Finance News & Insights

Workers gone wild: 7 outrageous cases of employee fraud

 

For some rogue staffers, lifting office supplies or seeking reimbursement on a few minor “non-business related” charges is mere child’s play.

Here are seven of the most over-the-top examples that we could find of in-house theft and employee fraud:

  • $1.2 million in false expenses. David Smith, a former Quest Diagnostics manager, managed to get reimbursed for over $1.2 million in false expenses through a complex web of deception. He set up fake companies, created fake invoices and turned in fake expense reports for payments he’d supposedly made to companies on Quest’s behalf.
    The FBI eventually caught on, and Smith was sentenced to five years in prison. His undoing? In addition to poorly named fake companies like Environmental Tech and Rep Med Services, Smith’s mailing addresses didn’t match up. Example: Environmental Tech’s address was an entrance ramp to a Tampa freeway.
  • Security expert finds — and exploits — $1 million hole in company’s internal controls. It’s not an unheard of scenario: A company hires a former “professional” thief as a theft-prevention specialist because of real-life expertise in the security field. In this case, a former embezzler, Barry Webne, was hired at Block Communications, Inc., as a “theft-prevention specialist.” Rather than protection, Webne ended up writing himself checks on company stock — signed with a signature stamp of a co-worker — cashing the checks, then destroying the canceled checks that were returned to the company. He made false entries in the company’s books to cover his actions. Before he was caught, Webne robbed Block of a staggering $1,138,334!
  • A suspiciously long case of jury duty. Joseph Winstead, a Washington, D.C., postal worker, managed to bilk the USPS out of close to $40,000 in unearned wages over a total of 144 days by claiming he was serving jury duty on an extended federal trial. (The USPS worker fabricated court paperwork to support his reimbursement because he was excused before the deliberations began.)
    He would’ve gotten away with it if he didn’t try his luck again — three years later. After a supervisor caught on, Winstead plead guilty to fraud — in the same federal courthouse where he claimed to have spent over 100 days fulfilling his civic duties.
  • Lots of company property goes missing. The proper safeguards are essential to ensure staffers don’t make off with valuable company property such as PCs, laptops, fax machines and … phone books? Instead of delivering phone books, a former Directory Plus employee squirreled away over 100,000 directories over the course of four years. What did she do with all those numbers? She hid her stash in three storage units — taken out in her name. Estimated losses from the missing phone books: Over $500k!
  • Who counts coins anyway? A former Calgary Transit employee, David Hamilton, pilfered almost $375,000 from his company the old-fashioned way. Over the course of seven years, the former fare counter took coins home with him by hiding them in his bag. That’s an average of $200 per day in quarters, dimes and nickels!
  • IKEA worker nets $400K in refunds. After mastering the furniture company’s phone and mail-order system, Suraj Samaroo started issuing himself refunds for purchases made by customers. Samaroo would cover up his rampant refunding by altering inventory records. In less than a year, he stole almost $400,000.
  • Bookkeeper swipes $350K from bookstore. At an independent bookstore in NC, Bookkeeper Anna Susan Kosak was nabbed for embezzling $348,975. Because Ms. Kosak was the only person to handle the company books, she would write — and cash — checks written out to herself without any oversight.

Of course, employee fraud is no laughing matter. And during times of economic uncertainty, employee theft tends to increase — especially for smaller businesses. Here are four safeguards to keep your company safe.






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  • Stacy

    It does not matter how much you get in these schemes…you will ALWAYS get caught! No one ever gets away with the goods even if it takes years to catch up with you! This is proven every single day time after time with the same results. You’d think that people get that and there’d be less theft but I guess greed outweighs working for what you want and not wanting an iron vacation! You’ll be worse off than when you didn’t have what you stole!

  • Alex Ravski

    I could not help, despite the serious theme of the article regarding fraud to be no laughing matter, but to chuckle at the first story on David Smith’s mailing address being an entrance to a freeway ramp in Tampa. I’d think he would be more careful. However, what I do not find humorous is the fact that he was connected with Quest Diagnostics, of whom I have been a patient before. It just shows that fraud whether directly or indirectly can hit home anytime. It is around us and we are always susceptible to it without any idea that is going on.

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  • Shannon

    Why phone books? You have to pay to store them and who is going to buy one from you?

  • i want to knew what are the evidence of these case?