Tuesday, November 26, 2013

Here We Go Again - Md. Woman Accused of Embezzling $5.1 Million

This one made the front page of the Washington Post (November 25, 2013) and ties in with the recent blog post on Fraud in Non Profit organizations. Key takeaways from this case:
  • Employee registered trade names and opened bank account that closely resembled legitimate vendors of the association
  • Employee had ability to generate false invoices and approved them for payment (inadequate segregation of duties)
  • When the checks were prepared she had them returned to her rather than sending them to the vendors
  • The employee had worked for the association for more than 10 years (long time trusted employee)
  • Started small with submitting false bills for registration fees for conferences (T&E fraud)
  • Well respected in the community by donating wedding gowns to military brides
This is a classic case of fraud with all the earmarks of other schemes employed by multitudes of other fraudsters. Clearly there is not much new in fraud schemes and the continued ignorance and avoidance by managers contributes to these situations. As long as managers do not take a proactive approach in detecting and preventing fraud by educating all employees, enforcing a zero tolerance policy, and accepting their management responsibility for establishing internal controls, fraud will continue unabated. 

Jim Kaplan
President and CEO 
AuditNet LLC


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