A former payroll manager at The Art Institute of Chicago has been indicted on federal charges of wire and bank fraud. The charges allege that he embezzled more than $2M from the charity over a 12 year period.
His modus operandi was to falsify payroll records to employees with the payments ending up in his personal bank account. In order to avoid detection, after the payments were made, he went back into the system and changed the payments to make them look legitimate.
He now faces up to 30 years in prison if convicted. An arraignment has not been set and the Feds want him held without bond.
Let me leave you with this.
What’s truly sad about this case is how often it happens and how these crimes nearly never get prosecuted. Think about it. When’s the last time you heard about a white collar embezzlement case actually being prosecuted in illinois?
Earlier in my career I was involved in two similar cases. Both were family businesses where the owner knew that someone was stealing. They hired us to figure out who it was, and to provide the evidence necessary to prosecute the crimes.
I was clear in both instances, that I wouldn’t get involved unless the owner was going to press charges. Both owners said that they weren’t spending money for no reason, and that whoever it was belonged in jail.
The first business was a tool and die shop where the brother of the owner handled all of the finances. We discovered that the brother had opened another company and was paying falsified invoices.
When confronted with the evidence, the owner started shaking like a leaf. At the end of the day, he didn’t prosecute his brother. He confronted the brother who started whining about needing the money and didn’t even fire him. The brother probably still works there to this day.
The second case was a delivery business where a niece had been entrusted to handle the books. The owner knew that something was wrong because the finance companies had begun repossessing his vans.
He looked back through the checking account, and saw that payments in the exact amount had been made timely on the financing. When confronted, the niece said she had no idea why they were taking the vans.
We discovered that she had opened a personal checking account at the bank that had provided the financing, and was depositing the checks into her own account rather than paying the notes. She also had a ghost payrollee where she was cashing those checks into another personal account. The niece had then used the money to finance a couple of condos in South Beach, Florida, that she was renting out to vacationers.
When we provided the evidence to the owner, the same thing happened. Absolutely nothing. The only difference this time was that the owner popped open a beer in the middle of the meeting.
In both cases it was a family member who justified the thefts in their own minds by saying that they “deserved the money for all of their hard work.”. Interestingly enough, both cases had begun with a simple mistake.
In the first instance the brother overpaid a vendor by several thousand dollars. When the error wasn’t caught, he came up with his scheme to embezzle.
In the second, the niece already had an existing bank account when the company arranged financing at the bank for one of their vans. She mailed in a monthly payment, and the bank made the mistake of depositing the check into her account rather than crediting it toward the note.
Neither of the thieves ever did a day.
These are cautionary tales that all entrepreneurs should study. If you don’t think it can happen to you, think again.
Count your own money. Do routine spot checks that are completely unannounced. If someone else has the ability to sign your company checks, make sure the payments require approval. Don’t be the fool who trusts implicitly.
Also, please don’t think that any outside accountant in the normal process of preparing financial statements, would be able to detect this type of fraud. How would we ever know exactly what companies deserve a payment? How would we know who’s on the payroll and who isn’t?
One other thing. If you think this is happening to you, please don’t call, asking if I’ll get involved in the case. I’ve never seen one of these prosecuted.
I’m here to help entrepreneurs, not hurt them. I’m not going to charge anyone a bunch of money so they can look at me and say, “Oh well.”
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
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