Skimming Some off the Top

Model Manager Takes Cash for Himself


By John W. Marinucci, ED.D., CFE, CIA

 

 

MarchApril-Skimming-Some-Off-the-Top  

Randy was a manager of a small sporting goods store that always turned a tidy profit. He was a perfect employee — a little too perfect. He thought no one would notice that he was skimming from the cash register. Learn how to catch a fraudster in this classic scheme and how to set up internal controls so it never has to happen.

Sam and Karen owned a small chain of about 20 sporting goods stores on the East Coast of the U.S. They acquired their latest store in a small suburban town of 40,000 residents. The market base of this successful little store grossed $750,000 yearly in total sales. Many of its customers included military personnel from a nearby base, so a major part of the store’s market continually changed. 

The manager of the newly acquired store, Randy, was a model, stable employee with a strong work ethic. His employment history was impeccable, he was dependable and generally pleasant, and he was knowledgeable about the products. 

Sam and Karen believed that the store would continue to be viable. However, after about a year, the store’s profit appeared to be slipping. Sales remained strong, but repair and/or installation of sporting goods were decreasing. 

The store was about 100 miles from the chain’s home office and 60 miles from the chain’s closest store, so it was difficult for management to conduct hands-on supervision. It was time for a visit.

 Sam and Karen arranged a dinner meeting with Randy and his wife. They discussed concerns about the slipping sporting goods repairs but also praised him for his accuracy. His store was the only one in the chain at which the cash registers’ total numbers, the bank deposits and the change till never varied. Randy said there was no secret to the exact balancing; he just made sure he and the employees who had access to the cash registers were exacting and accurate in their change-making. Sam and Karen asked Randy to document his procedures so they could give them to the other stores for guidance. 

 After the meeting, Sam and Karen noticed a distinct increase in the sales category of service labor (sporting goods repairs and/or installations) with a commensurate decrease in parts and accessories.They then contacted me for help. After the initial meeting with the owners, I asked to see the individual bank deposit records and the complete cash register records that included the cash register “Z” tapes, which recorded all sales and transactions for each shift and working day. I quickly developed my theory of fraud, which I was able to prove through an extended records examination, fraud operational tests and, ultimately, a confession-seeking interview with Randy, the manager.


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By Nugget Casino Resort
This article not only gave particulars of the skimming fraud scheme but also completed the lose-lose picture: Everyone at the store lost their job and the owners lost their attitude of trust. Unfortunate all around.