Embezzlement and Naive Business Owners

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Bob McNutt, president of Collin Street Bakery, said Wednesday he was pleased to have the investigation and sentencing behind them, and declined to comment further for now.

“We don’t have to worry about this anymore, and just get on about our business,” McNutt said.

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Also, how was a bakery making that kind of cash.

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I don't know how even their CPA firm or whoever filed their taxes never raised a question in 10 years though when doing their tax returns.

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Bob McNutt was shaking his head year after year, wondering why the bakery wasn’t making more money. He couldn’t figure it out. Was the company expanding too quickly? People seemed to love the new pecan cakes, a twist on the fruitcake that came in regular or bite-size. “It doesn’t make sense,” Hayden would tell Bob. “We’re doing something wrong.” They’d finish each fiscal year and say, “It slipped through our hands again.” Some years they could blame the economy, like anybody else; other years they had no excuse. They examined their expenses: labor, the price of ingredients, even the inventory of ingredients, as if somebody were stealing the cherries or pecans to make a million fruitcakes at home. They audited the payroll. Nothing came of their efforts. Hayden said, “We did this over years trying to pinpoint what the problem was.”

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On occasions when he’d already bought what he wanted from the latest Robb Report and he didn’t have time to drive to Dallas, he would ask jewelers to come to the bakery. Under armed guard, he’d finger the stones as he asked his colleagues, “Do you think Kay would like this one?”

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Before long he and Kay were spending up to $98,000 a month on their credit card, which Sandy then paid with Collin Street Bakery checks. After remodeling their kitchen with a Viking range, cooling and warming drawers, and granite countertops, they started hosting elaborate dinner parties, opening hundred-dollar bottles of wine while serving steak and veal chops. They could join multiple supper clubs now, and they did. They hosted champagne brunches with themes like “flip-flops to stilettos” and dinners featuring “burgers and Bordeaux,” mixing high and low cuisine. “She’d have a ladies tea and everybody had to wear a hat—she did that kind of thing,” said Scott, who had started seeing Sandy and Kay socially about three days a week. The Jenkinses installed a wine cellar under their staircase outfitted with two refrigerator-size storage units, and Sandy’s palate developed so quickly that when he’d go down to the Corsicana Country Club—which he didn’t do as often as some people, only once or twice a week—he’d bring his own bottle from home, as the house wines were no longer to his liking.

At work, Sandy told people admiring his fine clothes that he’d bought his outfits at Walmart, though nothing could have been further from the truth: he was actually wearing $600 shirts from Armani and Hermès. 

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He didn’t always cover his tracks so well. One time, for example, Sandy stopped by Bob’s office to tell Bob about his cousin’s plane. “He lets me use it,” he told Bob, as he had told everyone. Bob was confused about why this employee he barely knew was boasting to him. “I was kinda like, ‘Well, why do you need to tell that to me?’?” Bob said later.

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He spent big money at the charity auctions—sometimes even outspending Bob McNutt.

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