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One contractor’s embezzlement: What happened

Posted By Marcia Gruver Doyle On April 29, 2013 @ 5:29 pm In CU Relevant Articles | No Comments

There’s much more to the contractor tale we highlighted in our “Are you being embezzled?” story [1]. Here is this Southern California contractor’s account, told to us under the agreement of anonymity:

“We needed an accountant, and this candidate was far above anyone else we had interviewed. She had construction experience, letters of reference and the best personality. I called one of her references and it was so glowing I stopped there. I should have called more references.

“She worked for me for eight years, and I never had any occasion to doubt her integrity.  I had even given her and her husband a $40,000 loan to help them buy a house. She was meticulous about showing me how she was paying back the loan.

“I just felt like it was a huge betrayal, almost like a family member had done this to us.”

“She was great at her job, very detailed. After three months, she started reconciling our bank statements. Even though I signed every check – or thought I had – I did not review the actual checks. That’s where I went wrong.

“She handled everything on the financial end of the business, and even got into HR a bit. She knew how much I made, would prepare the quarterly and year-end financials, and I’d discuss employee bonuses with her. She was working toward a degree in accounting, and she’d show me her grades

“Then construction work just came to a halt. We were downsizing, laying people off and struggling to get our expenses down. She would come to me with all sorts of cost savings ideas. She helped me decide whom to lay off, and we were down to four people in the office.

“I had personal line of credit on my house that I kept using to lend money to the company so that we could survive. She would tell me that we would need more money to make payroll, and I’d write a check. But then we had two small jobs that were bringing in about $10,000 a month, but she was still telling me she needed more money to meet payroll.

“One night, I was online looking at my business account and I saw reference to a check for $4,500 to a company I didn’t recognize.  I searched through the account further and found an $8,000 check made out to her. I was up until 2 a.m., and going back three months I found $45,000 in checks made out to her. This had been during some of the worst three months in our company, and she was taking money.

“I called up my CPA. He advised me to try to get a confession and to have a witness when I confronted her. I thought for sure she would break down and cry, but she just sat there with a blank look on her face. ‘What do you want from me?,’ she asked.

“I wanted a written confession of how much she had taken. She wrote that she had been stealing for about a year, and had taken $75,000. She left and I never spoke to her again.

“When she walked out the door, we got on her computer, and over the next hour found out she had stolen over $1 million. Within a day, we had 280 checks that were suspect.  We had never gotten copies of our actual checks from the bank; we just saw the amounts. She would change the checks with her name on it. She was forging my signature. It wasn’t even a good forgery.

“She would give us a profit-loss report on each job. We found she would charge one of her checks to a job in QuickBooks, pull it out for the report, and when the job was closed out, enter the check back in.

“I just felt like it was a huge betrayal, almost like a family member had done this to us. We trusted her. It turns out the $40,000 I loaned her for her house didn’t even go to the down payment because she got a no-down payment loan. I don’t know what she did with it.

“What’s amazing to me is that if she had stopped taking money, I would never have caught her.”

“When times were good, I would sit down with her to go over everyone’s bonus. Then I would give her a bonus she knew was more than I had given anyone else. She’d come into my office with tears in her eyes, thanking me, telling me she was going to keep on working hard. We found out that she wrote herself a check for $8,000 the very next day.

“What’s amazing to me is that if she had stopped taking money, I would never have caught her.

“I met with the police, and they were interested, primarily because of the amount involved and how long it had been going on. But they had to go through a process, because they wanted to make the charges stick. It took a year to even arrest her.

“In the meantime, I filed a $1.8 million civil suit against her and her husband, since we knew he had to be in on it. That cost me $20,000, even though an attorney friend helped out.

“They never responded to the lawsuit, so the court gave us a default judgment. A headhunter called me, asking for a reference because a large developer in town was about to hire her that day. I thought about the possibility of a slander charge, but we had the judgment, so I told the headhunter the whole story. She didn’t get the job.

“She and her husband had filed for bankruptcy, and they tried to get the civil judgment listed as a credit they could get wiped out with the bankruptcy. We’re continuing to fight that.

“They moved to Tennessee but they had to come back for a court date related to their bankruptcy case.  The police were ready. They arrested her as she was leaving the courtroom. She’s been in jail ever since.

“My wife and I have been to several court hearings. We’ve gotten to see her in her orange jump suit with cuffs on. But was really satisfying was what happened this February when she agreed to a plea bargain of 13 years: They read the 43 counts against her, asked her how she plead, and she answered ‘guilty’ 43 times.

“We’re doing OK. We survived because I knew construction was up and down, and I learned from my parents to put money away for bad times. If I hadn’t done that, we wouldn’t have a business. Construction is still slow, but I haven’t had to put more of my personal money into the business in the past year. If this hadn’t happened, we would have been in a different position. I maybe could have used the money to hire a marketing person. Maybe I wouldn’t have had to lay off people or have them take pay cuts.  I’d still have a superintendent who’d been working with me for 18 years.

“I’m looking at every check now, and I’m writing everything down. When we grow enough to hire a financial person, I’ll definitely have different controls in place, and I’ll do a credit report on any candidates. I have learned to have two sets of eyes looking at the actual checks.

“She’ll probably be in jail around six years. To this day, I don’t think she thinks she’s done anything wrong.”

 

 

  [2]


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URLs in this post:

[1] “Are you being embezzled?” story: http://www.theconstructionuniversity.com/are-you-being-embezzled/

[2]  : http://www.marquetinternational.com/pdf/the_2011_marquet_report_on_embezzlement.pdf

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