June 22, 2018

Suspect Someone of Fraud? Give Them a Promotion

suspect fraud promotion

The trick to fraud is maintaining control. If you’re siphoning company funds into a bank account that you own through a dummy vendor, it’s key that you’re the person who approves those transactions and it’s even ideal if you can literally or figuratively cut the check. Yes, those are atrocious internal controls, but as we’ve documented on this site many, many times, lots of businesses have atrocious internal controls. Also, it helps if management is clueless.

Anyway, if you’re a business owner or manager and you have the slightest inkling that something untoward is going on in your accounting department, try this: Promote your prime suspect and reassign all their responsibilities to someone else.

This story from the Deseret News reports on the allegations against Daniel Scott Richardson, who is accused of swiping more than $1 million from his former employer, Pegus Research Inc., and includes how the jig was upped:

From about April 2013 through December 2016, prosecutors say Richardson made “180 unauthorized transactions totaling just under $1.3 million.”

Some of the items Richardson purchased using his company’s money included a Hawaiian vacation; two Lincoln SUVs for more than $50,000; hotel stays; groceries; tens of thousands of dollars of airline tickets from Delta, including trips to London, Amsterdam and Australia; European hotel stays; $10,000 at Pottery Barn; and thousands of dollars of purchases from Apple and Amazon, the charges state.

The fraud was discovered by the person who took Richardson’s position after Richardson was promoted to senior accountant, according to the charges. He was fired on Dec. 5, 2016.

What’s not clear is if Pegus thought Richardson was doing a great job or if they got wind of his globetrotting or his spending sprees at Pottery Barn and wanted to flush out their suspicions. If it’s the latter, then good for them. If it’s the former, well, then catching a fraudster by dumb luck works too.

[Deseret News]

Image: iStock/AntonioGuillem

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SHOCKER: Doesn’t Appear that Stanford Auditors were Doing Any Auditing

allen-stanford_1018295c.jpgLast week’s indictment of Allen Stanford has brought up the always popular question when fraud, occurs: “Who are the auditors that were asleep at the wheel of this disaster?”
Well, in this case, the auditors were a local UK two-person shop, CAS Hewlett, which must be Queen’s English for Friehling & Horowitz.
It doesn’t appear that CAS Hewlett has a website, but they’ve been doing the Stanford “audits” for at least 10 years, so obv they’re legit. PwC and KPMG both have offices on Antigua but Stanford preferred to stay with its “trusted firm”. Totally understandable.
And the best part? The founder of the firm, Charlesworth “Shelly” Hewlett died in January, approximately a month before the story broke on the Ponz de Stanford.
This all adds up to who-the-fuck-knows if audits were even occurring and for us to speculate if Shelly needed to get got because Stan knew that the poo and fan were coming together. Just sayin’.

New Bail Hearing for Stanford Set for Monday Because He Just Might Split

Stan the Man will spend the weekend pumping iron in a Houston jail because all signs are kinda, sorta pointing to the possibility of him going on the lam after a judge granted the silver medalist in the Ponzi competition a measly $500,000 bail.
Stanford’s attorney called bullshit because “he had already shown the financier was no flight threat.”
Judge David Hittner didn’t buy it and remanded Stan to jail until Monday based on the evidence presented by prosecutors:

testimony from a pilot who flew Mr. Stanford to Libya and Switzerland before government officials raided his Houston offices; testimony from a friend of Mr. Stanford’s daughter who gave him $36,000 in cash, and claims that $100 million was withdrawn from a Swiss bank account Mr. Stanford controlled

C’mon, your honor, that’s just walking around money! My client can’t be expected to strut around without serious money on hand!

New Bail Hearing Set for Stanford
[WSJ]

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