Writing Checks and Paying Bills

A Rubber Stamped Check Forgery

on Friday, 27 September 2013. Posted in Writing Checks and Paying Bills

It’s hard to believe that the use of a little rubber stamp would cost a company over $ 600,000. Bonnie Johnson, the ex-office manager for North County Smokehouse has pleaded guilty to embezzling just over that amount from New Hampshire’s, North County Smokehouse.

 

The owner of the 101-year-old-business,  Mark Satzow, discovered the fraud scam while Johnson was on vacation, Satzow discover the trusted, 21 year employee of the company had made an unauthorized charge on the company’s credit card. After further investigation it was found that she had, over the last seven years embezzled more than $ 600,000 by writing checks made out to herself. Johnson was an authorized signatory on the business checking account along with Satzow, and although the account required both signatures on a check Johnson would use a rubber stamp to affix Satzow's. Johnson also charged unauthorized purchases to the company credit card.

The embezzlement started out small, as they usually do, with Johnson stealing a reported $ 16,000 in 2005 the crime then escalated as it went unnoticed to the point where Johnson had stolen $124,000 in 2012.

This type of fraud is called an "authorized maker" scheme and is one of the hardest to defend against; as the fraudster has authority to sign on the checking account. Many believe that requiring two signatures on a check is an effective internal control; however, this is exactly as it states - an internal control - and must be monitored internally. Your bank will not monitor this requirement or reject checks that do not have two signatures on them. In fact, I've seen checks clear a bank with no signature affixed at all! So if the person responsible for monitoring and reconciling your banking transactions also has authority to sign checks; you're a prime target for this type of fraud.

Pages 24 -33 of book one, in my three book series, provides direct guidance in detecting and preventing this type of scheme.

 

Johnson reportedly used some of the embezzled money for elaborate vacations, Harley Davidson motorcycles, jewelry and snowmobiles.

 

Johnson plead guilty to wire fraud on October 10th and was sentenced to 33 months in federal prison On October 27, 2013.

 

 

 

Check Forgery: You bought what??

on Monday, 09 September 2013. Posted in Writing Checks and Paying Bills

                In book one we talk about three factors that must be present for a normally honest employee to begin stealing (1) opportunity (2) rationalization and (3) outside financial pressure. Jennifer Lynn McCage, age 39, from Memphis, TN. Embezzled $234,000 from her employer Dunavant Enterprises from 2007 to 2012. McCage had been employed by Dunavant Enterprises since 1992, but didn’t begin stealing until 2007. So for fifteen years McCage was a presumed, honorable employee. What happened? Did she see an opportunity? Did she have outside financial pressure? Did she rationalize to herself that her actions were somehow acceptable?

                For nearly five years McCage used her supervisors, William B. “Billy” Dunavant Jr., credit card and personal checking account to pay for personal purchases. McCage plead guilty to the crime and was sentenced in December 2012 to two years and three months in federal prison and ordered to pay full restitution to Dunavant.

                According to sources McCage used the money on everyday expenses such as children’s tuition, clothes and food. She did not appear to be living beyond her means. Unlike Angela Buckborogh Platt who embezzled $6.9 Million from her employer and used the money to purchase items such as a 104-acre ranch, six (Wizard of Oz type) talking trees for Halloween, a life-size ceramic statue of Al Capone, and a 20 foot tall smoke emitting, hydraulically powered dragon!

 

Were They Forged Checks?

on Wednesday, 14 August 2013. Posted in Writing Checks and Paying Bills

The hardest type of check tampering scheme to defend against is one where the crook is an authorized signor on the account. The trickster simply signs checks made out in their own name and then deposits them into their own account. Often these employees hold positions as bookkeepers or accountants and work with little or no oversight. Working alone they competently perform their duties of writing checks and; verifying to you that the banking transactions are indeed accurate. Allowing them cart blanch when it comes to stealing you blind.

This is what happened Angela Buckhorogh Platt did to J & J Materials; perhaps the largest landscaping and masonry supply company in the Rhode Island area. From 1999 to 2006 Platt embezzled $6.9 M. Her scheme wasn’t sophisticated and could have been detected, even prevented. The opportunity presented itself and she had the means to conceal the crime, without which the crime could not have happened.

When taking about employee frauds, forgery or forged check schemes many will advise first to have a separation of duties*, then random audits and third, requiring employee’s to take vacation. But what if your business is so small you only have one or two people? What if a separation of duties isn’t possible? I have the answer.

 I propose a more pro-active approach to employee fraud prevention, one that will not only detect ongoing frauds but prevent new ones from occurring. One that will arm business owners with need-to-know information, provide counter-tactics to combat employee fraud schemes in their business.

J & J Materials was forced to lay off 35 workers due to the losses, when Platt plead guilty in 2007 she was sentenced to 4 years for her crime but was released in 2009 after serving over just two years of her sentence.

 

Embezzlement, Fraud and Racketeering

on Wednesday, 14 August 2013. Posted in Writing Checks and Paying Bills

August 2013

Next month Bobby L. Willis, age 40, will appear in a Farmington, N.M. court room and answer to embezzlement, fraud, racketeering and securities fraud allegations. 

A 14-page arrest warrant was issued by authorities in San Juan County, N.M. accusing the organizer of last year's Mesa County Fairgrounds cancelled country music festival of steeling millions.

Mike Atchison claims to have invested more than $15 million with Willis; $8 million in a classic car deal gone bad, $6 million in jewelry and gemstones and $1.5 million for a hospital project in Kirtland that never got off the ground. Atchison claims that “Every time he would ask for his money or other assets, Willis would tell him that he would get the money back, but would never follow through with the return of the assets, Willis would say that he had a group of investors that would buy him out, but this never came through.”  

No fewer than 66 checks or money transfers have been identified streaming out of customers escrow accounts; with one check signed by Willis for the amount of $132,880.

Willis is expected to make his first court room appearance during  the two day preliminary hearing set for mid-September in, Magistrate Judge Mark S. Hawkinson court room.

Until then, Willis is residing at his home in Branson, Mo., wearing a court-ordered ankle bracelet.