Audacity_Module3Case
The audacity of greed, Gen-X style
Employee embezzlement’s dueling divas
Annette Simmons-Brown, CFE
May/June 2014
Case in Point: Case history applications
In my earlier Fraud Magazine Case in Point, "Fluffie the Bank Account Slayer" (January/Fe
uary 2014), I
chronicled the adventures of a classic paperhanger whose expensive, girly narcissism cost hundreds of individuals
and businesses more than $430,000 in 3½ years and whose criminal case cost me — a paralegal CFE with a county
attorney's office — an equal amount of i
itation.
In subsequent cases, I've learned — much to my dismay — that Fluffie wasn't unique in her felony-diva vibe; in
fact, she was a role model of sorts for the generations that follow her. Shortly before her case was concluded, I
found myself shepherding not one but two employee embezzlement cases whose details — including the Fluffie
Quotient — were so similar that at times I was in great danger of mixing them up in my evidence/discovery files,
my spreadsheets (my beloved spreadsheets), my calls to law enforcement, prosecutors and defense attorneys, and
my poor head.
However, there's still so much more to learn from my tale of Sydney and Joely. (I've changed all names to protect
the innocent and guilty.)
SYDNEY AND JOELY: DARK STARS CIRCLING
Sydney was born in 1980, and by 2008 she was the unma
ied mother of two children and proud possessor of six
traffic charges, two DWI charges and three theft charges (at least two of which were check-related). She also had the
face and physique of a
unette model for The Gap, and she knew it.
In July 2008, Sydney ran into one Justin Thomas at a party. Justin was the owner of Home Renewal and Repair LLC
— a very small, newish local company that specialized in repairing and remodeling homes that had suffered storm
damage. Justin, quite by coincidence, was Sydney's boyfriend's best friend. At this party, she learned Justin was
looking for a new bookkeeper, and over tequila shots she lo
ied Justin for the job. Justin, who trusted his best
friend's selection of women and was impressed by Sydney's looks, her purported bookkeeping training and taste in
tequila
ands, hired her to be his new fulltime bookkeeper.
Meanwhile, across town, there was Joely. She was born in 1982, and in 2008 was single with no children, no
advanced education, no consistent job history, but she had a thriving night life and Facebook account. She, like
Sydney, was an attractive
unette who resembled actress Natalie Portman.
Joely's father, an attorney with questionable ethics, had gotten tired of financing Joely's night life, so she signed on
with a local office-temp agency. In September 2008, she got an assignment at Landscape Luxe Inc., another very
small local company that had been in business for 32 years. Landscape Luxe hired Joely to temporarily replace its
longtime office administrator who was retiring. The owners of the company, seasoned businessmen Sam Reilly and
Ha
is Jones, were pleased with Joely's performance, so they hired her permanently in November 2008.
NO TIME WASTED
Just a few days after Sydney assumed all bookkeeping responsibilities, she began to forge Justin's name on business
checks and use them to pay herself for cash and her landlord for rent payments. She buried these fraudulent transfers
in the office's QuickBooks system, changed the payee information and miscoded the purpose of the transfers —
sometimes hiding the entry's row electronically.
Sydney also accessed the business' corporate VISA credit card and charged innumerable purchases on the main
account number and a sub-account she opened without Justin's knowledge. In an employee embezzlement Ponzi
scheme of sorts, she forged checks from the business account to pay the outstanding balances on the credit card
account and transfe
ed the balance of one sub-account to a second sub-account she opened up for herself. She also
opened up store accounts with a couple of local big-box retailers by using a deceptive conflation of her name with
the former bookkeeper's name and the business' taxpayer ID number.
Within 15 months, Sydney stole more than $165,000 under the nose of Justin — who trusted her, was better at doing
the business than running the business and had his own problems. Now, in comparison with the dollar loss of other
fraud schemes we CFEs have encountered, $165K can seem like small potatoes. But this was a big enough potato to
eventually drive Justin out of his fledgling business, out of his house and onto his mother's couch, and send several
employees to the unemployment line.
Meanwhile, in October 2008, about a month before Joely was formally hired as a permanent employee at Landscape
Luxe, she began embezzling by issuing checks to herself from the business bank account by, at times, forging one of
the owner's signatures on the checks.
After she became a permanent employee, she had complete control over the distribution of incoming mail and
management of the company's online communication systems, so she began making unauthorized personal charges
on the business' credit cards. She opened new accounts in Landscape Luxe's name — sometimes with an owner's
personal information — and paid the credit card thefts with the business bank account.
Like Sydney, she manipulated the business' bookkeeping records to hide these blossoming credit card bills, and she
changed the credit card and bank statement delivery from snail mail to her own email account. The owners — both
very busy men who had had no problems with Joely's predecessor — seldom noticed any changes in the
administration of the office, and when they did notice something, Joely explained it away. Between October 2008
and her final termination in March 2011, Joely stole more than $130,000. Not bad for a garage-band groupie who
grew up in a cul-de-sac.
GREAT MOMENTS IN WRETCHED EXCESS
It's axiomatic that you can tell embezzlers' genders by the statements of the victims' plundered bank and credit card
accounts. Even though they didn't know each other, Sydney's and Joely's spending patterns were so similar I could
almost imagine them texting each other from different courts at the Mall of America and so predictable that they
were like a set of twins that had fallen out of an issue of InStyle magazine.
They were so similar that I used one spreadsheet template for both cases for my data dumps. Victoria's Secret and
Soma Intimates. The Aqua Nightclub and First Avenue. Lifetime Fitness Diamond-level memberships and Pizza
Lucé and Weight Watchers. Darque Tan and lots of booze emporia. Jack Wills shoes for boyfriends and
subscriptions to Match.com. Delta Airline tickets and Modria Hotel stays and Las Vegas rollercoaster rides.
Nordstrom and Christian Dior and iTunes. Rent and utilities and Verizon.
For Sydney, Hottie Clothing in Tempe, Ariz., and select plastic surgeries, presumably to model the clothing more
satisfactorily. For Joely, edgier purchases of an extraordinary number of rock concert tickets through StubHub,
tattoo parlors, hot-yoga studio private sessions, Twins/Timberwolves/Vikings/Wild tickets and some random junk
from a business called Monkey in a Dryer Screen Printing.
Given the number of restaurants they each frequented, including the requisite chef-driven phantasmagorias where
the bu
les in the artesian water were locally sourced, I don't believe either ever cooked one meal. And reviewing
the amount of money they stole from their employers, it's doubtful they ever had to dip into their own personal
checking accounts even once.
SYDNEY'S GRAVY TRAIN DERAILS
Justin found out about Sydney's thefts when he had to lay her off, along with other employees, because of financial
problems in the business. Sydney had password-protected the QuickBooks system, so Justin contacted QuickBooks'
IT department, which told him he could run a report on voided, deleted or altered transactions. He did so and found
quite a few. He then got his own copies of bank statements and credit card statements and learned just how much
Sydney had stolen and how quickly she began doing so after he hired her. He confronted her at a local restaurant;
she cried and pleaded to be given a chance to pay him back, singing The Struggling Single Mom Canticle. She even
hand-wrote a confession of sorts that Justin held on to.
A month's-long text dialogue went something like this:
"when RU gonna pay me?"
"IDK was expecting tax rfnd now no"
"WTH U think i can wait?"
"pls be patient my kids need shoes"
"UR kids W/E, i have bills too!"
"OMG I'M TRYING"
"IDC try nothing, i want my money u lied"
"O RLY NTIM but shane
oke up w/me this wk thks to u"
"IDC good for him i want my money or i call cops EOD"
"LOL ill call cops 2 for ur fake bizns"
"u do that CUL8R"
It took Justin a surprising amount of time to get tired of all of this, but he finally went to the police station.
JOELY'S CHUTZPAH AND SHELL-COMPANY PLOY
Ha
is Jones learned about Joely's misadventures while she was vacationing in Cabo San Lucas on the business'
nickel. He'd attempted to use one of the business' credit cards and was declined; he got suspicious because he knew
a substantial payment had been made recently on this card's balance. He reviewed the card's statements and found
several charges in Cabo San Lucas, then began his own audit of the company's financial accounts and learned the
dimensions of Joely's thefts.
He and Sam confronted Joely when she got back; she cried and pleaded to be given a chance to keep working and
pay them back. Both men of compassion and fathers of daughters, they agreed. Instead of the company taking
epayment deductions from Joely's paychecks, she recruited her ethics-challenged attorney father to try to set up a
shell company in Delaware through which the company could funnel the theft losses, and Ha
is and Sam could
eport these losses on their taxes. (Hopefully, this confuses you as much as it does me.) Ha
is and Sam may have
een compassionate, but they weren't stupid; they realized that this would be a scam. They subsequently fired Joely
and reported her to the police. (She still managed to open up yet another credit account in the business' name during
her second-chance period.)
THE TORTURE OF A PARALEGAL CFE
Sydney was charged with four counts of felony theft by swindle over $35,000