Wednesday, October 22, 2014

Former Principal Of NH Parochial School Pleads Guilty To Embezzling $152K

From the New Hampshire Union Leader on 10/20/2014:

The former principal of a private school in Litchfield intends to plead guilty to embezzling more than $150,000 from the Catholic school, and may spend up to 13 years in prison.

Shannon L. Dannible, 37, of Amesbury, Mass., is expected to plead guilty to a felony count of unauthorized taking or transfer for stealing $152,468 from St. Francis of Assisi School over four years.
According to court documents, Dannible obtained funds from the school’s bank accounts by issuing herself checks, withdrawing cash for herself and directing school funds to pay off personal debts.

In May 2011 — about two years prior to Dannible’s arrest for embezzling — the Catholic Diocese of Manchester was holding frequent meetings with parishioners and parents of St. Francis to try to resolve budget concerns.

While there was no talk of the school closing, Dannible told the New Hampshire Union Leader at the time that ideas on how to generate more income and revenue for the school were addressed at meetings, as well as how to reduce the school’s debt.
A few months later — before the embezzling was discovered — tuition rates were increased at the school.

Dannible, who was indicted for the thefts last year, will be back in court on Nov. 12 for a plea and sentencing hearing.

She has reached a plea deal with prosecutors that will, if approved by Judge Jacalyn Colburn next month, order her to spend five to 15 years in prison for the offense, with 2½ years of the minimum sentence suspended.
In addition to the prison time, Dannible will have to pay full restitution to the school, with an initial payment of $10,000 to be handed over at the time of the sentencing, according to the terms of the plea on file at Hillsborough County Superior Court in Nashua.
If restitution payments are made in an appropriate time frame, the maximum 15-year prison sentence will be reduced to as low as 11 years, court documents say.

Without the plea deal, Dannible would have faced trial and may have been ordered to spend 7½ to 15 years in prison.

She will also be required to participate in counseling or rehabilitation, and provide a yearly copy of all tax filings with a probation officer.

Former Funeral Director In Mass Charged With Embezzling $150K From Clients (not to mention improperly storing bodies...)

From the Associated Press on 10/20/2014:

A former Boston funeral director charged with improperly storing bodies and stealing thousands of dollars in funeral pre-payments has been ordered held on $50,000 bail.

Joseph O'Donnell pleaded not guilty in Suffolk Superior Court on Monday.
 
He's charged with stealing nearly $150,000 from clients and keeping the remains of 12 people at a storage facility where they were found in July. He faces a 278-count indictment including multiple counts of larceny, forgery, embezzlement and improperly disposing of human remains.
 
O'Donnell's attorney says he doesn't acknowledge wrongdoing and would like to be out of jail so he could begin repaying former clients. He's been in custody since he pleaded not guilty in April to stealing $12,000 in funeral prepayments.
 
Prosecutors say O'Donnell's license expired in 2009 but he continued doing business until 2013

Political Consultant Charged With Embezzling $1.8 Million

From the Austin American Statesman on 10/20/2014:

Austin Republican political consultant Kenneth “Buddy” Barfield is due in court Tuesday after federal authorities on Friday charged him with embezzling nearly $1.8 million from the campaign of Lt. Gov. David Dewhurst.

Barfield is to plead guilty to wire fraud, making a false tax return and embezzlement of campaign funds, according to a plea agreement filed Friday in the U.S. Western District of Texas. He faces up to 20 years in prison on the first offense and up to three and five years, respectively, on the final counts.

Barfield admits he stole the funds from 2008 through 2012 while working as a campaign advisor for the David Dewhurst Committee and Dewhurst for Texas, according to the plea bargain he signed Oct. 6. He used the money for his own expenses, such as his home mortgage, school tuition for his children, personal investments and other living costs, the document states.

Authorities said Barfield would submit false and inflated invoices to a campaign finance bookkeeper, who would then issue payments via checks or electronic funds and wire transfers to bank accounts under Barfield’s name or that of his companies, the Alexander Group and Alexander Group Consulting. In October 2009, he reported zero taxable income on a federal tax filing form, when the correct amount should have been nearly $583,000, according to IRS criminal investigators.

Barfield has been under scrutiny since December 2012 when up to $1.3 million was found to have disappeared from Dewhurst’s campaign and he was accused of falsifying documents to the Texas Ethics Commission. He has had financial troubles since at least 2006 and signed over his 6,000-square-foot home in West Austin to Dewhurst as part of a settlement agreement reached in a civil lawsuit in November, according to Travis County court records.

Requests for comment to his lawyer, Gerry Morris, were not immediately returned Monday.

For background on the case, read here.

Tuesday, October 21, 2014

Great Media Series On Embezzlement

Kathy Jessup, a local journalist in Michigan, has begun an excellent six part series of articles on embezzlement.  They are terrific exposes on this topic and I encourage all of my readers to check it out.  The first two articles have been published and can be viewed here and here

Thanks, Kathy! for your first rate work.

Monday, October 20, 2014

Michigan Woman Accused Of Embezzling $460K From Nursing Home Residents

From www.mlive.com on 10/17/2014:

LAPEER, MI – The Lapeer County woman accused of embezzling more than $460,000 from residents at a Rochester Hills nursing home has been arraigned and is free on bond.

Tina Marie Binkley, 44, of Almont, was arraigned Thursday, Oct. 16, according to the Attorney General's Office. The charges include two counts of embezzlement from a vulnerable adult of $100,000 or more, with each charge punishable by up to 20 years in prison and a $50,000 fine or three times value of the money or property involved, whichever is greater.

Oakland County District Court Judge Julie Nicholson set Binkley's bond at $25,000 cash or surety, which she posted on Friday, Oct. 17, according to the Attorney General's Office.

Investigators allege money was taken from 136 residents from the Boulevard Health Center.

Authorities said Binkley was fired in April 2013 from her job as the facility's business manager after allegedly failing to follow standard financial reporting procedures.

The case was referred to the Attorney General's Office after an accountant hired by the facility noticed bookkeeping discrepancies. Binkley allegedly had access to a general account for facility income and day-to-day expense, as well as a trust fund.

Binkley was arrested Thursday, Oct. 16, by special agents from the Department of Attorney General after an investigation by the state Attorney General's Health Care Fraud Division.

Binkley is scheduled to be in court for a pre-exam conference on Tuesday, Oct. 21, at 10 a.m. and will be assigned a court-appointed attorney.

Municipal Clerk In Kansas Sentenced In $190K Embezzlement Case

From the Topeka Capital Journal on 10/18/2014:

A federal judge on Friday sentenced the former Auburn clerk to 12 months and one day of imprisonment after pleading guilty to felony embezzlement.

Alice Riley, 61, was ordered to pay to the city of Auburn full restitution in the amount of $189,594.05 and to serve one year of supervised release after her imprisonment. Chief Judge J. Thomas Marten also issued a special condition to her release: a prohibition on gambling.

As many as five family members and friends came out for Riley’s hearing, including her sister, Grace Bowser, who serves as city clerk of Mayetta in Jackson County. Those there for support could be seen wiping away tears during the proceeding.

“I know that I've done something awful,” Riley said when the judge asked for a comment. The rest of her statement was inaudible from the back of the courtroom.
Marten ordered Riley to self-surrender after Jan. 1, 2015 — so she can have some time to pull things together and get through the holiday season, the judge said.

While incarcerated, Riley will have to make monthly restitution payments to Auburn equal to no less than 10 percent of the funds in her inmate account. When she gets out, Marten said, 5 percent of her monthly income will go toward paying back the city of Auburn.

Riley intends to pay back all the money, said her defense attorney, J. Richard Lake. In advocating for a reduced prison sentence, he said Riley “would like to begin that as soon as possible.”

“In your case, Miss Riley, you are going to have to do some time,” Marten said. “Twelve months and a day might seem like a slap on the hands to some, but it's not.”

The extra day allows Riley to be let out early on good behavior, which, Marten said, likely would reduce her sentence to 10 months.

Riley in July pleaded guilty to a federal embezzlement charge. She resigned Feb. 13 amid questions from the Auburn City Council and multiple-year audits into the city’s finances. She served in the appointed position for 31 years.

The federal government alleges Riley, between 2009 and 2014, embezzled at least $186,000 from Auburn, where she managed payroll and other accounts as the city clerk. Prosecutors say Riley issued duplicate payroll checks to herself, as well as other unauthorized checks she deposited into her personal accounts. She attempted to cover up the embezzlement by creating false entries in the city’s books and bank statements.

Auburn Councilwoman Micki Bicknell was present for Friday’s sentencing, but declined to comment given the ongoing civil suit the city is pursuing against Riley in Shawnee County District Court. The case still is in the pretrial phase, said Auburn’s attorney Todd Luckman. However, with the sentencing and guilty plea in the federal case, he doesn’t imagine it will be fought to the end.
Riley's guilty plea can be used against her in the civil suit, and prevents her from filing an appeal in federal court.

The city’s civil case claims Riley embezzled more than $196,000, so it will be required to prove that figure, Luckman said.

...

Possible $700K Embezzlement Investigated In Oklahoma

From KJRH Ch. 2 on 10/17/2014:

MUSKOGEE, Okla. - Police are currently investigating reports of possible embezzlement from the Muskogee Children’s Clinic.

According to Muskogee police, funds in excess of $700,000 have been reported missing from the clinic, located at 3101 Chandler Road.

Clinic staff called police to report the crime Friday.

Police say the funds were discovered missing during an inquiry by the Internal Revenue Service. They were confirmed when an independent auditor was hired by the clinic.

The IRS said payroll taxes haven't been paid since the clinic hired an independent auditor.

Police say the man who worked on finances for the Muskogee Children's Clinic funneled money from the business into his personal account.


Update from the Muskogee Phoenix on 10/20/2014:

A Muskogee medical clinic filed a civil suit Monday seeking damages resulting from the alleged embezzlement of $791,959 by a company that provided staffing and management services.

Office Medic and its principal owner, David Edwards, were named as defendants in the lawsuit. The case was filed Monday in Muskogee County District Court by Childrens Clinic and the four physicians who practice at the clinic.

The doctors allege in their petition that Edwards obtained access to funds belonging to the clinic during the course of his contractual relationship with the physicians. The petition alleges the funds embezzled or diverted by Edwards to entities in which is said to have an interest exceeded what his company was owed for staffing and services provided.
The alleged diversion or wrongful transfer of funds was discovered Sept. 11. According to the petition, the amount of money missing was calculated by a forensic audit conducted subsequently to the discovery of the “wrongful conversion” of funds.

New Mexico Couple Sentenced In $874K Embezzlement Case

From the Associated Press on 10/20/2014:

A former New Mexico couple has been sentenced to five years of supervisory probation after pleading guilty to embezzlement and tax evasion charges in a case that involved the theft of hundreds of thousands of dollars from an Albuquerque family business.

State authorities say 37-year-old Antoinette Greenlee and her husband, 48-year-old James Greenlee Jr., were sentenced last week.

In addition to probation, they must pay restitution to the woman's father for embezzling money from his construction materials business.

A criminal complaint says the couple stole $874,000 from Post-Tensioning Reinforcing Services during an 18-month period in 2010 and 2011 while they worked for the company.

The Greenlees, who now live in Texas and operate their own steel business, also failed to pay state income taxes on the embezzled income.

Former Receptionist For Medical Practice In New Jersey Allegedly Embezzled $446K

From the Associated Press on 10/20/2014:

Federal prosecutors say a woman has admitted embezzling more than $446,000 from the northern New Jersey medical practice where she formerly worked as a receptionist.

They also say 53-year-old Gwendolyn Muller used fraudulent credit cards to obtain more than $200,000 in goods and services and evaded taxes on that illegal income.

Muller, who formerly lived in Kearny, pleaded guilty Monday to embezzlement, credit card fraud and tax evasion charges. She faces up to 25 years in prison when she's sentenced Feb. 19 and will forfeit $556,000 to the United States government.

From 2007 through 2011, prosecutors say Muller used her position to take, conceal and cash more than $446,000 in checks paid by insurance companies to the medical practice for services to patients.

Monday, October 6, 2014

FraudTalk Interview With Terrorism & Global Security Expert Brian Michael Jenkins

Do not miss today's episode of FraudTalk on the Voice America network (http://www.voiceamerica.com/show/2349/fraudtalk).  My very special guest will be Brian Jenkins, a world renowned expert on terrorism and global security issues.  We will be discussing ISIS, al-Qaeda, the Middle East, Ebola, Russia, and much more.  Brian is Senior Advisor to the President of the RAND Corporation.  Read his bio here: http://www.rand.org/about/people/j/jenkins_brian_michael.html

Join me live at 10 a.m. EST or listen to us at your leisure to the audio file.

Here is the link to the audiofile: http://www.voiceamerica.com/episode/80844/global-security-and-risks-with-brian-michael-jenkins

Thursday, October 2, 2014

Business Journal: Embezzlement Survival Guide

From the Central Valley Business Journal (10/1/2014):

STOCKTON — Dealing with the possibility of betrayal by employees is one of the hardest aspects of owning and operating a business. Still, with the growing number of embezzlement cases both in the Central Valley and across the nation, it’s something no business owner can ignore.

“The owner says, ‘We treated this person like family. We couldn’t imagine them doing something like this,’” said Chris Marquet, CEO of Marquet International, a boutique investigative firm. “The owners need to do the right thing and take care of their fiduciary duties. Many entrepreneurs love the creating, social and business aspects of their jobs. A lot don’t care about the back end, the office aspects of it.”

Ignoring those “office aspects” can be costly. In two recent Stockton-area cases, employees were accused of stealing more three quarters of a million dollars from their employers.
In January 2011, Brenda Kemper pleaded guilty and was sentenced to three years in prison for stealing nearly $500,000 from Big Valley Aviation. The 59-year-old bookkeeper was a longtime, respected employee of the firm.

Sawtantar Singh Jaspal, a manager at hat manufacturer Dorfman Pacific Company, was arrested in June at his home in Tracy, accused of embezzling $277,000 from the company. In September, Jaspal entered guilty pleas to embezzlement and tax evasion and was sentenced to five years in prison.

These are just two of the most recent in what has been an uptick in embezzlement cases across the country.

“The first thing to understand is this phenomena is happening all the time, all over the country,” said Marquet. “Employers really have to keep on eye on things.”
One of the biggest traps that employers fall into is placing too much trust in a single employee. Bakul Patel, Dorfman Pacific Company’s chief financial officer, found that out the hard way when the company discovered irregularities with Japsal’s work.

“You give managers a certain level of trust,” Patel said. “A manager can create a fictitious business, and he then has the power to pay those businesses.”

That is a fairly common scam used by embezzlers, according to San Joaquin County Deputy District Attorney Stephen Taylor. Taylor prosecutes many of the embezzlement cases in the county and has seen an increase in cases since the recession.

“I don’t know that there are more crimes being committed now,” he said. “When you have harder economic times, businesses are more conscious of where every dollar is going. More of these crimes are discovered. You look back in history, and you see the same thing during the depression in the ‘30s.”

Marquet International released a report in 2013 that studied the trend nationwide. The average embezzlement scheme went on for 4.7 years before being discovered and the median loss for companies was $340,000. The average prison sentence for a convicted embezzler was 49 months.
Marquet said that tough economic times can also prompt people to do things they wouldn’t otherwise do.

“Many times, these people led a regular life and any number of issues led them to just say, ‘I’ll borrow this money and pay it back,’” Marquet said. “Well, they can’t pay it back, and it just keeps going on. You have people that are faced with losing a house or maybe a spouse’s business is suffering, and they do things they might not otherwise.”

Another contributing factor that Taylor often sees is compulsive behaviors that contribute to the thefts. Nearly a third of cases nationwide involved perpetrators who had gambling issues.
“People have drug or gambling problems that they fund this way,” said Taylor. “We’ve had several cases where people used the money for gastric bypass surgery.”

So what are business owners to do? Investigators and police agree that monitoring employees’ financial activities is the key to uncovering and preventing such crimes.

“These are not difficult crimes to uncover,” said Taylor. “They are all in writing.”

That means keeping track of where expenses are going. Employers need to make certain the vendors and employees being paid really exist. That can be a challenge for smaller businesses that lack the employees to doublecheck the books.

“Our accountant came in and helped us put in some additional processes,” said Dorfman Pacific’s Patel. “Now we have dual signing of checks instead of just one manager signing.”

Doing extensive background checks and knowing the history of those in charge of a company’s financial dealings is also vital.

“We had a case where a lawyer was ripped off by an eighth grade dropout,” said Taylor. “We have had companies that have hired people right out of drug rehab and put them in charge of large sums of money.”

Getting stolen money back from an alleged embezzler is often impossible. Embezzlers have often already spent the money that they stole from an employer by the time they’re caught.

“It’s not like they usually have the money laying around,” said Taylor. “They have usually spent that money on trips, or gambling or items they wanted.”

That is one reason that protecting one’s business beforehand is so important. Getting various forms of insurance is an important and relatively inexpensive way for businesses to protect themselves. Dorfman Pacific Company had such policy which made up for the majority of the loss.
“Our insurance paid us back for most of the loss,” said Dorfman’s Patel.

A fidelity bond is a form of insurance protection that covers policyholders for losses they incur as a result of fraudulent acts by specified individuals.

While called bonds, these obligations to protect an employer from employee-dishonesty losses are similar to insurance policies in most respects. A $5,000 bond for a company with five employees or fewer can cost as little as $100 per year. A $25,000 bond for the same employer can cost around $170 per year. The larger policies are determined by the employers size, and industry but can still be a company-saving investment.

“We recommend these to our business clients,” said Rick Sanguinetti, insurance agent and customer service representative at Sanguinetti Insurance. “The bond will cover whatever you amount you choose. The only hangup is there is a conviction clause in most cases.”

Many insurance policies have endorsements that also cover these kinds of crimes, but business people need to check to make sure the policies cover embezzlement.

One of the best things business owners can do is to help prevent theft before it ever occurs. Keeping track of exactly what comes in the mail each day may not be the most exciting part of running a business, but it can save owners a lot of headaches, according to area insurance and law enforcement officials.

“Creating an environment where this kind of crime isn’t easy to occur is a big step in preventing losses for businesses.” said Taylor.

Monday, September 29, 2014

Fraud Talk Interview with Cheryl Obermiller - Small Business Embezzlement Survivor

Check out today's FraudTalk interview with Cheryl Obermiller, a small businesswomen and major embezzlement survivor.  Cheryl is in the process of completing her book, My Accountant’s Drawers ~ the Small Business Owner’s Guide to Outwitting Embezzlers, Thieves and Scallywags, due to be published in late 2014.  Her story is a compelling one that every small business owner should hear.  In fact, when her book comes out - it should be required reading at any credible business school.  Her lessons are not taught there these days and, with the proliferation of embezzlement schemes in today's business world, they should be.

Join me Monday's at 10 a.m. EST for Fraud Talk on the Voice America online platform.  My host page is here

Thursday, September 25, 2014

Report: Lawsuit claims ex-worker stole $2 million from PBS

From the Boston Globe 9/25/14:
 
Lawsuit claims ex-worker stole $2 million from PBS

By Deirdre Fernandes
Boston Globe
September 25, 2014

The former finance director of PBS’s video distribution arm in Boston is alleged to have stolen more than $2 million from the public broadcasting network over the course of about four years, according to court records.

The alleged embezzlement came to light in a lawsuit filed Monday by PBS’s insurance company against Citizens Bank in US District Court in Boston. The suit alleges that Christopher C. Morris, who worked for a PBS subsidiary that sells DVDs and video-on-demand of popular shows, deposited more than 200 checks meant for PBS in his own private account, and it contends that Citizens should have been aware of the fraud.

Federal law enforcement officials are investigating, according to the PBS subsidiary, Public Media Distribution. No charges have been brought in the case, according to court records.

The office of US Attorney Carmen M. Ortiz declined to comment, as did Citizens Bank. Morris, whose last known address was in Chelsea, could not be reached.

In a statement, Public Media Distribution, said, “There is current law enforcement activity regarding this issue and we cannot comment at this time.”

 PBS, which stands for Public Broadcasting Service, and its state affiliates are nonprofits that rely on taxpayer funding and the goodwill and trust of individual and corporate donors. But the network also has some money-making entities, such as Public Media Distribution, a joint venture between PBS and Boston public television’s WGBH Educational Foundation.

Public Media Distribution generated $48.7 million in profits in 2012, according to the latest federal tax filings.

Morris worked for the distribution company until 2012. Company officials declined to provide more specific information about when Morris was hired and the circumstances of his departure. Morris sold his Chelsea condominium in early 2013 for $312,000, according to real estate records.

Morris deposited 202 checks made out to PBS totaling $2.1 million into his own account starting in 2008 continuing until at least 2012, according to the lawsuit filed by Federal Insurance Company, a New Jersey firm that covers PBS and its subsidiaries. The checks were not from the network’s fund drives but from consumers and companies buying PBS and WGBH programming such as “Downton Abbey,” the Civil War series by documentary filmmaker Ken Burns, and the children’s program, “Arthur.”

The checks should have been deposited into PBS’s Bank of America account. But the lawsuit alleges Morris forged a PBS endorsement on the checks and presented the checks to Citizens for deposit into his own account

“Citizens Bank did not conduct any reasonable inquiry or question the appropriateness of the deposits when the checks were presented to Citizens Bank and accepted,” Federal Insurance said in the lawsuit.

Federal Insurance, which covered PBS for employee theft, paid the nonprofit $2 million, the limit of the policy’s liability. The insurer is seeking to recover that money from Citizens, plus legal and other costs.

Federal Insurance on Wednesday filed a motion asking the court to seal the original complaint and allow Federal Insurance to submit a redacted version concealing the name of the former employee and PBS, according to court records.

WGBH was the victim of employee theft a few years ago. In 2010, a former accounting manager at WGBH-TV pleaded guilty to stealing nearly $500,000 from the station over nine years.

Such thefts deliver a blow to the reputations of charities, because they are built on trust and the expectation that the money they receive is used appropriately, said Chris Marquet, the owner of Marquet International, a Boston investigative firm that publishes an annual report on white-collarfraud.

“It’s never a good thing,” Marquet said. “They are probably no doubt going to have show the world that they have safeguards in place.”

Thefts from charitable organizations are fairly common, usually because they do not have the resources and structure for strict oversight, Marquet said. One in six major embezzlement cases in 2012 involved charities or religious organizations, according to Marquet’s study.

Public Media Distribution is set up as separate company from PBS and WGBH, with its own leadership and employees. But executives from WGBH, which owns a 40 percent stake in the distribution company, sit on its board of directors.

Monday, August 18, 2014

Fraud of the Week: Texas Couple Charged With Embezzling $2.3 Million

From the CW on 8/8/14:

A Lubbock couple has been charged with embezzling $2.3 million from a Lubbock asphalt company.

Sargent Jason Lewis said 54-year-old Paula Whitley and her husband, 60-year-old Robert Whitley were arrested and charged with theft of $200,000 or more after the owners of Armor Asphalt went to LPD, concerned about where their money was going. Their business has been devastated by the loss of funds.

Lewis said Detective Laz Walck and his team of investigators are to thank for putting the case together.

"After going through different computers, obviously paper files, computer files, lots of different evidence. They were able to determine that more than $2 million had actually been embezzled," Lewis said.

The investigation is ongoing. It is unclear if other businesses have been targeted.

Monday, August 11, 2014

Join Me Today For A Fraud Talk Discussion On Ponzi Schemes

Join me this morning at 10 a.m. EST for another episode of Fraud Talk on the Voice America radio network (http://www.voiceamerica.com/show/2349/fraudtalk).  My guest this morning will be Jordan Maglich, the creator of the PonziTracker blog and the Ponzi Database.  The discussion will be all about Ponzi Schemes as you can imagine.  Listen live or at your leisure to the audio file.  We hope you join us.

Monday, August 4, 2014

Join Me Today For Fraud Talk Radio On Voice America Network

Join me this morning live at 10a.m. EST for Fraud Talk radio program on the Voice America network (http://www.voiceamerica.com/show/2349/fraudtalk).  My special guest this week is Gary Zeune of The Pros & Cons speakers bureau.   Listen live and call in to join the discussion at (866) 472-5790.  Otherwise, listen to the podcast at your leisure.