28Feb

Scrap Metal Firm Hammered With $11.2 Mil. Embezzlement

Former CFO Charged

The CFO of a scrap metal brokerage in Alabama is charged with the embezzlement of over $11 million from his former employer. He set up a fake company with a similar name and illegally directed payments meant for his employer into the fake company’s accounts. He hid his crime by making false entries in the accounts, statements and records of his employer. Over a nine-year period, he siphoned away the money to pay for real estate, cars, other assets and expenses.

Prosecutors filed a plea agreement in which the perpetrator admitted guilt and agreed to make full restitution. He faces up to 20 years in prison and additional fines.

Read the full story here. 

Would an Audit Committee Have Helped Catch the Crime Sooner?

Mitigating fraud and embezzlement requires a range of actions, policies and procedures including:

  • Separation of accounting duties

  • Mandatory vacations and reassignment of duties among accounting employees

  • Greater management oversight

  • Regular audits by experienced third parties

  • Periodic and random record reconciliation of invoices and payments

Additionally, a company or non-profit organization should consider establishing an audit committee. Among other duties, the committee is charged with reviewing the audit and ensuring that internal controls have been followed. It is also important to include members beyond the accounting or finance departments.  Further, the audit committee should consider meeting with auditors on an annual basis without the CEO and/or CFO in the room.

For more detailed information on establishing an audit committee and its’ responsibilities, click here for a useful guide from the Institute of Internal Auditors.

Before a Loss Occurs…

Make sure your clients have crime insurance. Trying to recover stolen funds from a perpetrator offers no guarantee of success. Take the steps to ensure that your clients are covered and call one of the Berkley Crime team members listed below.

Call Berkley Crime today, we’ll help you and your clients get the right coverage, quickly.

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National Practice Leader
Sean Missal
(860) 466-7377
smissal@berkleycrime.com

Mid-West Regional Mgr.
Michael Beranek
(501) 707-6548
mberanek@berkleycrime.com

East Regional Manager
Matt McNamara 
(212) 497-3707
mmcnamara@berkleycrime.com

Amanda VanCauwenberge 
(312) 730-1101
avancauwenberge@berkleycrime.com

Patricia Logan 
(212) 497-3708
plogan@berkleycrime.com

Thomas Trieloff
(312) 705-1132
ttrieloff@berkleycrime.com

Cheryl Yorio 
(860) 466-7379
cyorio@berkleycrime.com

Everton Barrington, FLMI
(860) 466-7376
ebarrington@berkleycrime.com

Alexander Doerflein 
(212) 497-3724
adoerflein@berkleycrime.com

West Regional Manager
Jennifer Maggi 
(213) 417-5467
jmaggi@berkleycrime.com

Adam Pardi 
(212) 497-3704
apardi@berkleycrime.com

 

Steve Nguyen 
(925) 472-8233
snguyen@berkleycrime.co

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