A U.S. District Court judge sentenced a former accountant of a manufacturing company to three years in prison for stealing $2.5 million from her employer in an embezzlement scheme that lasted 10 years.
The 40-year-old from Kent, Washington, stole more than $2.5 million from her employer by transferring funds to accounts made up of fake companies she created, and then routing the funds to her own bank accounts.
According to Acting U.S. Attorney Gorman, the former Accounting Manager betrayed colleagues who were also her friends. For nine years she engaged in a meticulous scheme to hide her theft. Over those nine years, she deliberately chose to steal from the company 867 times and she did it while working side-by-side with colleagues who trusted her.
The former Accounting Manager opened an account with payment processor Square in 2013, choosing a display name that made it look like it belonged to a commercial shipping company, according to the charges filed in federal court.
As part of the scheme, from 2014 to 2019, she moved $1,695,591.97 in company funds to her Square account, then transferred the money to a personal account to use “for her own purposes,” according to the court documents. Throughout the scheme, she made false entries in the accounting system to make it look like the payments were legitimate.
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Prevent This From Happening TO YOU!
Below are a few steps you can take that may help prevent the risk of internal fraud in your accounting department:
- Establish strong controls: require approvals, signatures, and documentation for transactions, reconcile bank statements regularly, and use secure software and encryption.
- Train employees on fraud prevention: educate them on the signs of fraud, the consequences of fraud, and the reporting mechanisms for fraud.
- Regularly review financial statements: check for unusual or unauthorized transactions, discrepancies, or errors.
- Restrict user rights: limit access to sensitive data, systems, and assets to authorized personnel only, and change passwords frequently.
- Segregate duties: assign different people to initiate, authorize, record, and reconcile transactions, and rotate or cross-train staff periodically.
- Get an extra pair of eyes: hire an external auditor, consultant, or CPA to review your financial records and internal controls periodically.
These are some of the best practices that can help a company reduce the risk of internal fraud particularly in its accounting department. However, no system is foolproof, and fraud can still occur despite these measures. Therefore, it is important to be vigilant and proactive in detecting and reporting any suspicious activities or red flags.
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