No, it wasn’t a hijacking of a tractor-trailer loaded with $16 million worth of fruitcakes. (Not exactly a product that’s easy to fence.) Nor was it properly labeled a heist. Thieves who steal with a pen and a computer are called “white collar criminals” and their crime is embezzlement.
Missed this big crime in Corsicana in real time with the bust in 2013.
Sandy Jenkins was sentenced in federal court in Dallas Wednesday after pleading guilty in 2014 to charges connected with the embezzlement of nearly $17 million from Collin Street Bakery, where he was comptroller. He was sentenced to 10 years for each count of conspiracy to commit money laundering, mail fraud, and making a false statement to a financial institution. The sentences were ordered to be served concurrently.
You can read the reported details of how this grand embezzlement was perpetrated at the above link to the Corsicana Daily Sun. As well as the really stupid crap this thief purchased with over $17 million. (Hint: a much larger version of the husband/wife McDonnell and Jackson, Jr. duos.
The real story of how the bakery embezzler did it without being detected will not be published. (That would make it too easy to inspire a copycat thief.) However, it is an all too common story.
- A trusted employee of a family owned business.
- No annual CPA audit.
- Weak internal financial control systems.
- Extended period of time in which the embezzlement was perpetrated.
(Missing from this one is the dedicated employee that never takes a vacation.)
Number four is the stuff of nightmares for embezzlement loss control analysts. That’s how some small, almost petty individual thefts can add up. Consider this October 2013 LA Times report Theft case stuns Rialto schools:
An investigative firm hired by the Rialto Unified School District has so far found a “documented” loss of at least $1.8 million but warned it could reach as high as $3.16 million, including discrepancies that could not be documented. School records go back only to 2005.
In this case, some sort of justice was served. ABC7 reportFormer Rialto school accountant who stole $1.8M in lunch money released early from jail.
A former Rialto Unified School District accountant who embezzled at least $1.8 million in student lunch money has been released from prison after serving six months of her five-year sentence.
(Compare that “justice” with: Young black man jailed since April for alleged $5 theft found dead in cell (The Guardian report.)
Small businesses and operations, particularly non-profits, are particularly vulnerable to the “trusted employee” with sticky fingers. While a culture of trusting employees is admirable, it’s no substitute for proper financial management systems. Even the smallest of operations can avail themselves of a minimum level of separations of duties. I was once doing some bookkeeping and tax reporting for a teeny, tiny entity. At one point the principals suggested that they give me the checkbook. My response was, “Are you nuts?” They said, “We trust you.” To which, I said, “That’s irrelevant, and furthermore, anyone in my position that would willingly accept handling the cash and books is precisely the person you shouldn’t trust.”
In the Collin Street Bakery case, if over a million dollars a year could be pilfered, it is much too large not to have an annual CPA audit. Contrary to what some think, CPA’s don’t look for criminal activities in the course of an audit. It’s often more by accident than design when they detect embezzlement in the course of an audit. However, it would have been impossible for an auditor to balance the cash and bank accounts for this bakery which would have led to the discovery of the embezzlement in less than two years from when it began.
CPAs also check out the operating internal controls and make recommendations when they are weak or non-existent. Absent more details, it appears that the thief could issue, void, and send out checks and also do the monthly bank account reconciliation. IOW no separation of duties. A lower limit on the automatic check signing authority wouldn’t have prevented the theft, but might have reduced his total take or at least made it more cumbersome for him to steal in smaller chunks.
Two ancillary observations:
This controller was paid only $50,000 a year (and started at $25,000 fifteen years earlier). That’s low for someone with the proper skills/experience and level of responsibility such a job required. Not that higher compensation attracts employees that don’t steal, but it reduces employee resentment which is often a factor in employee theft.
An exceptionally high standard of living in comparison with an employee’s salary should be noted and in some way questioned. In this case, why would someone that claimed to have inherited a bundle continue working at such a relatively low paying job? Earning a fraction of what a casual observer could see that he and his wife were spending year after year. (The CIA was slow to note this in the case of the USSR spy Aldrich Ames)
btw — While I loathe thieves, but do like a good fruitcake.