Tag Archives: investigation

White Noise

“Also after our incident, we started reading a lot. If you have not been a victim of embezzlement, it’s just white noise. But once you start paying attention, it’s clearly an epidemic.”  That quote came from a victim of a pink collar criminal who stole over $200k+ from their medical practice.  Getting to hear real stories from the victims is part of my job.  It’s the part that is the hardest but also very rewarding.  Listening to this doctor’s story is like a record with a scratch: she was my friend, we socialized together, she handled everything, she was a long time trusted employee.  I hear these stories each time I go to investigate.

I am trying to get the word out about these long time trusted employees who steal victim’s innocence and joy from their work.  This victim has been devastated by the theft.  Paying back taxes, reconstructing the books, and of course trying to rebuild trust with your employees and clients.  And it continues.  It continues because many of these women live in the victim’s community.  This victim sees their former employee at the grocery store.  She is not in jail.  She is actually working for a new medical practice. Justice is slow.  But luckily this victim is also trying to get the word out about medical embezzlement.  It can happen to you and then it won’t be “white noise.”

 

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One degree of separation

I recently was at a holiday party with a diverse group of people.  The one thing they all had in common was Pink Collar Crime.  It is the relatable crime.  Every group at the party had either been personally embezzled in their business or knew someone directly who had been embezzled.  It is like the dirty little secret in business.  Also, it is like Kevin Bacon’s 6 degrees of separation but actually in pink collar crime only one degree.

No one wants to admit they have been stolen from.  No one wants to admit they were duped daily for sometimes years by their most trusted employee.  It hurts.  From Jean Le Carre: “The capacity to love is proportionate to the capacity to be betrayed.”  I read this in articles about people who have been stolen from.  The people who stole often are like family members.  They know their target inside and out and often use that to their advantage.

When people find out what I do they start speaking quietly to me.  “I want to tell you what happened to me…” and they pour their hearts out to me.   From Betrayal (written by Jed Block on the Goodwill NCW $500k theft) “On a personal level, I felt shame, embarrassment and anger. I also experienced a profound sense of loss of innocence and a challenge to my fundamental capacity to trust. Before the embezzlement was discovered, I was an ardent fan of the employee who committed the fraud against us.”

That is the hardest part of my job.  I want to restore their trust but they need to understand trust is not an internal control.

You can trust your employees with many things but be very careful when you are trusting them with your finances.

 

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I am not a bad person

Bonnie Brannock Davis was a longtime volunteer for the Giles County Lifesaving and Rescue Squad. She also had a good paying, $120k per year, job at The Chemical Lime Company in Ripplemead until she was laid off.

She just was sentenced to two months in jail for a $65k theft from the Giles County Lifesaving and Rescue Squad. She was facing up to 100 years. She had no previous criminal history and had volunteered decades as a medic for Giles County Lifesaving and Rescue Squad.

She apologized over and over to the Giles County Lifesaving and Rescue Squad, which she called “the love of my life,” and to her family and the community at large.

Davis repaid the $65k to the non-profit. She stated that she made “anonymous” donations to repay over time. Davis told investigators that she had tried to repay the rescue squad by making anonymous donations. That is what many embezzlers do not understand. It is easier to steal money but much harder to replace the stolen funds. They may have intentions to repay but the mechanics of it are much more difficult to do. However, she did make 2 payments before sentencing to cover the $65k theft.

There was no “extravagant” spending on Davis’ part according to her attorney. I’ve seen this before. They start stealing because of a pressure and it snowballs. In this case Davis was a lifetime member of the non-profit.

People like Davis don’t wake up in the morning and say they are going to steal but at some point something triggers it. In Davis’ case the loss of a good paying job was most likely the trigger.

Davis is on LinkedIn https://www.linkedin.com/in/bonnie-davis-7b57b76 and from her information was a Deputy a long time ago. After she was let go it appears she started her own business which it seems did not replace her salary.

You just never know. Pay attention to your volunteers and their situations.

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Get out of jail free card

 

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What is a get out of jail free card? Unfortunately for some, it’s the card your employee has when you catch them stealing from you. The panic from the moment you find out you have been stolen from can become even greater. This is when you confront your employee (remember you need legal and HR help for that) and they turn the whole debacle around to possibly get out of jail and threaten you with disclosure of your dirty little secrets.

What are those dirty little secrets? Do you have two sets of books? Do you write off inappropriate expenses? Do you hire and fire illegally? This is just the start of what the desperate thief will try.

What do you do when this happens? Again, (insert legal advice here from a good attorney who has worked these cases before-not your golfing buddy) you need to process your own personal situation. I never tell someone directly not to file with law enforcement. But as your “fraud coach” I will tell you to take a step back and analyze all the angles.

I had a client once who, as so many do, wanted the perp hung in the town square. The client generally needs to be talked off the ledge. You need to prepare for the process. The process is long and hard and not cheap. You need to think about the potential PR crisis. You need to be ready to take responsibility for your business and other employees.

Tone at the top of course is part of the equation. While there is NEVER a reason for stealing you need to understand the rationalization part of the fraud triangle. When you give your assistant your credit card bill or expense report that is filled with personal expenses realize what you are doing. You are possibly chipping away at their own set of values. When they see you expense a family vacation to ski while attending a work conference they see you cheating and stealing. This can start a slippery slope (pun intended) for them to start stealing.

Most people, in my opinion, do not wake up and say I am going to steal from my boss or my employer. What does happen is they go to work and get a call from a bill collector stating they are late and their car is going to be repossessed, their husband or partner leaves them with a mortgage, their kid texts them about the school ski team they can’t afford and then they start down that path.

So when they get caught they are desperate to not go to jail and break up a family. Everything they have seen taking place at work becomes fair game for them to defend themselves. You need to be prepared for this. How do you prepare for this? Tone at the top. I can’t say that enough. What your employees see in your behavior is incredibly important.

I can’t tell you how hard it is for an employer to go through this. They want to do the right thing but they also feel the need to protect themselves and their business. So what happens is that sweet, conniving little Mary gets off and then goes to the next business. Eventually she will get caught but sometimes it takes awhile.

You set the example for your employees. Be the best example you can be. Set the right tone at the top and maybe she won’t have the get out of jail free card.

If this has happened to you I would love to hear from you. Please email me at kellypaxton503@gmail.com.

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Non profit fraud Executive Director helped by twin brothers!

The former executive director of an East Orange-based non-profit developer of low-income housing was arrested today on charges she had embezzled more than $380,000 from the corporation, the Essex County Prosecutor’s Office said in a statement this evening.

Lancie Marchan, 64, who headed the East Orange Revitalization and Development Corporation, used the money for trips, hotel stays, visits to casinos and gifts, among other things, the statement said.

An indictment unsealed today alleges that Marchan, who was being paid an annual salary of $93,163.50, embezzled the money between 2005 and 2010.

At the time, EORDC was partnering with a private corporation to build a low-income development, called the Princeton Estates Phase II Project, with partial funding from HUD.

The indictment also alleges that Marchan’s twin 66-year-old brothers, Arthur Werts, of Chesterfield, Va., and Artemus Werts, of Plainfield – both of whom have experience in the financial and non-profit industries – helped their sister embezzle and launder the funds.

Marchan was arrested at her home in North Brunswick by officers from the prosecutor’s office and the U.S. Department of Housing and Urban Development.

All three are charged with conspiracy, theft by unlawful taking and financial facilitation of criminal activity. They could face up to 20 years in prison if convicted of the charges, the prosecutor’s office said.

Marchan is being held on $50,000 bail at the county jail. Her brothers have not yet been arrested.

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