Ex-Employee Drives $2 Mil. Embezzlement at Auto Dealer

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“Trust but Verify” 

A former assistant comptroller has been convicted of embezzling $2 million from a South Carolina auto dealer.  The ex-employee used the stolen money to pay for a lavish lifestyle including furniture, jewelry, vehicles and even the down payment on a house for her daughter.

The theft was discovered after an audit exposed payments to nonexistent vendors. The auto dealer said that the embezzler was a long term employee that he trusted but admitted, “I didn’t verify what I trusted.”

The dealer is getting some money back from the sale of confiscated assets and the promise of restitution from the perpetrator after serving her probation time.  In addition, thanks to crime insurance, he will also be receiving $200,000 from his claim.

Read the full story here.

Take Steps to Reduce Risk

The lessons learned from type of embezzlement lead to a series of steps that any business or organization can take to reduce their risk exposure.

Clear vendor management and process changes can make a big difference:

  • Segregate the positions that request new vendors and approve new vendors
  • Maintain an approved vendor list
  • Pre-screen the vendors to check their ownership and financial stability before adding them to the approved vendor list
  • Institute an annual vendor audit to verify vendor validity and activity

Additional steps can be taken to help minimize financial fraud:

  • Institute monthly cash reconciliation to discover anomalies early
  • Establish mandatory controller vacation so that others might spot irregularities during that time
  • Segregate accounting duties including receipt of invoices from payment of invoices so the process chain allows others to discover irregularities if they emerge
  • Support employees to report fraud by creating a confidential 800 number for employees to report suspected irregularities or questionable practices

When You Do Experience a Crime Related Loss, Make Sure You’re Covered


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


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