Friday, April 10, 2009

Theft and Embezzlement -- Another Interesting Case

I'm constantly amazed at the amount of employee theft and embezzlement that persists in American companies, large and small. And also amazed at the fact that most business owners and CEOs are convinced "It's not happening here."

Another of those stories surfaced recently in our local market (Upstate South Carolina). In that scheme, a man operating three local businesses (apparently fronts pretending to be trucking, warehousing, etc.) was charged with mail fraud and money laundering that took place over a 6-year period. The amount of the fraud? Four Million Dollars! Like many, this was an imaginative scheme.

The victim was a $20 million Oregon-based company owned by a private equity group. The scheme was built around falsified freight invoices, charging for freight that was never hauled. You might suspect an "insider" accomplice in such a scheme -- surely somebody would notice all that freight cost and ask some questions, wouldn't he? From news accounts, it sounds as if the person approving and forwarding those invoices was a contract employee of the scammed company, located in yet another state! Apparently he invented the scam, and the recently-charged local guy just helped step it up by providing even more fake invoices (for a 50% cut).

Simple deal -- one guy produces invoices. Another, as a work-at-home contract employee, approves and submits them as legitimate and the company pays them. The guy generating the fake invoices was apparently also very good at fielding questions about those invoices from "real" company employees. Considering the 2700 miles between company headquarters and the perpetrators, one can assume nobody drove past the "freight terminal" and realized there were no trucks.

I believe such stories include great lessons for business owners, such as members of Chief Executive Boards International. They're tipoffs to things we should be watching in our own businesses every day, and pitfalls we don't have to suffer if we learn from the misfortunes of others.

If you have a tale of an imaginative embezzlement, fraud or employee theft scheme, please click "Comments" below and share it with us.

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Terry Weaver

Chief Executive Boards International

Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it

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