Anyone who frequents the News section of The Accounts Payable Channel knows that there is never a shortage of fraud stories. As long as there are opportunities to exploit weak financial internal controls, people are going to take advantage of them.
I've read quite a few fraud stories during the past few weeks. What makes these stories particularly interesting is that they show the wide range of positions fraudsters can hold in their organizations. A fraud perpetrator can be anyone from an executive with a six-figure salary to a small town government official.
Accountant has a Taste for the Finer Things
A recent article posted on the New York Times describes how a former vice president of Citigroup's internal treasury finance department allegedly stole $19.2 million from the company.
The accountant, Gary Foster, who earned $100,000 a year with Citi, is accused of adding false contract numbers to the remittance information of wire transfers and sending the money to his own accounts. He allegedly committed the fraudulent transfers between July and December 2010.
Police revealed to the press some of the more extravagant possessions found in Foster's apartment after the arrest. Inside his $3 million New Jersey home he had a home theater system worth $500,000 and even bathroom mirrors that double as touch-enabled video monitors. Not to mention the fact that he owned a Maserati and a BMW. Unfortunately his Ferrari was ordered, but not delivered before his arrest.
Citibank discovered the fraud earlier this year following an audit. This case comes just two years after the bank's internal controls were called into question following the 2008 financial crisis.
See the full story at nytimes.com.
Fraudsters Share Cautionary Tale
In Vermont, a former small town treasurer who was convicted of embezzling $400,000 from the city of Ira, recently spoke to officials in the state capital about the dangers of fraud.
Don Hewitt warned the state that a lack of oversight by elected officials creates an environment for fraud to thrive. This warning came at a training session he held, along with Thomas Hughes, another city official also guilty of stealing from his community, to help governments and nonprofits avoid fraud.
"I could tell within a week or two if the boss was paying attention," Hughes said, according to a report published in the Burlington Free Press. "The very hardest dollar to steal is the first dollar. Doing it once makes it almost 100 percent certain you'll do it again."
Hewitt told the attendees that the best thing they could do to prevent fraud was to check the work of the people they supervise. He added that this does not mean you should not trust your staff, but it is important to "trust, but also verify.
See the full story at burlingtonfreepress.com.
Financial fraud is a real concern for every organization. Staying ahead of the curve means having strong internal controls that include detailed job descriptions and segregation of duties. In addition, find ways to monitor your transactions on an ongoing basis, such as implementing continuous controls monitoring software. If you are not watching your money, chances are that fraudsters are.
