Sunday, September 15, 2013

Business theft a problem

Few business embezzlement cases make the news. And not because they aren’t happening. In fact, the meager publicity of these cases might be one reason they continue to proliferate. The thieves move on to victimize again and business owners don’t know how often and how easily employees commit fraud. They also get no tips on how to prevent it.

That’s why I’m writing about Ashley K. Coffey, who is scheduled to be sentenced on Monday. If the judge goes along with the plea agreement, the 25-year-old Lehigh Acres woman will get 36 months in prison and 27 years of probation for stealing more than $250,000 from the Sonic Automotive Group where she worked as an office manager.

According to the Lee County Sheriff’s Office affidavit, Coffey started embezzling from Sonic in October 2008. She would access accounts at one of Sonic’s dealerships, Volkswagen of Fort Myers, Mercedes Benz of Fort Myers or Honda of Fort Myers, cancel an old customers’ extended warranty protection plan and then have the system issue a refund check. Before the check printed, Coffey would override it and put her name on it. Then she would forge the managers’ signatures.

Bank records show Coffey issued 172 fraudulent checks over 3.5 years, ranging in value from $446 to $2,188. She used ATMs to deposit the checks, avoiding the scrutiny of tellers.

The scheme went undetected for years as Coffey, “worked her way up,” to office manager, the affidavit stated. It wasn’t until the spring of 2012 a comptroller reviewed Coffey’s work and found the fraudulent checks.

In January, Coffey was charged with first degree larceny-grand theft of more than $100,000.

One reason embezzlement cases often don’t get prosecuted is because most business owners just want the money back, said Ruth Crane, managing partner with Auditors Inc. in Maryland.

And a lot of embezzlement goes undetected because no employer wants to believe employees are stealing from the company. “They would rather ignore it,” Crane said.

They also want to avoid embarrassment of having the theft revealed, because there is usually something the business owner could have done to prevent it from happening, Crane said.

Business owners are often too trusting, too tired and or too busy to do what’s necessary to prevent fraud, Crane said.

Yet there are simple things an owner can do, Crane said, such as having two people trained to do two jobs and then switching the responsibility back and forth each month. That way, one is always looking over the other one’s shoulder, she said.

Gail Wright, a professor of accounting at Florida Gulf Coast University, said small businesses often don’t have enough workers to divide up accounting duties. In that case, the owner needs to be involved and establish internal controls. For example, anytime there is a system with an override capability — such as changing the name on a check – controls should be put in place to require an approval of the override, Wright said.

“If she is keeping the books she shouldn’t have access to check stock at all,” said Jimmy Allen, a certified public accountant and certified fraud examiner in Tampa.

Allen also suggests getting an outside firm to perform cash reconciliations every month. Allen said for most small businesses, this is a $100 a month or less expense.

Another suggestion from Allen is to take a “holistic view” and identify the points where an employee could steal from the company. And not only cash but inventory and services too.

“It’s all common sense. There’s an asset, how can someone take it,” Allen said. “Take a few friends out to lunch and talk about the ways someone could steal from you and then put controls in place to prevent it. “

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