A former Global Account General Manager at a New York based IT services firm was sentenced to 38 months in federal prison for orchestrating a near decade-long embezzlement scheme that siphoned more than $8.3 million from his employer and a financial-industry client. The executive exploited his authority over a subcontractor to approve fraudulent invoices and inflated expenses for work that was never performed. Among the illicit charges were personal indulgences, including restaurant meals, hotels, limousine rides, a luxury cruise, and visits to gentlemen’s clubs, all camouflaged as legitimate business costs disguised in subcontractor billing.
The scheme also included “no-show” jobs for family and friends, enabling further unjustified billing. In addition to prison, the court imposed three years of supervised release, $2.68 million in forfeiture, and $9.02 million in restitution, highlighting the severe breakdown in internal controls.
While the case also involved a $668,000 tax evasion charge tied to unreported income and missed filings, the core issue was the breakdown in internal controls that enabled a trusted executive to perpetrate years of financial misconduct. This highlights the critical importance of implementing strong oversight around subcontractor relationships and expense approvals.
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Prevent This From Happening TO YOU!
To help protect your organization from similar schemes, consider reviewing the following fraud-prevention tips as potential strategies to strengthen your organization’s controls:
- Validate vendor billing: Use three-way matching (PO/contract, evidence of work, and invoice) and ensure segregation of duties so no one person can create, approve, and pay vendors.
- Raise audit frequency: Conduct unannounced subcontractor payment and expense audits to uncover irregular billing patterns.
- Secure vendor info changes: Never permit banking‑detail updates via email alone; require an out-of-band callback to a trusted contact.
- Encourage anonymous reporting: Support internal whistleblowers with a confidential channel; reporting is often the first defense in detecting fraud.
- Educate and train staff: Equip employees with the skills to spot red flags, abnormal spending patterns, duplicate invoices, or unfamiliar payees, especially in subcontracting scenarios.
Sources: https://www.netsuite.com/portal/resource/articles/accounting/three-way-matching.shtml, https://www.shaunstoltz.com/2025/02/14/5-best-practices-for-conducting-effective-surprise-audits/, https://trustpair.com/blog/call-back-procedures/ , https://www.acfe.com/whistleblower-hotline-report and https://www.padgettadvisors.com/blog/how-to-spot-and-prevent-invoice-fraud-before-it-hurts-your-business/
Encourage your clients to take a proactive approach to protecting their business in the event of a loss!
Make sure your clients have crime insurance. Take the steps to ensure that your clients are covered by calling one of the Berkley Crime team members listed below.
Sincerely,
Michael Beranek
Berkley Crime
Experts focused on your protection. We deliver.
| National Practice Leader Michael Beranek (646) 522-7362 [email protected] | East Regional Manager/Commercial Crime Product Leader Matt McNamara (212) 497-3707 [email protected] |
| West Regional Manager Brian Platt (720) 979-1155 [email protected] | Renewal Team Leader Cheryl Yorio (860) 466-7379 [email protected] |