A 45-year-old Naugatuck, Connecticut woman pled guilty to a bank fraud felony arising from an $865,106 embezzlement scheme, according to the office of the United States Attorney for the District of Connecticut. The conviction carries a maximum term of 30 years in prison.

The defendant performed bookkeeping and other office-related tasks as an employee of a family-owned business. Between 2017 and 2023, she created roughly 1,000 checks made payable to her, then forged the signature of the company's owner and cashed them, adding to her personal bank account. After checks were issued, the defendant deleted the transaction in the employer's accounting system. "Naugatuck woman pleads guilty to $865K embezzlement scheme" www.wtnh.com (Sep. 27, 2024).

Commentary

Without regard to the length of service or the position within an organization, financial soundness requires multiple layers of oversight over employees managing finances in order to prevent crimes.

Create permanent "footprints" in your financial system that cannot be erased so that there is always a clear audit trail. This could include keeping corporate checks under lock and key, with a check log clearly showing who is in control of and responsible for which check series, numbering invoices, or making sure that all financial software is set up with individual logins for any team member who needs to access to that information. Be sure that the software permanently tracks any changes to the accounting and who made those changes.

Another tool is the "Positive Pay" Notification. Many banks offer this service, wherein the client sends the bank a list of the checks written each day or week. The bank compares that list of checks to those it is paying out. This can help prevent an embezzler from trying to slip extra checks into the weekly run, as those checks not on the list will be flagged before they are paid.

Alternatively, your bank can send you a list of all checks paid on your account, so you can compare that list with yours. By doing this, even if, as in this case, an employee deletes the transaction from the bookkeeping software in an attempt to hide the crime, the bank will provide a second, independent backstop to prevent the crime from completion.