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----- County District Attorney ----- announced today that ----- of ----- plead guilty today to one count of Grand Larceny in the Third Degree, a class “D” Felony.
Over a five and a half year period between January, 1998 and June, 2003, ---- who worked as the bookkeeper -------, Inc. a personnel agency at, ------- made numerous unauthorized ATM withdrawals and wrote petty cash checks and extra payroll checks to himself.
In addition, he paid his personal credit card bills by using electronic transfers, with company funds.
As a result of his fraud, and ensuing ----- State and Federal tax issues, the company subsequently shut down.
Investigators from the District Attorney’s office along with the ------Police spent more than three years investigating the fraud.
The total of ------theft is $76,040.65.
He will be required to pay full restitution.
------ faces a maximum of seven years in prison.
He will be sentenced on December 8th, 2006.
Assistant District -----, of the Economic Crimes Bureau, prosecuted the case.
About the above, this person above was the brother in law of someone i worked with, who was our company controller. I didn't get along with her in our later years at the company. She was a braggart and was always puffing about how muc h she had and how much $$ she made and how well off her entire family was
Curious tho, Does the crime committed above indicate an issue with the defendant's financial situation and/ or an inability to share such difficulty with his spouse so much that he had to resort to this? this was a married man with 2 daughters (met him once at a wedding). could his judgment have been so off that he actually thought he couldn't get caught? do you think the average wife would forgive this or not?
Curious tho, Does the crime committed above indicate an issue with the defendant's financial situation and/ or an inability to share such difficulty with his spouse so much that he had to resort to this? this was a married man with 2 daughters (met him once at a wedding). could his judgment have been so off that he actually thought he couldn't get caught? do you think the average wife would forgive this or not?
Most of my career has been spent in auditing and I have seen more than a few cases of fraud. In general, these kinds of cases don't usually start with an intent to defraud. Usually, the individual has a local difficulty and takes money with the intent of putting it back once the difficulty is over.
It then starts to snowball. An inability to pay back combined with a need for more money plus the fact that nobody noticed will lead to the person taking even more money. And that pattern will repeat itself until, eventually, they are caught.
So how do they get caught? Very often it is not the controls over financial reporting that catches them out. In big corporations the amounts are usually way below the materiality threshold and a smart person knows what these are, what numbers trigger exception reporting, etc..
They often get caught when they go on vacation and someone else is filling in for them (this is why many banks enforce a two week vacation every year). Or when an accomplice goes on vacation (large fraud at a data center we audited). Or when there is a change in computer software which brings the discrepancies to light (fraud at Corp. in Connecticut). Or when they get lazy and stop covering their tracks. Or when, eventually, the fraud gets so big that it starts hitting the management and internal audit radars (engineering corp where they were inflating numbers by not obsoleting high value components in line with policy).
We generally know how many get caught. What we don't know is how many get away with defrauding their employers. Where I worked we got a decent amount of expense fraud. It was never big numbers and the solution was immediate termination and not prosecution. However, our expense police were really good and had a lot of very sophisticated tools to flag up strange goings on with regard to expenses. Most corporations do not have internal audit depts with the skills to identify systemic fraud and most smaller police departments do not have the skills to investigate financial fraud either.
wow thanks. last time i posted this i got a "why is it your business?" type of response. i wonder if it was the kind of thing where the guy was always short on $$, didn't communicate it to his spouse, then when she gets the news that he's in jail it turns out was really a matter of marital communication difficulties about $$, or is it really that simple? a man who was too sheepish to tell his spouse of was having $$ difficulties so instead he gets larcenous and goes to jail??...
the reason why this jogged my mind was simply because the defendant's sister in law, who i worked with (and eventually came to dislike because if her "my family does no wrong" attitude and other things). this was a shock to me when i saw it. she was always touting herself as the perfect person with the perfect family
I think it is a combination of things. Some people like the "thrill" of getting away with it, figuring out how to do it...and like having extra money.
I agree with the prison term, and think sometimes judges are too lenient on this type of white collar crime.
There was a woman who worked at a school in our town, as the secretary, she was able to skim over $100,000 cash with no one noticing it. She was finally caught, and basically given no jail time. I found this to make no sense to me. Sure, she was a Mother with young children...did not stop her from stealing! She is a criminal, and should have been given a longer sentence. Former Kingwood Christian School manager gets probation in embezzlement | al.com
in terms of forgiveness from wife, i guess it could be worse, like sexual abuse of a minor or the like, but i would guess that his career would be shot due to the crime being related to his job (background checks are supposed to consider job related convictions)
I think Jaggy is spot-on -- we have had a slew of embezzling cases here recently and the really astounding one, in which a whole list of schoolteachers and administrators ripped off the district to the tune of hundreds of thousands of dollars, described the exact same thing -- "it started so small and it just seemed so easy and before I knew it I had stolen $30,000," that sort of thing. People ALWAYS tell themselves that their particular crime -- be it speeding on the highway or molesting infants -- is really no big deal. And every time you get away with it (or seem to), you convince yourself a little more that it's all perfectly OK. Then you land really hard when you get caught...
Drug habits can play a role in embezzlement. I know of another major embezzlement where someone was embezzling to feed a gambling addiction.
Over the years, I represented several people charged with embezzlement. I observed some interesting things. The people I represented were all working for private businesses. Generally speaking, criminal prosecution was a last resort. When the embezzlement was detected, corporate officers would terminate them and try to work out some kind of a plan where they would pay the company back--even if it was only a marginal amount of money per month. The people who got prosecuted were generally those who made no attempt to pay the money back at all. Often, before the crime was reported to the authorities, six months to a year had transpired since it was discovered. The corporate officers weren't stupid. They saw no margin in it for them if these people went to jail. In their minds, they realized that would reduce the likelihood of getting the money back to zero. I even saw letters written by businesses attempting to get such former employees to start making payments.
Embezzlers have often contemplated going to jail and sometimes they literally decide that a jail sentence of 18-24 months is worth the risks to them of getting caught. I have seen them pass up "boot camp" or other options which would have shortened their confinement to 3 to 6 months because they felt general prison life was a "softer deal".
Very often, its not an easy crime to prosecute and prosecutors don't make it a priority. Of course, there are exceptions like Bernie Madoff who swindled all those people out of their retirements, but the average embezzler takes far less money than that. This is often what a prosecutor faces with a case like this though:
1. A need to acquire enough financial acumen to present the case coherently to a jury.
2. Expert witnesses (accountants) who are often not the most charismatic people in the world and who must literally be trained how to present their testimony, so a jury will understand it.
3. Priorities in the office that put embezzlement cases on the "back burner". The public is far more concerned about murder, sexual assault, crimes against children, and DUI cases involving injury or death. Even the corporation who has suffered the embezzlement is often not pushing hard for prosecution. The squeaky wheel gets the grease in the system and there are few squeaky wheels in a case like this.
4. Sympathetic defendants. Those accused of child abuse are seldom treated with any sympathy by a jury. However, when the charge is a theft without violence, very often jurors identify on some level with the defendant. The "reasonable doubt" standard is actually applied in such cases and I've seen them acquit men and women based on any flaw or discrepancy in a case at all. One juror told me that deliberations began in such a case with another juror saying "Do we really have to convict the defendant? Or is there a way we can avoid it?".
5. Time constraints. The cases are complicated and harder to prove than most cases involving a physical assault or violence.
All prosecutors have the "discretion" to bring a case or not. For the most part, that is a good thing. However, I've seen prosecutors use this discretion to not bring embezzlement cases that were pretty clear cut. I saw one case where an employee stole $85,000 and walked without any charges being brought or ever repaying any of the money. The prosecutor was not backward in suggesting to the business owner that he had behaved stupidly in placing so much trust and confidence in one person.
Embezzlement cases don't make most people have a gut reaction. Therefore, I don't see many changes in the way they are being handled.
Drug habits can play a role in embezzlement. I know of another major embezzlement where someone was embezzling to feed a gambling addiction.
Over the years, I represented several people charged with embezzlement. I observed some interesting things. The people I represented were all working for private businesses. Generally speaking, criminal prosecution was a last resort. When the embezzlement was detected, corporate officers would terminate them and try to work out some kind of a plan where they would pay the company back--even if it was only a marginal amount of money per month. The people who got prosecuted were generally those who made no attempt to pay the money back at all. Often, before the crime was reported to the authorities, six months to a year had transpired since it was discovered. The corporate officers weren't stupid. They saw no margin in it for them if these people went to jail. In their minds, they realized that would reduce the likelihood of getting the money back to zero. I even saw letters written by businesses attempting to get such former employees to start making payments.
Embezzlers have often contemplated going to jail and sometimes they literally decide that a jail sentence of 18-24 months is worth the risks to them of getting caught. I have seen them pass up "boot camp" or other options which would have shortened their confinement to 3 to 6 months because they felt general prison life was a "softer deal".
Very often, its not an easy crime to prosecute and prosecutors don't make it a priority. Of course, there are exceptions like Bernie Madoff who swindled all those people out of their retirements, but the average embezzler takes far less money than that. This is often what a prosecutor faces with a case like this though:
1. A need to acquire enough financial acumen to present the case coherently to a jury.
2. Expert witnesses (accountants) who are often not the most charismatic people in the world and who must literally be trained how to present their testimony, so a jury will understand it.
3. Priorities in the office that put embezzlement cases on the "back burner". The public is far more concerned about murder, sexual assault, crimes against children, and DUI cases involving injury or death. Even the corporation who has suffered the embezzlement is often not pushing hard for prosecution. The squeaky wheel gets the grease in the system and there are few squeaky wheels in a case like this.
4. Sympathetic defendants. Those accused of child abuse are seldom treated with any sympathy by a jury. However, when the charge is a theft without violence, very often jurors identify on some level with the defendant. The "reasonable doubt" standard is actually applied in such cases and I've seen them acquit men and women based on any flaw or discrepancy in a case at all. One juror told me that deliberations began in such a case with another juror saying "Do we really have to convict the defendant? Or is there a way we can avoid it?".
5. Time constraints. The cases are complicated and harder to prove than most cases involving a physical assault or violence.
All prosecutors have the "discretion" to bring a case or not. For the most part, that is a good thing. However, I've seen prosecutors use this discretion to not bring embezzlement cases that were pretty clear cut. I saw one case where an employee stole $85,000 and walked without any charges being brought or ever repaying any of the money. The prosecutor was not backward in suggesting to the business owner that he had behaved stupidly in placing so much trust and confidence in one person.
Embezzlement cases don't make most people have a gut reaction. Therefore, I don't see many changes in the way they are being handled.
Good comment.
I was on a Grand Jury recently and we had a few cases of embezzlement come before us. Bear in mind that I have spent 30 years in public accounting so I have a decent amount of expertise here.
What struck me was that the detectives presenting the prosecution case had relatively little experience of investigating this type of crime and lacked the skills necessary to present a coherent case. I don't blame them for this. There are relatively few cases of embezzlement and our county is not big enough to have specialists in this area. To a large extent they relied on the defendant admitting wrongdoing which they often did. However, I remember thinking that, where the defendant did not admit guilt, that a fairly competent defense attorney could destroy the prosecution case.
good post, Mark. i was just going to ask if the $76,000 in the original post was a lot but you kind of explained that part of it to me
There is a difference between fraud and embezzlement.
A lot of fraud is management trying to hide the fact that results suck. So they play games with the stock figures, with how they capitalize assets or how and when they recognize revenue.
Embezzlement is different and it is almost always fairly small in the grand scheme of things. We had a case where a facilities manager was defrauding his employer. He was doing things like hiring fictitious temps, taking kickbacks from suppliers, using desk-top publishing to create fake invoices. He was very clever at getting everything signed off by his boss so it passed under some of the automated exception reporting.
So why was it not picked up? Because this was a multi-billion dollar corporation and the numbers were so small - maybe a couple of hundred thousand dollars over several years - that they were not even a rounding error on a rounding error. He eventually got caught when his accomplice at the temping agency went on vacation and her replacement blew the whistle.
Expenses fraud is another area where theft is rampant. But, again, if you know how the system works it is quite easy to manipulate. For example, if anything under $25 does not need a receipt and, each week, you stick a $22 and a $19 onto your expenses then that is $41/week or over $2000/year. If you work for a company that has a lot of people on the road and you are on the road a lot then those kind of numbers just slip under the radar. People usually get caught when they get greedy or arrogant.
Also, many companies and organizations make embezzlement easy. They don't put proper controls in place and prefer the 'honor system'. The problem is that there will always be that one person who has no honor and sees an opportunity for easy money with no consequence. Usually the controls don't go in until after they have been burned.
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