“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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Is nothing sacred?

I guess not. Eleanor Zapanta allegedly stole $712,000 from the Center for Spiritual Living by, wait for it…writing 250 unauthorized checks.

If your organization uses checks in any way, shape, or form, be very, very careful. Zapanta’s fraud allegedly took place over six years. The church only has an annual budget of $1.2 million. Assuming that the money was stolen at the same rate each year, that’s just under $120,000 per year, or 10% of the annual budget, lost to fraud. Normally, a check fraud starts small and grows until it is discovered, but you get the point – the church lost a huge percentage of its budget from just one fraud scheme.

Given the information shared in the original news story, let’s see what we can learn or infer:

1. Church business managers should never be left to their own devices. Someone in the organization needs to review their work on a regular basis. Fraud thrives on secrecy, lack of oversight, and misplaced trust.

2. Check stock must be locked in a file cabinet or safe when not in use, and it should only be accessible when two individuals are present. I know – it feels like overkill, but consider the losses associated with just the check frauds that I have discussed on this blog. I have many, many more check frauds stored and analyzed in our global case studies database. Check fraud can easily cost well over $500,000, and it is almost 100% avoidable.

3. Don’t rely on your bank to stop embezzlement. Most banks do quite well at detecting and preventing check fraud perpetrated by third parties. Embezzlement, or fraud committed by an insider with access to checks, however, is a different matter. How exactly should a bank uncover an embezzlement if the checks are signed by an authorized signatory?

4. Reconcile your organization’s bank statements on a daily basis. As part of that reconciliation process, ensure that checks issued have the appropriate supporting documentation such as invoices, purchase orders, etc. Checks should also have two signatures when appropriate and pertain to business-related expenses. Checks made out to individuals or payees that appear unfamiliar should receive additional scrutiny.

There are additional lessons learned, but that’s enough to start the ball rolling. What additional measures would you recommend?

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

“I’m as mad as hell, and I’m not going to take this anymore!”

Regular readers of this blog will know that many of the fraud losses I discuss here are largely avoidable. Well, my business partner and I have decided to do something about it. Today, we launched Consult-OnLine, an online platform that provides fraud and intellectual property theft prevention services for small- & medium-sized companies.

Why now, and why online?

Quite simply, the number of fraud cases involving small-and medium-sized companies is staggering. SMEs need help, and they need it fast. They are often overlooked by traditional consulting firms as too small to purchase services – or worse, the companies suffer in silence and do their best to muddle through without the assistance of a fraud expert. The most common reason for not engaging a fraud consultant is cost. Small companies can’t afford to pay the hourly rates and expenses that traditional firms charge. They are also genuinely concerned that once a fraud consultant enters their office, they will have a hard time convincing them to leave.

Believe it or not, other firms have offered professional services online before. One in particular was phenomenally successful, but for a number of reasons they shut the site down. We strongly believe that professional services can be delivered online. In fact, we built an innovative platform to do exactly that.

In addition, over the last three months, we have developed a proprietary database that contains analysis of fraud cases from the news. There are so many lessons to be learned from fraud at other companies. We thought it made sense to build a database that companies could access and use to learn how to avoid a similar fraud at their company. I have over 16 years of fraud experience, yet even I am amazed at the number of six- and seven-figure fraud cases that we have gathered from around the world. We are absolutely convinced that the database will “open eyes” and help companies dramatically reduce their fraud risk.

So, I am mad that small- and medium-sized companies coffers are being raided by fraudsters with impunity. AND my firm is prepared to do something about it.

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