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Workplace Fraud Seminar

November 30, 2011
By Bendix Anderson

Melissa King plead guilty in Manhattan federal court October 21 to embezzling from “the Sandhogs Union,” Local 147 of the Laborers International Union of North America. However, she denies stealing the full $42 million claimed by prosecutors. “I plead guilty, but I don’t plead guilty to millions of dollars,” she told the Court.

Among other purchases, from 2002 to 2008 King allegedly used at least $5.5 million of her stolen cash to buy, maintain and transport horses; at least $1 million to buy antique jewelry and $25,000 a month to pay the rent on a Park Avenue apartment.

Her story was just one of many the cases shared by fraud prevention experts at the “Workplace Fraud Seminar” November 18. First Trade Union Bank and Certified Public Accounting Firm of Armao, Costa and Ricciardi organized the event, held at the Nassau County Bar Association in Mineola, N.Y. Experts shared case studies, recent research and advice and how to unions can keep the funds entrusted to them safe from fraud.

The numbers are shocking: An afflicted organization typically loses 5 percent of its revenue from fraud annually, according to a 2010 analysis by the Association of Certified Fraud Examiners of more than 1800 cases of fraud reported by Certified Fraud Examiners between January 2008 and December 2009. Smaller businesses are disproportionately affected because they often lack the resources to address the issue.

Here are some best practices from the seminar:

  •    Personally receive monthly bank statement and canceled checks directly from the bank unopened.
  •    Personally scan the canceled checks, front and back, checking the check numbers, payees, signatures and endorsements
  •    Have someone other than the person preparing the books of original entery prepare the monthly bank reconciliations
  •    Have someone other than the person who opens the mail prepare the bank deposits.
  •    Personally receive all correspondence from taxing authorities unopened.
  •    Have a Fidelity Insurance Policy covering your employees.
  •    Have someone perform your office employees’ jobs for them when they are on vacation.
  •    Receive checks for signature along with the invoices that you are paying.
  •    Have invoices stamped or canceled when they are paid a filed away for future reference.
  •    Personally review you payroll list, vendor list and customer list.

Signs of Trouble:

  •    Is the person in charge of your office and the books always the first one into the office and the last one to leave?
  •    Does your office manager and or bookkeeper neglect to take vacations because they are too busy?
  •    Do you use a signature stamp to sign checks?
  •    Do you sign blank checks in advance?


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