What Can We Learn from Recent Las Vegas Embezzlement Case?

By Tricia Cook, CFE

A recent case of embezzlement in Las Vegas shows us once again how employees might take advantage of their employer.  In an article in Vegas Inc, Eli Segall reports that two employees are accused of embezzling nearly $6 million from a Las Vegas developer. These employees were in financial positions, the most common department for fraud activity.  They would transfer funds between accounts under the guise that they were real business expenses, and then write checks to themselves or to cash. The two employees face up to 20 years in prison and a $250,000 fine for each fraud count committed between 2007 and 2012.

What can you learn from this unfortunate situation to improve your company’s internal controls, thereby possibly preventing fraud?

  • Segregation of duties.  The controller had control over multiple areas and was able to hide their thefts. Someone should have checked the expenses and a separate person should pay the expense checks.
  • Need for oversight and audits.  There did not appear to be oversight or surprise type audits that may have caught these problems earlier.
  • The suspected theft occurred over a period of four years.  Companies can perform a yearly Fraud Checkup that reveals red flags for fraud (contact us for your own copy of the Fraud Checkup Checklist).
  • Accountability. High level officials and trusted employees still need supervision and to be accountable to someone.
  • Red flags. Look for warning signs of personal problems or changes in behavior.  Gambling or other addictions may contribute to the rational for the theft.

No company is immune to fraud, but having proper controls and procedures in place can help to stop or uncover fraud in the workplace.

Source: http://www.vegasinc.com/news/2012/dec/26/2-accused-embezzling-nearly-6-million-las-vegas-de/

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