“She’s just a wolf in sheep’s clothing”

Looks like another bookkeeper may have forced their employer to declare bankruptcy. Karen Tripp allegedly embezzled $1.5 million from Seiler-Nabors Construction Company, based in Collierville, Tennessee. The indictment states that Tripp wrote checks to her personal bank account as well as the antiques store that she owned. She also allegedly used the money to buy her children cars, build a mansion and take exotic vacations.

Collierville’s population is just under 45,000. I am sure the Seiler-Nabors bankruptcy will create a sizable ripple effect across the community. The company has already fired 20 employees which will obviously have a direct impact on a number of families.

Christy Klink worked alongside Tripp. She shared her thoughts with Memphis reporters regarding the indictment.

“It’s not going to change anything that happened or change the financial problems it has caused us. It does give us some satisfaction to know she is going to spend a lot of time in jail.”

Klink may be in for a rude awakening if Tripp is found guilty or “cops” a plea. In reality “a lot of time in jail” may not amount to much. It is probably Tripp’s first offense, and I would guess that she’ll serve 2 to 4 years. She’ll probably be ordered to pay the money back and it sounds like there may be some assets that can be liquidated. But, when the IRS comes knocking for the taxes on the $1.5 million (I doubt that Karen declared all of her income), they’ll likely jump to the head of the line demanding payment.

This case is just another example of how fraud can destroy a business. Ultimately, there are very few “winners”. In addition to closing the business and putting 20 people out of work, trust was lost. Trust that their employee was honest. Trust that their mother’s gifts and new house were earned and not stolen, and trust that if you work hard and do the “right thing” for your employees and the community that you’ll be rewarded.

Christy Clink’s father is a part owner of Seiler-Nabors Construction. Clink told reporters that her father had hoped that the company would pay for his retirement.

“He lost my mom about three years ago. He’s not really gotten over that and this comes and destroys him. She’s taken everything. He’s going to lose it all.”

This story involves a small company, but the “lessons learned” can apply to companies of all sizes. If you learn only one thing from this post, please monitor employees that issue payments. This case involved checks, but fraud can just as easily happen with wires, debit cards, credit cards, ACHs and of course cash. When was the last time that you reviewed your bookkeeper’s work? Do you reconcile your company’s bank statements on a daily basis? Who has access to blank checks?

Remember: You can trust but always verify.

 

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.

 

paul@mccormackwrites.com

 

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Grab your Magic 8 Ball

I’d love to hear your thoughts on fraud in 2012. Several industry associations are predicting that we will see a significant increase in corporate fraud. Others believe that we are over the worst and that fraud losses may actually decrease. Your turn… please take 2 seconds to submit your vote.

Also, if you would like to share your thought process in the comments section, please do so! You may be the “lone voice”, or in the majority. Either way, you’ll find out!

Thanks for taking the time to vote!

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.

paul@mccormackwrites.com

 

Blog of the week – www.fbi.gov/news/news_blog

It is very easy to forget that many law enforcement agencies, including the Federal Bureau of Investigation have a blog. The FBI’s blog is easy to navigate, regularly updated and includes information on a vast range of fraud types that fall within the FBI’s area of operation. It is certainly not aesthetically pleasing, but the format is consistent with the FBI’s persona.

The “news by subject” section is particularly helpful as it provides hyperlinks to topics such as organized crime and white-collar crime. I found the post “Ten Years Later:  The Enron Case” particularly intriguing. Many of the Enron trial exhibits and documents are available online. Personally, it looks fascinating, but I am little biased…

http://www.fbi.gov/news/news_blog

Do you want to learn more about what is happening in fraud today?  Click 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.

paul@mccormackwrites.com

Dishonor among thieves

If you believe Diana L. Farmer-Forston, since her early childhood life has been a struggle. But in many respects, her struggles are just beginning. Diana was recently sentenced to two years in prison for embezzling $567,000 from her employer, Bennett and Zydron, a Virginia Beach law firm. In an interesting twist, Diana ended up being scammed out of $300,000 of the fraud proceeds when she agreed to lend a co-worker money to cover expenses associated with their cancer treatment. Allegedly, Diana made her coworker sign a promissory note with a monthly interest rate of 4.5%. Thankfully, the coworker is cancer free. In fact, they never had cancer in the first place.

Hired by the law firm in 2005, Diana didn’t launch her fraud career until 2007. What happened between 2005 and 2007? Did Diana’s struggles from her childhood come back to haunt her? We do know from court filings that her husband of 25 years announced in 1999 that he had decided to undergo a sex change operation. Their marriage ended shortly thereafter. That revelation surely had an impact on Diana, but did it force her to commit fraud seven years later?

Here’s a hint: In many cases, you’ll never figured our exactly what drove an employee to commit fraud.

In Diana’s case, it would likely require extensive therapy to truly undercover the root cause. Diana’s attorney claims that she has struggled with depression and other undisclosed mental health issues since her childhood. He also states that Diana was also around physical, sexual and emotional abuse while growing up. She has apparently had a very difficult journey to date, but her struggles started long before she joined the law firm.

As an employer, you have to focus on what you can control. Certainly, before hiring a new employee, perform background checks, conduct a rigorous interview process and call references. Whether the employee experienced abuse as Diana apparently did it is legally, ethically and morally out of scope during the interview process. Remember, you can’t control what has already happened…

You can control what happens once the employee sets foot in the office. Once they join the organization, make sure that you don’t send messages that help the new employee rationalize that committing fraud is “ok”. Fraud prevention essentially begins during the interview process and continues throughout the employee’s tenure. Assuming that you have not hired an employee that is already an accomplished fraudster, your company has ample opportunity to prevent from fraud happening. I’ll detail many of the tactics you can use to build a culture that prevents fraud in my next post. This post hopefully lays the groundwork.

Bottom line: You can prevent fraud if you focus on what you can directly control. The employee already has ‘baggage’ that they bring to the table. You can’t control how much, or what it contains. You can control how your organization is positioned to prevent and detect fraud. There are no “fool-proof” approaches, but you have far more power than you realize

Learn more about Diana’s case 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.

paul@mccormackwrites.com