$2.7 million embezzled from Arizona National Guard

While members of the Arizona National Guard were in harm’s way, James Eugene Burnes, a retired Army colonel took care of business on the home front. Unfortunately, he put his personal business above the needs of the National Guard. Between May 2003 and August 2011, Burnes embezzled $2.7 million from the Arizona National Guard Family Emergency Fund and the Arizona National Guard Emergency Relief Fund.

Apparently, Burnes had fallen on hard times. Just three years after retiring from the Army on presumably a healthy pension, he began committing fraud in his new role as a resources manager for the Arizona Department of Emergency and Military Affairs. From all accounts, he had a gambling habit that needed to be fed. To cover his tracks – as so many perpetrators of fraud do – he created fake financial statements and audit statements.

Here is how he stole the money:

  • Withdrew $1.9 million in cash during 675 separate visits to the bank (He visited the bank as often as 20 times a month).
  • Wrote 169 checks totaling more than $400,000
  • Purchased 32 cashiers checks for more than $332,000
  • Authorized electronic transfers of $40,000

Management oversight was apparently lacking and numerous red flags were ignored. In fact, an employee within Burnes organization uncovered the fraud and shared the information with a supervisor. The fraud continued for another five months before the supervisor confronted Burnes and initiated a review of bank records which confirmed the fraud.

I am sure that the Arizona National Guard thought it was appropriate to trust “one of their own” – a retired Army Colonel. If only life were that simple… Burnes may have been an exemplary officer while on active duty, but as I have said before, even good people make mistakes. Burnes will found out soon how much he’ll have to pay for his mistake when he is sentenced later this year.

Trust too much, and employees may view it as a sign of weakness. Call me cynical, but if my experience has taught me anything, it is that organizations routinely place far too much trust in their employees. If you ever catch yourself saying that you trust your employees and they would never steal from you, it may already be too late. Trust me; I built my career as a fraud consultant based on employers trusting that their employees will never steal. Guess what? Fraud happens.

Learn more about the case here and here.

Need a writer that understands fraud? When you hire me to write an article, blog post, newsletter or white paper you get an accomplished writer that is also an expert in fraud.

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About Paul McCormack
I have over 17 years of experience in corporate fraud and intellectual theft prevention, detection and investigation. Unlike many fraud experts, I have both industry and professional services experience. To date, I have conducted over 500 interrogations of fraud suspects including numerous senior corporate executives. As a freelance writer, I have written over 100 articles on a broad range of topics including accounting, banking, cloud computing, corporate governance, corruption, cyber security, executive protection, fraud, insurance, human resources, intellectual property, social media, and supply chain management.

3 Responses to $2.7 million embezzled from Arizona National Guard

  1. Edwin says:

    As a former solider he should be ashamed. Good story

  2. Debbie Davis says:

    My name is SGT Debbie Davis. I am the one who tried to reported the fraud in January 2011 to Congressman David Schweighert’s office. The Congressional complaint went no where except back to the base where they did a cover up and retaliated against me and fired me, non-recoomended me for promotion, gave me horrible ncoer’s that were full of nothing but lies about me. I was in shock. I thought I was going to be rewarded for reporting something like this. So, I contacted the Governor’s office in April of 2011 Begging for help and telling them everything that was going on and what I had reported and what they were doing to me and instead of Helping me the Governor’s office made things worse. In May of 2011 when I showed up for drill and I was physically forced into a room where they had a Bar for re-enlistment paperwork they had typed up for me to be counseled on. I asked to speak to an attorney and I was Denied one. I feel the commmunity has a right to know my story.
    Respectfully,
    SGT Debbie Davis

  3. Debbie Davis says:

    To add to my comment above, not only did General Salazar not care when I reported the embezzment, he actually brought me into his office and threatened me for what I reported and said that “things could come back on me”. Then, I desperately tried to get ahold of the National Guard Bureau, and they not only did not help me but I also started receiving threats from them as well.

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