Corporation Case Studies

Embezzlement Discovered and Company Repaid:

A CFO and partner for a large small business hired a female employee in the accounting department shortly after the CFO became physically involved with the employee. Within six months, she was embezzling large sums of money from the company via credit card payments. The CFO allowed the employee to circumvent internal controls and the segregation of duties and he signed off on month ending documents that were supposed to account for the receipt and disbursement of funds of the company. Over the years, the female employee became demanding and controlling and the CFO did nothing to improve the situation. Ultimately, she got into a fight with an employee and was asked to resign, which she did. A closer review of the company records by the Controller revealed the female had a corporate credit card issued to her and had made over $200,000 in personal purchases for which the company paid. She was contacted and agreed to pay the money back and did. Two years later, Sage was hired to covertly investigate further and found that the female employee had a criminal record. It was determined that the CFO was still in a relationship with the female and was providing her with financial support. Sage found the CFO violated his fiduciary duties to the company and found that in the past the female employee paid personal credit cards with corporate funds in the amount of $1.4 Million. Results: The CFO was confronted regarding the continued relationship and confessed that he had given the female the money to repay the company the $200,000. He resigned and the repayment of the additional credit card payments was withheld from his partnership interest.

 

Theft by Controller Confirmed:

A large family owned company employed a Controller and an Information Technology person and together they embezzled $350,000. The Controller was on the verge of retirement, never took a vacation and ruled with an iron fist. They stole the money over a period of 4 years during which the son of the owner was enrolled in college and studying accounting and finance to gain the knowledge to take over the family business. The owner’s noticed their bank account did not have the balance they thought should be present. They placed the Controller on paid leave after an altercation in the office. Sage was hired to determine what happened to their money and learned that the controller prepared and signed the checks issued by the company and he reconciled the bank accounts and destroyed the third-party invoices as they were paid. Sage inspected the bank account for checks over $1,000 and compared them to the QuickBooks transactions journal. Sage found an anomaly that the controller wrote checks to himself and the IT person and changed the payee name on QuickBooks and the classification to indicate a draw by a family member. A number of years were analyzed to find the extent of the embezzlement. Sage learned that the controller built a second home in Colorado and the IT person built a home in Texas with the stolen proceeds. RESULTS: They were terminated and the case was presented to the local district attorney.

 

Pilfering Stopped at State Agency:

A new Director of a state agency noticed that the facility responsible for the resale of state vehicles and surplus equipment was not generating the funds budgeted. Sage was hired and began by interviewing all the employees that worked at the state facility. It was determined that minor pilferage was taking place by the employees but the management and supervisors were involved in selling used vehicle to companies they had relationships with, which was to the determent of the state. Internal controls over the vehicles did not include record keeping to determine the book value of each vehicle. Sage analyzed the vehicle sales for three years and compared the sales price to Kelly Blue book and determined that in the most conservative situation the state had lost between $600,000 and $1 Million for the sale of the vehicles. Results: Sage rendered its report and the manager and supervisors were all replaced and the employees pilfering items were placed on leave without pay for a week.

 

Credit Union Theft Solved:

A local credit union in Miami, AZ started to lose money and after and internal audit it was determined that something was wrong. Sage Investigations was employed by The National Credit Union Administration (NCUA) to review the situation and determine how the credit union was losing money. A review of the records determined that the long-time manager of the credit union was creating fictitious loans for the former members and was manipulating payments to cover the fictitious loans. Sage interviewed the former members and determined that the manager was stealing. RESULT: The NCUA shut down the credit union and the case was turned over to the local District Attorney for prosecution.

 

Bad Loans Lead to a Law Suit:

A local credit union in Lock Haven, PA was managed by a former banker who had visions of growing the credit union. He violated The National Credit Union Administration (NCUA) policies and made loans on real estate that did not qualify, and loans to relatives and friends. When the economy turned down the individuals did not have the ability to make the payments, the manager began to manipulate the books to cover the payments. The NCUA auditors observed the improper loans and the lack of payments and employed Sage Investigations to review the situation and determine how the credit union was losing money. Sage’s review of the records revealed the less than arms-length relationship with borrowers, and found that the credit union manager didn’t perform due diligence and over paid for old ATM machines that had outdated technology. RESULT: The NCUA shut down the credit union and the attorneys for the NCUA pursued the manager for recovery of the losses.

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