[sygazelle]

Today I read about a woman who stole $40 million from work!

Here's the headline: Former Yale administrator stole $40 million, pretending to buy computer equipment for the university. Instead, she bought a fleet of luxury cars, and four houses.

Prosecutors say that in 2021 alone, she purchased more than 8,000 tablet computers, all in orders smaller than $10,000. In one 10-week period that year, she ordered $2.1 million worth of equipment.

So, she's going to jail for a very long time.

Here's my question: Do any of you work for companies with controls so lax that something like this could even happen?

[overcoil]

I know someone that works for a university that accidentally transferred 26-million instead of 2.6-million or 2600 - whatever it was.

[ryan stewart]

I don't know if it would be easier for me to actually take it home but I work in healthcare and I'm on the capital committee, anything under a million we don't even look at.

At the Enterprise level the amount of money you burn through in a week is amazing.

[iminhell1]

My cousin was working at Northwest Bank the night of Dec 31, 1999. He said they lost a lot of money for a few seconds. He said a number but hell if I can remember what.
There was some coding hole he was responsible for helping to fix.



In other news.
Locally here they only rob charities.
https://www.twincities.com/2022/01/2...food-programs/

[sygazelle]

Originally Posted by ryan stewart

I don't know if it would be easier for me to actually take it home but I work in healthcare and I'm on the capital committee, anything under a million we don't even look at.

At the Enterprise level the amount of money you burn through in a week is amazing.

I'll never forget a question a professor asked the the students in an ethics class back when I was in school. "Class, if an employee steals money from the cash register and there are no cash controls, who is guilty?" It turns out, according to this professor, that the company is guilty as well as the employee.

This woman who stole $40 million from Yale is not the only guilty party here. She should go to jail for sure, but the leadership at Yale should never have let this happen.

[M_Six]

Wow, at our university you used to have to have the Prez's office sign off on any purchase over $100. Yes, that's right...$100. Need a new laptop battery? Better be prepared to wait weeks for the red tape and approval process.

[shoei]

Originally Posted by sygazelle

Today I read about a woman who stole $40 million from work!

Here's the headline: Former Yale administrator stole $40 million, pretending to buy computer equipment for the university. Instead, she bought a fleet of luxury cars, and four houses.

Prosecutors say that in 2021 alone, she purchased more than 8,000 tablet computers, all in orders smaller than $10,000. In one 10-week period that year, she ordered $2.1 million worth of equipment.

So, she's going to jail for a very long time.

Here's my question: Do any of you work for companies with controls so lax that something like this could even happen?

Yes. Absolutely lol

[shoei]

Originally Posted by TSII

I thought McDonald's ran a pretty tight ship though.

Yes, at corporate McDonald's we calculate for loss. But considering you want to go there, it appears your franchise in FairOaks, IA is once again in the red. Why has your ice cream machine been down since August?

[DETRoadster]

Ugh the company I work for is frustratingly the opposite. Not that I'm wanting to commit fraud, but I spent a combined 3 to 4 hours a few weeks ago working though a missing receipt on my company card....For $17....

Accounting was all up my ass. 15+ e-mails back and forth and finally a meeting. Probably cost the company $1,000 to track down that $17. Bravo. Strict accounting controls winning.

[shoei]

Originally Posted by DETRoadster

Ugh the company I work for is frustratingly the opposite. Not that I'm wanting to commit fraud, but I spent a combined 3 to 4 hours a few weeks ago working though a missing receipt on my company card....For $17....

Accounting was all up my ass. 15+ e-mails back and forth and finally a meeting. Probably cost the company $1,000 to track down that $17. Bravo. Strict accounting controls winning.

I still think fondly back to when I used to have a boss and how I'd drive him up the wall uploading pictures of the fuel pump to the expense app for example. Accounting would call him rat me out and i'd tell him to tell accounting the numbers match the picture and the gas pump ran out of receipt paper.

Him - "For ALL the fuel receipts?!!"
Me - "Yes. It's a state wide crisis."
Him - "You were in two different states last week!!"
Me - "Right. Good looking out. It's a national crisis of printer paper shortage."

Lol. He really was a good guy. Let me get away with murder.

[No one]

Originally Posted by sygazelle

I'll never forget a question a professor asked the the students in an ethics class back when I was in school. "Class, if an employee steals money from the cash register and there are no cash controls, who is guilty?" It turns out, according to this professor, that the company is guilty as well as the employee.

Stealing is about ethics. Failing to prevent stealing is not. It's a technical matter. Say, being stupid isn't immoral. Being immoral is stupid, though.

Originally Posted by sygazelle

This woman who stole $40 million from Yale is not the only guilty party here. She should go to jail for sure, but the leadership at Yale should never have let this happen.

To save the means (no ethics)? Probably. To save the woman (ethics)? Unlikely.

[sygazelle]

Originally Posted by No one

Stealing is about ethics. Failing to prevent stealing is not. It's a technical matter. Say, being stupid isn't immoral. Being immoral is stupid, though.



To save the means (no ethics)? Probably. To save the woman (ethics)? Unlikely.

To your first point: Here's a quote from Lynn S. Paine that sums up how I think about this topic:

"Many managers think of ethics as a question of personal scruples, a confidential matter between individuals and their consciences. These executives are quick to describe any wrongdoing as an isolated incident, the work of a rogue employee. The thought that the company could bear any responsibility for an individual’s misdeeds never enters their minds. Ethics, after all, has nothing to do with management.

In fact, ethics has everything to do with management. Rarely do the character flaws of a lone actor fully explain corporate misconduct. More typically, unethical business practice involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organization’s operating culture. Ethics, then, is as much an organizational as a personal issue. Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds."

I cannot comment on your second point because I don't understand it.

[Tommy-G]

We had an employee who ran the loaner car department at the dealership.
He got a brand new big luxury sedan to the fleet which should have been used to run customers to the airport and high end dinners etc.
We also got a new service manager the same week.

Apparently said employee used the luxury shuttle to drive his family to Disney on the weekends and to drive back and forth to work. We have a strip mall next to us so apparently he would randomly move the vehicle around daily.

The real quicker is all loaners and shuttles get filled with gas on the regular, so that thing never was low on fuel

Needless to say there were new checks and balances put in place immediately

[DocL]

A friend of mine is a FBI attorney in the healthcare fraud department. There are a lot of stupid doctors who think they can get away with Medicare and Medicaid fraud.

[2000cs]

Originally Posted by M_Six

Wow, at our university you used to have to have the Prez's office sign off on any purchase over $100. Yes, that's right...$100. Need a new laptop battery? Better be prepared to wait weeks for the red tape and approval process.

This is not only a control for fraud detection, it also limits purchases to what is absolutely necessary, or less. Pain for employees but keeps you from spending.

IMO this is an example of a control that is set too tight, and reduces organizational execution strength and executive (Prez) effectiveness (unless he/she really has nothing better to do, in which case savings of prez salary would be possible).

[RickFLM4]

I'm a CPA / corporate accounting consultant and I expect an attempt to embezzle anything remotely close to $40M would be identified by any of my public company clients. If it happened, it would be a material weakness for SOX and all hell would break loose, since auditors express opinions on those controls. People get their panties in a bunch over much smaller control deficiencies even if the loss is zero. If anything, something like this could happen if companies and auditors lose the forest through the trees, but I doubt it.

Smaller private clients don't have the same internal controls but have their own systems to identify material fraud because they would collapse if $40M disappeared.

[2000cs]

Originally Posted by sygazelle

To your first point: Here's a quote from Lynn S. Paine that sums up how I think about this topic:

"Many managers think of ethics as a question of personal scruples, a confidential matter between individuals and their consciences. These executives are quick to describe any wrongdoing as an isolated incident, the work of a rogue employee. The thought that the company could bear any responsibility for an individual’s misdeeds never enters their minds. Ethics, after all, has nothing to do with management.

In fact, ethics has everything to do with management. Rarely do the character flaws of a lone actor fully explain corporate misconduct. More typically, unethical business practice involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organization’s operating culture. Ethics, then, is as much an organizational as a personal issue. Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds."

I cannot comment on your second point because I don't understand it.

Retired CFO here. Have seen control weaknesses, theft at a scale to break a company, etc over my career.

Tone at the top matters and I’d go farther and say ethical behavior at the top really matters. That is different than controls. Controls are for prevention and detection of fraud and theft. Whether controls exist or are strong enough doesn’t really matter in terms of who is guilty of or responsible for theft/fraud. Ethical lapses don’t have to turn into theft, they could be improper sharing of company info, for example. These are detected, reported and corrected in different ways than financial controls. Whistleblower policies are important for ethics compliance.

It is common to think of controls as a PITA, overly restrictive, or implying a lack of trust by management of employees. However they have the effect of preventing termination and jail if followed, and thus protect employees too.

There is plenty of evidence that fraud usually starts small, and employees who start small get emboldened and escalate their theft. Thus a zero tolerance policy for small stuff is appropriate. I wouldn’t bother with the occasional small office supply going home (prior to WfH, now this must be much clearer in company policy). But an employee that takes a bundle of pens should be talked to, and watched closely until proper behavior is reestablished and confirmed.

A company may have tighter controls above a spending threshhold like $1,000 or more for a larger company, but smaller transactions should be randomly audited to ensure compliance and detect the sort of fraud in the OP’s example. There are some good guidelines based on number and type of transactions to help with this, and a good internal auditor (credentialed) or external auditor should know and follow these.

[coonz]

Originally Posted by DETRoadster

Ugh the company I work for is frustratingly the opposite. Not that I'm wanting to commit fraud, but I spent a combined 3 to 4 hours a few weeks ago working though a missing receipt on my company card....For $17....

Accounting was all up my ass. 15+ e-mails back and forth and finally a meeting. Probably cost the company $1,000 to track down that $17. Bravo. Strict accounting controls winning.

We don't need common sense. We got rules

[unluky]

My old job, I was a department head at a pretty decent sized company that made lots of money. Being in sales & marketing, a lot of payments were made to lots of different places for large sums of money. Once I set my yearly budget and had it approved - I pretty much used it how I saw fit.

I told my controller many times - there is WAY too much room for abuse. I am a super honest person and they knew it - but you don't make rules for a person - you make them for a position. Many bills were paid over $100K in size on my signature only. If I mocked up a bill, signed it and submitted it - they would have paid it. Could I have siphoned off $10 mil in a year with no one noticing? No. But I could have probably bought a decent house every year and no one would have caught it.

The guy who had my position before me was less than ethical and I often saw old entries that I wondered might be just that. Not huge sums, but anything is stealing.

They were bought by a public company (the reason I left) and now have accountants crawling out of their ears - so I assume those days are over.

My current company is smaller and has the same cracks I could exploit, but due to the smaller size - anything very large wouldn't be worth it. I'd say the risk vs reward would be low. I probably could not take more than my bi-annual bonus checks without raising flags, so why risk it? Not everyone thinks like that though.

The family that owns it has been extremely good to me, so I would never think of it - but I once saw 2 people lose pretty decent jobs years ago for stealing a t-shirt each - so not everyone is like me.

[ryan stewart]

Originally Posted by sygazelle

I'll never forget a question a professor asked the the students in an ethics class back when I was in school. "Class, if an employee steals money from the cash register and there are no cash controls, who is guilty?" It turns out, according to this professor, that the company is guilty as well as the employee.

This woman who stole $40 million from Yale is not the only guilty party here. She should go to jail for sure, but the leadership at Yale should never have let this happen.

I dont disagree but if you seriously knew how much flows through a billino $ company youd understand how 10s of thousands can run under the radar of the execs. Sure SOMEONE should be responsible for those smaller amounts but if the responsible person is the one doing the stealing then its tougher.

But realistically even WITH sticking to 1mm+ its still a really busy group. You have to delegate else youd need an army just to review every purchase, which would cost more than some of the transactions themselves. AKA like DETRoadsters story.

[CTinline-six]

I work at a university. I can 100% see how this could happen, especially if it was a higher level person doing it.

Just with contracts alone, there are decisions made that benefit friends of people in certain positions, not necessarily the organization. What's worse is that many times when these people are caught, they threaten to release information about the organization that will impact its image, so they essentially just get their hand slapped or no disciplinary action whatsoever.

Remember what happened with Penn state a few years ago and their football coach? Unfortunately that kind of stuff is more common than you think. Money talks, and it can 100% influence the outcomes of criminal accusations, university research, you name it.

[shoei]

Originally Posted by TSII

Ah yes, agreed. Well as for the Fair Oaks, IA location, that's due to the fact my brain dead nephew is in charge of that one. The other 50 locations are running smoothly with the exception of an occasional angry patron trying to climb through the drive-thru window and beat up the employees for accidentally short changing them on McNuggets.

Doesn't surprise us back in Corporate. The non-surprise being the apple not falling far from tree with said nephew operating pretty much in the same manner as you operate.