Bamboozled by Embezzlement

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Embezzlement occurs when someone in a position of trust, such as an employee in charge of financial matters, uses an organization’s assets for their own personal benefit. (Small organizations are often bamboozled by embezzlement because it is sometimes difficult to detect in smaller organizations that don’t have enough staff to provide oversight.) An article published by the Burlington Free Press tells how an employee of a small town rescue squad embezzled more than a quarter of a million dollars and used it for her personal benefit before being discovered.

The story explains that the rescue squad embezzlement case went undetected until uncovered by investigators in an unrelated embezzlement case at a local credit union. A former credit union manager, who was convicted of embezzling more than $630,000 from customers, also made a $98,000 loan to the local rescue squad where she was a member.

Internal Revenue Service (IRS) investigators used tax returns, bank records and other documents to trace missing funds as well as search warrants for the employee’s home and the ambulance station. (Agents found that over a three-year period, the female ambulance employee wrote more than 400 checks on the company’s bank account to pay off her 14 personal credit card bills and loans for her home and car.)

The story details that the ambulance company had business receipts of more than $1.5 million when the employee with responsibility for the organization’s purse strings diverted over $250,000. (Who wouldn’t like to have a little extra cash lying around?) According to the article, agents also discovered that the rescue squad employee filed a false tax return that she certified to be true. (She claimed her income was more than $75,000 lower than it really was and as a result evaded a tax bill of more than $21,500.)

The 44-year-old woman agreed to participate as the investigation continued. (That was definitely a good decision. Otherwise, charges against her could have been worse.) She ended up pleading guilty to committing wire fraud and filing a false tax return. Her sentencing has been scheduled.

Chances are these two women thought they would never be caught because they were in positions of power and trusted by those around them. (Unfortunately, this is the perfect breeding ground for embezzlement.) Embezzlement often occurs because there are no internal controls established for maintaining accountability between the receipt and disbursement of funds. (One person should not control both responsibilities.) Congratulations to the IRS for catching these two fraudsters and holding them both accountable for their illegal actions.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Derby Line Woman Admits Tax Fraud,” written by Mike Donoghue and published by the Burlington Free Press on June 18, 2015.

A Derby Line woman, who embezzled more than $250,000 from a local rescue squad, was uncovered during an unrelated embezzlement at the Border Lodge Credit Union, court records show.

Amy C. Fletcher, 44, of Derby Line pleaded guilty in U.S. District Court in Brattleboro this week to committing wire fraud and filing a false tax return.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.