by James
Marasco, CPA, CFE, CIA
Director, Corporate Services
StoneBridge Business Partners
Reprinted with permission from Fraud
Matters Newsletter of CPA America.
A recent fraud case in upstate New York that
made headlines shows the importance of background verification.
While on probation for embezzling funds from
a former employer, the perpetrator committed the same crime
against her next employer. This time she was ordered
to prison for three to six years.
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In her earlier job, she was hired as a bookkeeper for a
property management company. She was in charge of writing
checks, reconciling bank accounts and transferring money
between the various accounts.
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Within two years of her employment, she started keeping
two sets of books: one set was shown to the owners and independent
accountants, and the other represented the true picture of
the company. What began as a small-scale embezzlement
scheme soon exploded into something much larger.
The bookkeeper started writing checks to herself for small
amounts, forging the owners’ signatures and depositing
them into her own bank account. As time passed and
she continued to get away with it, she even wrote company
checks against her personal charge cards to pay down her
balances. In some instances, she had to transfer money
between company accounts to cover the checks that she had
written. This is how it all began to unravel.
While on vacation, checks started bouncing and the bank
called the owners of the company. They soon learned
that the accounts were overdrawn and they had lost over $300,000.
She had been perpetrating this crime against the company
for nearly six years!
The bookkeeper was charged and convicted of grand larceny.
She plea bargained and received a break on sentencing because
of the generosity of a cousin who loaned her money to make
restitution.
She was sentenced to weekends in prison and a couple of
years of parole. During this period, she found new
employment as a bookkeeper at an architectural firm. Within
a year, it was discovered she had committed the same crime
there. She embezzled over $50,000. This time,
she had no means to make restitution, and the court system
wasn’t as accommodating. She was ordered to prison.
It’s unfortunate that her second employer didn’t
perform a background check or employment verification prior
to hiring her.
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