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Checks and balances


Airehead

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Stories like this always make me wonder-- aren't businesses of all sizes supposed to have checks/balances, audits, and financial oversights?  That is a bunch of money for no one to notice.

 

PHELPS, N.Y. (WHEC) — An Ontario County woman was sentenced to two years in prison and must pay $607,672.71 in restitution after she was convicted of wire fraud.

Prosecutors say Karen Owens, 55, of Phelps, worked at Finger Lakes Conveyors, Inc. (FLC) as its Director of Finance from 2003 to 2017 and wrote $750,000 worth of fraudulent checks, which she deposited into accounts belonging to her and her husband.

Prosecutors say she wrote 556 fraudulent checks in total, and recorded them as legitimate businesses expenses in an effort to cover up what she was doing.

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She was probably the only person in accounting and the company never wanted to pay for an independent audit.

My son is a CPA and had been called in on cases where someone finally notices something too late.

He's also helped audit medium sized companies and government entities where the books are such a mess that there is no way to figure out where the money went.

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1 hour ago, Airehead said:

750,000 worth of fraudulent checks, which she deposited into accounts belonging to her and her husband.

That's easy to beat...   $53.7 million embezzlement  

You got to wonder how this could happen....   No one checks anything...    And Dixon is a small town of 15,400 people.  How could this go unnoticed??:blink:

 

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10 minutes ago, Kzoo said:

And she was such a nice person and worked so hard...

We had a payroll supervisor who kept a retired guy on the payroll for 10 years. Switched direct deposit to her bank account . Her husband was killed in a fireworks accident. People assumed she could afford the Cadillac and lake cottage from his life insurance proceeds. 

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1 hour ago, Airehead said:

Stories like this always make me wonder-- aren't businesses of all sizes supposed to have checks/balances, audits, and financial oversights?  That is a bunch of money for no one to notice.

 

PHELPS, N.Y. (WHEC) — An Ontario County woman was sentenced to two years in prison and must pay $607,672.71 in restitution after she was convicted of wire fraud.

Prosecutors say Karen Owens, 55, of Phelps, worked at Finger Lakes Conveyors, Inc. (FLC) as its Director of Finance from 2003 to 2017 and wrote $750,000 worth of fraudulent checks, which she deposited into accounts belonging to her and her husband.

Prosecutors say she wrote 556 fraudulent checks in total, and recorded them as legitimate businesses expenses in an effort to cover up what she was doing.

In a school somewhere a woman was promoted to the position of school bookkeeper to replace the woman before her who was caught with her finger in the cookie jay.  It was a good chunk of change and took years to pay off.  Such a tale could never be made public however with the naming of names.

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21 minutes ago, Bikeguy said:

That's easy to beat...   $53.7 million embezzlement  

You got to wonder how this could happen....   No one checks anything...    And Dixon is a small town of 15,400 people.  How could this go unnoticed??:blink:

 

I remember reading about that one. Didn't she have a fancy horse farm and people assumed that's where she got her money?

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9 minutes ago, maddmaxx said:

In a school somewhere a woman was promoted to the position of school bookkeeper to replace the woman before her who was caught with her finger in the cookie jay.  It was a good chunk of change and took years to pay off.  Such a tale could never be made public however with the naming of names.

My CPA son claims that many such cases are just swept under the rug or never found. He thinks that it is at least a 1 to 5 ratio of convicted to hidden.

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We are publicly traded.  We have to file reviewed financials quarterly and audited financials annually.   I am pretty sure I would get caught if I tried to do something like this.  People are stupid and once you dip your hand in the cookie jar, it is hard not to go back for seconds and thirds and four hundred and seventy fourths!

 

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I thought this was interesting.

 

Thanks to a new paper penned by three researchers based out of the Olin Business School at Washington University in St. Louis, we get to see the adverse effects of mentorship.

“One important thing we show is that people learn from peers,”  Co-author Yijun Chen explained in a statement. “To make sure employees do not learn stealing from their peers, it’s important to influence them in the first few months. If they don’t know what the typical conduct is, but they see their peers steal, they will follow.”

The Influence of Peers in Worker Misconduct: Evidence From Restaurant Theft

Apparently workplace theft is more prevalent than most people know.  The mispractice occurs so frequently in the restaurant industry that coworkers actually plan their stealing days around their peers as to not step on their thieving toes. The authors came to these conclusions by way of seven years worth of data, comprised of 1,049 different locations, in 46 different states. That’s about 5.7 million transactions shared between roughly 83,000 servers.

An analyst of the data suggested workers were especially impressionable in their first five months of employment. Employees that witnessed another employee stealing during this window were more likely to evolve into repeat offenders themselves, though this particular kind of misconduct seems to occur fairly of

ften with or without the presence of predictors. Fifty-six percent of servers reviewed in the database nicked at least once during their tenure.

“It’s not just to catch stealing,” Chan continued. “People will restrain their stealing behavior themselves if they know they are being monitored.”

Easier said than done, unfortunately.  The study highlighted a long list of clever ways employees get away with pocketing cash discreetly. Like “The Ole’ Wagon Wheel” routine.  Let’s say a guy comes in and orders a basket of fries for eight bucks and leaves a 10-dollar bill. When another comes in later and inevitably orders the same thing, you transfer the first charge to this guy’s bill then pocket the difference. This kind of works albeit more clumsily with voided items too.  With no supervision, I imagine it’s quite easy to bill a person, void the item in the POS then just keep the cash all to yourself.

 

 
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4 hours ago, donkpow said:

On the news feed this AM, there was a story about a kid who stole just under $1M in two weeks from a Kroger store. The person in charge of checking this area for fraud was on vacation for that two weeks. :lol:

Yeah, that was here. Didn't hear about the worker on vacay, though. Interesting.

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18 minutes ago, Airehead said:

“One important thing we show is that people learn from peers,”

I knew a guy in high school who worked for the local movie theater.  He let all of his friends in for free unless the manager was in the ticket box with him.  The manager, as was typical for most places that employ teenagers, was not a particularly savvy or experienced guy, and was also prone to keeping daytime hours  - minimal work - and leaving the afternoon and evening - busiest times - up to the normal staff to handle.

In any case, I learned a few things from him about other stuff he and some of his cohorts did.  One, they all let friends in free. Two, when they did collect tickets from legit customers, they kept them and "resold" them to the next paying customers.  Three, and this is where it got gross (but less so to teenage me), they collected the "trash" between shows, and any "good condition" drink cups were REUSED.  Apparently, they had a strict "counting" system for cups, so if you reused cups, you could pocket the difference.  It may have been true for popcorn buckets too, but I am not sure.

Regardless, YUCK.  But also, horrendous management.  I will also say that I worked at a grocery store, and the management all left at like 6pm, and at that point, it was basically 20 teenagers running the store with the one adult - the lead stocker - as the manager.  It was equally horrendous management.  I know one of my best friends once parked his truck in the back, and another buddy loaded about ten or twenty cases of beer into it.  We were 17 at the time, and spring break was coming.  Another friend worked in the pharmacy sales (not drugs, but all the OTC and photos), and he routinely reloaded his walkman/discman with fresh batteries right off the shelf.

What's funny is another high school friend, who worked at the store for a short while before moving on, was busted by the "in store detective" that randomly worked.  He was busted with a ton of condoms. :)  Too funny.

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11 hours ago, JerrySTL said:

He's also helped audit medium sized companies and government entities where the books are such a mess that there is no way to figure out where the money went.

Say, they sound like great places to work!  :whistle:  Jerry, PM me the names of those companies and I'll cut you in for 20%!

 

10 hours ago, JerrySTL said:

My CPA son claims that many such cases are just swept under the rug or never found. He thinks that it is at least a 1 to 5 ratio of convicted to hidden.

Think about that for a couple seconds.  That's WAAAY better odds than winning the lottery.

 

I worked at a research center for a global company that made its initial fortunes in the power producing business.  Every August the company stockroom would be wiped out of pencils, pens, notebooks, paper, rulers, erasers, etc., etc.  Curiously, this mad exodus of stationary supplies never occurred at any other time of the year.  :scratchhead:

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14 minutes ago, Thaddeus Kosciuszko said:

Say, they sound like great places to work!  :whistle:  Jerry, PM me the names of those companies and I'll cut you in for 20%!

 

Think about that for a couple seconds.  That's WAAAY better odds than winning the lottery.

 

I worked for at a research center for a global company that made its initial fortunes in the power producing business.  Every August the company stockroom would be wiped out of pencils, pens, notebooks, paper, rulers, erasers, etc., etc.  Curiously, this mad exodus of stationary supplies never occurred at any other time of the year.  :scratchhead:

Yep.  The company had to lock up the pens and paper and pencils as well.  They also had to lock up the batteries for the meters.  If you wanted new you traded the old for them.

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22 hours ago, Airehead said:

So much dishonesty.

You have  no idea. 

I have literally been in hundreds of small businesses or organizations where their bookkeeping was done with a pencil on looseleaf and knowing money is gone even a hard audit fails to pinpoint exactly where it went.  So sad.

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5 minutes ago, Zephyr said:

You have  no idea. 

I have literally been in hundreds of small businesses or organizations where their bookkeeping was done with a pencil on looseleaf and knowing money is gone even a hard audit fails to pinpoint exactly where it went.  So sad.

When the swim club we were in was falling on hard times, a previous board member turned over the records - in a paper grocery bag.

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36 minutes ago, Zephyr said:

You have  no idea. 

I have literally been in hundreds of small businesses or organizations where their bookkeeping was done with a pencil on looseleaf and knowing money is gone even a hard audit fails to pinpoint exactly where it went.  So sad.

Schools, especially high schools and the like handle lots of cash.  There are car washes and basketball game ticket sales etc.  The accounting really begins after the cash is in the hands of whomever is keeping the books.  That cash is available for skimming before it ever gets turned in.

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7 minutes ago, Square Wheels said:

I'd have no problem at all cheating on my taxes.  The only reason I don't is fear of getting caught.  I've already paid over 7k in taxes from my paycheck this year.  One year the IRS determined we underpaid by 47k, that hurt, a lot.  I won't make this political, but I hate paying taxes.

Taxes make it possible to drive your BMW.  Without taxes you would need an off road vehicle to negotiate Boston's roads.

 

Oh, and thanks for my paycheck this month.

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Just now, maddmaxx said:

Taxes make it possible to drive your BMW.  Without taxes you would need an off road vehicle to negotiate Boston's roads.

When does it end?  I had significant damage to a car once from a pothole in Boston.  Tough luck.  I guess my taxes didn't pay for that.  The roads are barely driveable.

Federal Income
State income
Sales
Gas
Property
All the crazy fees on my cell and internet service

I think more than enough is collected.

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