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re: Embezzlement and Naive Business Owners
Posted on 3/6/17 at 2:00 pm to Serraneaux
Posted on 3/6/17 at 2:00 pm to Serraneaux
I think that's where the expansion kind of covered him. As they were expanding, it was probably harder to track what extra expenses were from expansion and what was fraudulent.
Some of it makes sense as it to why it wasn't caught by normal variance analysis. But some of screams you didn't catch it due to naivety and incompetence.
I mean, the dude you're paying $50,000 a year is outbidding you at an philanthropy auction and ordering watches delivered to your bakery and you aren't concerned why the hell he is still working for you and hasn't quit?
Just about every red flag I've learned in a forensic course was hit here.
Some of it makes sense as it to why it wasn't caught by normal variance analysis. But some of screams you didn't catch it due to naivety and incompetence.
I mean, the dude you're paying $50,000 a year is outbidding you at an philanthropy auction and ordering watches delivered to your bakery and you aren't concerned why the hell he is still working for you and hasn't quit?
Just about every red flag I've learned in a forensic course was hit here.
This post was edited on 3/6/17 at 2:04 pm
1
Posted on 3/6/17 at 2:13 pm to southernelite
quote:
I mean, the dude you're paying $50,000 a year is outbidding you at an philanthropy auction and ordering watches delivered to your bakery and you aren't concerned why the hell he is still working for you and hasn't quit?
Yeah. Obviously hindsight is 20/20 but anyone that comes into an inheritance of that amount and is that flashy about their purchases, doesn't stay in their $50k/yr job unless they need it.
Posted on 3/6/17 at 2:21 pm to Golfer
Closest one that I saw was when the son-in-law was ripping off the father-in-law he worked for. The daughter / wife turned the guy in. She knew something was up when Rolex was flying their own plane into his tiny home town to show him new watches (among other things as well).
Posted on 3/6/17 at 2:27 pm to Serraneaux
quote:
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.
IF they were only seeing the books once a year at tax time, and those numbers were pretty consistent from year to year, it's not that hard to comprehend. Especially if the tax return was their only engagement with the client.
Posted on 3/6/17 at 2:35 pm to The Spleen
I actually just remembered that the accountant from my previous employer was busted stealing. She got a company CC issued in her name and ran up charges on it. There were about 40 of us with company CC's and the CFO only saw the total bill to Citi and it was always within reason.
She got busted a few months into the theft when one of her purchases was flagged, and she forgot to change the contact person for the bank to call to her. It went to another staff member who blocked the charge and then the company looked into it.
Would have been caught in a few months anyways as our entire CC spends are audited each year.
She got busted a few months into the theft when one of her purchases was flagged, and she forgot to change the contact person for the bank to call to her. It went to another staff member who blocked the charge and then the company looked into it.
Would have been caught in a few months anyways as our entire CC spends are audited each year.
Posted on 3/6/17 at 3:03 pm to The Spleen
quote:
IF they were only seeing the books once a year at tax time, and those numbers were pretty consistent from year to year, it's not that hard to comprehend. Especially if the tax return was their only engagement with the client.
For sure, most of the time, the CPA firms are just comparing year to year expenses and if they are okay with the amounts then they move on. If there is an explanation that makes sense like "expansion" and everyone including the owner is satisfied with the amount of the expenses then it could be overlooked. If I am the owner or CFO, I am asking for more details when things fall outside a variance. Was the expansion budgeted internally at all, (where were the POs, who can approve, etc.) and were expenses put against the internal budget to make sure it's on target? Any process or routine outside of the normal, established accounting practices (AP sending checks via ACH or wire vs controller doing a one off check every now and then)and I immediately think something could be wrong. Did any of the vendors ever question a 1099 amount if they got one? Once the costs rose, then you could ask for some details, especially the larger invoice amounts. Hindsight is 20/20 though.
This post was edited on 3/6/17 at 3:04 pm
Posted on 3/7/17 at 1:37 am to Serraneaux
It is probably happening in my dad's company right now.
Posted on 3/7/17 at 7:16 am to CaliforniaTiger
Tell me more. Why do you think something is going on? Can you get it stopped or looked into?
Posted on 3/7/17 at 3:35 pm to tigerpawl
I'm more surprised that the bakery had enough money running through it so that Jenkins could pilfer about $2MM/yr and not put the bakery out of business. Who knew there was that much money in fruitcakes?!
Posted on 3/13/17 at 10:48 pm to southernelite
The fruitcake company accountant was on CNBC's American Greed last week. Watching it on dvr now.
Posted on 3/14/17 at 1:23 am to Golfer
quote:
The fruitcake company accountant was on CNBC's American Greed last week. Watching it on dvr now.
Good episode.
The bakery has a great restaurant and bake shop. I've eaten there several times while investigating other frauds in the town.
There's an inordinate amount of this kind of stuff in East Texas, it seems.
Posted on 3/14/17 at 9:43 am to Evolved Simian
quote:
There's an inordinate amount of this kind of stuff in East Texas, it seems.
My guess would be it's a combination of people wanting in on the "oil money" wealth and the stereotypical Texan being big and flashy.
Obviously I'm generalizing, but you get the idea.
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