The audacity of greed, Gen-X style

Employee embezzlement’s dueling divas


By Annette Simmons-Brown, CFE

Case in Point: Case history applications

MarApr-dueling-divas

In my earlier Fraud Magazine Case in Point, "Fluffie the Bank Account Slayer" (January/February 2014), I chronicled the adventures of a classic paperhanger whose expensive, girly narcissism cost hundreds of individuals and businesses more than $430,000 in 3½ years and whose criminal case cost me — a paralegal CFE with a county attorney's office — an equal amount of irritation.

In subsequent cases, I've learned — much to my dismay — that Fluffie wasn't unique in her felony-diva vibe; in fact, she was a role model of sorts for the generations that follow her. Shortly before her case was concluded, I found myself shepherding not one but two employee embezzlement cases whose details — including the Fluffie Quotient — were so similar that at times I was in great danger of mixing them up in my evidence/discovery files, my spreadsheets (my beloved spreadsheets), my calls to law enforcement, prosecutors and defense attorneys, and my poor head.

However, there's still so much more to learn from my tale of Sydney and Joely. (I've changed all names to protect the innocent and guilty.)

SYDNEY AND JOELY: DARK STARS CIRCLING

Sydney was born in 1980, and by 2008 she was the unmarried mother of two children and proud possessor of six traffic charges, two DWI charges and three theft charges (at least two of which were check-related). She also had the face and physique of a brunette model for The Gap, and she knew it.

In July 2008, Sydney ran into one Justin Thomas at a party. Justin was the owner of Home Renewal and Repair LLC — a very small, newish local company that specialized in repairing and remodeling homes that had suffered storm damage. Justin, quite by coincidence, was Sydney's boyfriend's best friend. At this party, she learned Justin was looking for a new bookkeeper, and over tequila shots she lobbied Justin for the job. Justin, who trusted his best friend's selection of women and was impressed by Sydney's looks, her purported bookkeeping training and taste in tequila brands, hired her to be his new fulltime bookkeeper.

Meanwhile, across town, there was Joely. She was born in 1982, and in 2008 was single with no children, no advanced education, no consistent job history, but she had a thriving night life and Facebook account. She, like Sydney, was an attractive brunette who resembled actress Natalie Portman.

Joely's father, an attorney with questionable ethics, had gotten tired of financing Joely's night life, so she signed on with a local office-temp agency. In September 2008, she got an assignment at Landscape Luxe Inc., another very small local company that had been in business for 32 years. Landscape Luxe hired Joely to temporarily replace its longtime office administrator who was retiring. The owners of the company, seasoned businessmen Sam Reilly and Harris Jones, were pleased with Joely's performance, so they hired her permanently in November 2008.

NO TIME WASTED

Just a few days after Sydney assumed all bookkeeping responsibilities, she began to forge Justin's name on business checks and use them to pay herself for cash and her landlord for rent payments. She buried these fraudulent transfers in the office's QuickBooks system, changed the payee information and miscoded the purpose of the transfers — sometimes hiding the entry's row electronically.

Sydney also accessed the business' corporate VISA credit card and charged innumerable purchases on the main account number and a sub-account she opened without Justin's knowledge. In an employee embezzlement Ponzi scheme of sorts, she forged checks from the business account to pay the outstanding balances on the credit card account and transferred the balance of one sub-account to a second sub-account she opened up for herself. She also opened up store accounts with a couple of local big-box retailers by using a deceptive conflation of her name with the former bookkeeper's name and the business' taxpayer ID number.

Within 15 months, Sydney stole more than $165,000 under the nose of Justin — who trusted her, was better at doing the business than running the business and had his own problems. Now, in comparison with the dollar loss of other fraud schemes we CFEs have encountered, $165K can seem like small potatoes. But this was a big enough potato to eventually drive Justin out of his fledgling business, out of his house and onto his mother's couch, and send several employees to the unemployment line.

Meanwhile, in October 2008, about a month before Joely was formally hired as a permanent employee at Landscape Luxe, she began embezzling by issuing checks to herself from the business bank account by, at times, forging one of the owner's signatures on the checks.

After she became a permanent employee, she had complete control over the distribution of incoming mail and management of the company's online communication systems, so she began making unauthorized personal charges on the business' credit cards. She opened new accounts in Landscape Luxe's name — sometimes with an owner's personal information — and paid the credit card thefts with the business bank account.

Like Sydney, she manipulated the business' bookkeeping records to hide these blossoming credit card bills, and she changed the credit card and bank statement delivery from snail mail to her own email account. The owners — both very busy men who had had no problems with Joely's predecessor — seldom noticed any changes in the administration of the office, and when they did notice something, Joely explained it away. Between October 2008 and her final termination in March 2011, Joely stole more than $130,000. Not bad for a garage-band groupie who grew up in a cul-de-sac.


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