A 38-year-old Northborough man was sentenced to two years in prison and five years of supervised release for wire fraud and money laundering. The former employee of Venture Community Services (VCS) embezzled approximately $366,477 from the non-profit where he worked as an Information Technology (IT) Manager.
In his role, the former IT Manager was given access to two company credit cards to purchase necessary equipment and services. Starting in 2016, he misused these credit cards to supposedly buy equipment from two vendor accounts on Square and one on Amazon. However, the 38-year-old had created these vendor accounts to embezzle funds, fabricating sales invoices to cover up his actions.
The Northborough resident connected the three vendor accounts to multiple personal accounts at Bank of America, where he transferred the embezzled funds. He then used the stolen money for personal expenses, including constructing a house. The government later seized and sold the house. He was also ordered to pay $371,088.97 in restitution.
The case was prosecuted by the U.S. Attorney’s Office with assistance from the FBI and local police departments.
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Prevent This From Happening TO YOU!
To mitigate the risk of internal fraud, especially within the accounting department, companies can adopt several best practices. Some of these include:
- Implement strong internal controls: establish clear policies and procedures for financial transactions and ensure they are followed consistently. This includes segregation of duties, where different individuals are responsible for different aspects of financial activities, to prevent any single person from having too much control or opportunity for fraud.
- Regularly review financial records: conduct periodic internal audits and review of financial records to identify any irregularities or discrepancies. This can help prevent fraudulent activities early on and prevent further losses.
- Conduct periodic external audits: engage external auditors to conduct independent reviews of the organization’s financial records and internal controls. This can provide an objective assessment of the effectiveness of internal controls and identify areas for improvement.
- Monitor and analyze financial data: utilize data analytics tools to monitor financial transactions and identify any unusual patterns or anomalies that may indicate fraudulent activities.
Source: journalofaccountancy.com, smallbusiness.chron.com
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