The Deceptive Office Manager

Employee theft and embezzlement


By Michael J. West, CFE
FraudBasics

When this CFE was being ignored by his heating and cooling company he suspected more than poor customer service. Sure enough, the office manager was pilfering the firm. Here's the CFE's story of how he helped devise a plan to prevent subsequent employee fraud.

When we bought our new house, we paid for warranty service on our air conditioner through BACME Heating and Cooling, which was owned and operated by Cliff.1 After 18 months, we had a small problem with the unit and one of Cliff's technicians said he would order a part. Weeks went by so I called BACME and talked to Christine, the kind and helpful office manager. She said they would research the problem and call me back within a couple of days. But there was no response for weeks. The owner eventually fixed the problem and gave me an additional year of warranty without charge.

Several months after my initial calls to the company, we repeatedly called about another problem. Christine always had some reason why Cliff wasn't available. One time he was out of the office, another time he was at lunch, another time he was in conference and couldn't be disturbed. Christine was always willing to help but she couldn't solve our problem.

I told my wife that I was finally fed up. After I filed a complaint with the Better Business Bureau, my fraud examination adventure began.

The BBB contacted Cliff; he responded that he had no record of doing any warranty work at our house. I was sure he was putting me off again, so I quickly mailed them the date the technician had been to our house and copies of the invoices for service and parts they had left with us. I finally got their attention. One of Cliff's technicians called me and made an appointment to come to my house. I told the technician that I was a Certified Fraud Examiner and that the things I was seeing at BACME raised my suspicions.

After the technician left that next afternoon, I mentioned to my wife that Cliff must have some real problems and I thought it was time I talked to him. It appeared that he not only didn't know anything about the internal workings of his own business but someone else was actually controlling his customers.

Before I could phone him, Cliff called me early the next day and said, "I need help." We arranged to meet at his office later that morning. Here's where things really got interesting. The FBI had just arrested Christine, the office manager, after Cliff's bank reported the discovery to the FBI that all of the business' cash deposits had completely stopped for eight months.

Christine used her exuberant charm and "can do" attitude to cover up the embezzlement and misappropriation of almost $330,000 during those eight months! Cliff's business was falling apart and he needed help now.

In 2004, Cliff met Christine when she owned a company that produced security badges for a secure government facility in which his employees worked. She also had a contract with the state of Arkansas producing these badges. He had also seen her several times working at a local dry cleaner near his business. One day she casually mentioned that business was a little slow and she might need to find other work. Cliff told me he thought she was a nice lady and pleasant in nature and characterized her as the average "soccer mom." He hired her in November 2004 as a part-time bookkeeper but he rapidly increased her responsibilities. She quickly became an indispensable and integral part of the business. Christine was always available and willing to handle the most difficult jobs and had the right answers to Cliff and his customers' questions. She would make sure that customer complaints were funneled to her, ostensibly because "Cliff was overworked" and she "wanted to make a contribution to the business."


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