Epiosde 73: Business Embezzlement Cases | Tracy Coenen & Mary Breslin
This summer while at the ACFE Global Fraud Conference several speakers and friends of the podcast got together to play an escape room. Before and after the escape room adventure, Leah found herself engrossed in stories from investigators around the US and didn’t want the conversation to end. It was these valuable conversations that inspired the format for the next 6 episodes of the podcast. For the remainder of 2022, Leah is joined by investigators to share case stories from investigations worked in a variety of areas.
In this episode, Leah is joined by Tracy Coenen CPA, CFF, MAFF and Mary Breslin, CFE, CIA who discuss cases involving embezzlement from businesses.
Data Sleuth: Using Data in Forensic Accounting Engagements and Fraud Investigations by Leah Wietholter, CFE, PI, CPA
When Leah joined the financial investigation industry over 15 years ago, her goal was to work as many cases as possible, but getting those first few cases felt extremely challenging with questions like, “How do I get the casework without the experience? And how do I get the experience without the casework? And when I get the casework, will I know what to do?”
Based on her experience of working over 200 cases in her career, she wrote Data Sleuth® to help others facing this very problem. It is the book she needed so many years ago. In this book, she explains how to start a financial investigation from case planning, to finding best evidence, to incorporating non-financial evidence – like interviews and open source intelligence, and ultimately, how to put it altogether for clients or even law enforcement with step by step details and case examples. If you want to gain confidence in financial investigations to build your case experience, you need to read Leah’s book. Data Sleuth® is available on Amazon, Goodreads, or wherever you like to buy books!
Tracy Coenen CPA, CFF, MAFF
Tracy has been investigating fraud for more than 25 years, but she didn’t always want to be a forensic accountant. With a dream of one day being a prison warden, Tracy went to Marquette University in Milwaukee, WI to get a criminology degree. A class on financial crime investigations reminded her how much she loved Encyclopedia Brown books as a kid. She continued her criminology degree, but added accounting and economics courses so she could sit for the CPA exam. Tracy is a Certified Public Accountant and holds the designations Certified in Financial Forensics and Master Analyst in Financial Forensics.
Now, Tracy is finding money in cases of corporate fraud, high net worth divorce, and other financial shenanigans.
LinkedIn: https://www.linkedin.com/in/tracycoenen/
Website: http://sequenceinc.com/
Mary Breslin, CFE, CIA
Mary Breslin is the Founder of Verracy and an internationally recognized speaker and training facilitator for Internal Audit, Risk and Fraud. When she is not speaking publicly or facilitating trainings, Ms. Breslin conducts fraud investigations and provides management consulting for internal audit and fraud.
Ms. Breslin has over 25 years of experience in Internal Audit, Fraud, Accounting and Management, including working for global companies like Costco, Barclay’s Capital, ConocoPhillips, and Boart Longyear. She has implemented and managed audit programs in more than 50 countries. Additionally, she has led fraud investigations in numerous countries spanning six continents.
Ms. Breslin attended Rutgers University and University of Phoenix. She is a Certified Internal Auditor (CIA) and a Certified Fraud Examiner (CFE).
Connect with Mary:
LinkedIn: https://www.linkedin.com/in/marybreslin/
Website: http://www.verracy.com/
Connect with Workman Forensics
Youtube: @WorkmanForensics
LinkedIn: @workmanforensics
Subscribe and listen to this and more episodes of The Investigation Game on Apple Podcasts, Android, or anywhere you listen.
Transcript
Leah Wietholter:
Welcome to the Investigation Game podcast. I’m your host, Leah Wietholter, CEO and founder of
Workman Forensics in Tulsa, Oklahoma, and the author of Data Sleuth, using data in forensic accounting
engagements and fraud investigations. This summer, while at the ACFE Global Fraud Conference, several
speakers and friends of the podcast and I got together to play an escape room. Before and after our
escape room adventure. I found myself engrossed in stories from investigators around the U.S and I
didn’t want the conversation to end. It was these valuable conversations that inspired the format for the
next series of Investigation Game podcast episodes. So for the remainder of 2022, at least, I’ve invited
investigators to join me in sharing case stories from investigations worked in a variety of areas. In this
episode, Tracy Coenen and Mary Breslin and I discuss cases involving embezzlements from businesses.
Tracy Coenen has been investigating fraud for more than 25 years, but she didn’t always want to be a
forensic accountant. With the dream of one day being a prison warden, Tracy went to Marquette
University in Milwaukee, Wisconsin to get a criminology degree. A class on financial crime investigations
reminded her how much she loved Encyclopedia Brown books as a kid. She continued her criminology
degree, but added accounting and economics courses so she could sit for the CPA exam. Tracy is a
certified public accountant and holds the designation certified in financial forensics and master analyst
in financial forensics. Now, Tracy is finding money in cases of corporate fraud, high net worth divorce,
and other financial shenanigans. Mary Breslin is the founder of Verracy and an internationally
recognized speaker and training facilitator for internal audit, risk and fraud. When she’s not speaking
publicly or facilitating trainings, Mary conducts fraud investigations and provides management
consulting for internal audit and fraud. Mary has over 25 years of experience in internal audit fraud
accounting and management, including working for global companies like Costco, Barclays Capital and
ConocoPhillips.
She has implemented and managed audit programs in more than 50 countries. Additionally, she has led
fraud investigations in numerous countries spanning six continents. Mary attended Rutgers University
and University of Phoenix, and she is a certified internal auditor and a certified fraud examiner.
Welcome to the Investigation Game podcast. I’m super excited to talk today because today I am going to
be sharing case stories with Tracy Coenen and Mary Breslin. Two pros in the field, and today we’re going
to be talking about embezzlement from a business. So that’s all the intro we get. We just got to jump
into this. So Tracy, take it away.
Tracy Coenen:
So I have to be exciting right out of the gates, right?
Leah Wietholter:
Yeah.
Tracy Coenen:
Okay. So the case that I chose is one that I worked a couple of years ago, and it involved the general
manager of a hotel. It was a hotel chain, right? An individual franchisee with a branded hotel in kind of a
smaller town in Wisconsin. And the company used a bookkeeping service to do their books because the
owner just had a couple of hotels here and there. And the bookkeeper discovered some unusual
transactions. And so they said, we need an internal audit. And so they contracted with a company to do
an internal audit, and they found some evidence of theft, they thought, but they weren’t confident in
the amount of theft or the methods that were used. So that’s when they decided to find a forensic
accountant to do it for them.
And the things that they found were things like entries made to house accounts and group stays, which
seemed to adjust cash balances, but they weren’t exactly sure how. They found transfers in and out of
accounts that didn’t appear to be business transactions. They appeared to be kind of nothing
transactions. They found strange refunds, and ultimately they thought there must be a cash theft here,
but were not quite sure. So what I had to do when I came in is do a detailed reconciliation of each day’s
activity. And that sounded really boring to me because I mean, that just seems so run of the mill, but it
actually ended up being really complicated because of what the general manager did with these entries.
And so what I started looking at was the cash and the checks that they received. And now you’re
thinking to yourself a hotel, doesn’t everyone pay with credit card?
Yeah. For the most part, people of course do pay with a credit card or a debit card, so there was really
nothing he could manipulate with that. But when it came to banquets or weddings where they would be
giving a check for a deposit or when they would have events, they had a rooftop where they had events.
And there was one particular event that happened once a year. It was a week long festival type of thing
that happened in the area, and it was huge, brings in people from all over the country. And so every
night they had a cash bar up there and a lot of money coming in. So those were the kinds of things that
were generating checks and cash. And so what I was looking for was every entry that was made that
adjusted the cash to see if that was legitimate.
And so what I found was that he had accounting entries with a description called due back, which was a
description that they would use if there was a refund due to a customer. But customers don’t get cash
back. So the only way they said you could ever get cash back as a customer is if you came in and put
down a $100 as a deposit towards a room at the hotel, let’s say, and then came back later the exact
same day, you would get a cash refund. But if you came back a day later and said, I don’t want the room
anymore, you’re not getting a cash refund. And so they knew that cash refunds were very rare. So every
entry that had due back for a refund was already suspect. He literally made hundreds of these entries
using house accounts, and that was even more suspicious because those are internal accounts where
there would never be a refund due.
The internal accounts were used to move costs from one department to another. Right? Or reclassify
something. So when he was confronted prior to me being brought in, he said that he had been using
cash to pay employees and other vendors, and that he was making these entries so that the cash would
be accounted for. Now, there were some employees who backed up his story that they were receiving
some cash under the table, but we didn’t think it could be to the extent that I found. So here’s what I did
very quickly, I determined how much cash and checks were collected every day because the system was
recording that and we believed it was recorded accurately. I then compared that to the amount
deposited to the bank, and the bank deposits weren’t done every single day. So sometimes there was
some overlap, but ultimately I was able to figure out what was undeposited cash.
And then I looked at all of these adjusting entries and looked at any that might have a reasonable
explanation, and I gave them a lot of benefit of the doubt on that. And if there seemed to be a reason,
like he paid, let’s say a carpet cleaning company that sounded legitimate, I gave him the benefit of the
doubt. Even though management said, we’re really not sure because what carpet cleaning company is
going to take a pile of cash from us. Ultimately, over a two year period, he had $142,000 of cash that
was collected and never deposited. I gave him the benefit of the doubt on about $35,000 that I said,
okay, assuming those are business expenses that left $107,000 cash missing two years, smallish hotel.
Leah Wietholter:
Dang. So the general manager was actually putting the transactions into the accounting system?
Tracy Coenen:
Yes. And at some point, he and his next closest employee made some comments that, well, we didn’t log
ourselves in, people would use other people’s logins for the computer. And so they tried to further
confuse it that way so that we would potentially say, oh, maybe he didn’t make these entries and
someone else did. But through looking through the entries, it really did appear that the people whose
names were on the entries really did make them.
Leah Wietholter:
Yeah.
Tracy Coenen:
And so yeah, the general manager was making all of these accounting entries.
Leah Wietholter:
I like the little clues like due back. Due back from who? Right?
Tracy Coenen:
Well, and I did things like I counted the number of entries that he made that were due back versus how
much the other employees made that were due back, right? And so of course, his was off the charts
compared to everyone else. And then his explanation was, well, of course I’m the general manager.
Well, no, you have actually an accounting person, your night auditor or whatever would’ve been making
those entries. Should have been not you as the general manager.
Leah Wietholter:
Was the case prosecuted?
Tracy Coenen:
It was, it was.
Leah Wietholter:
And it was cash. Wow.
Tracy Coenen:
Yes. So he ultimately ended up pleading guilty, and he ended up getting a little bit of jail time. I think he
got six months of jail time with work release and two years of probation, and a large restitution order
that he is paying at the rate of $1,500 a month. So this company went hard after him. They were very
well capitalized, and they wanted to make an example of him. What we thought was interesting was
that upon being fired from this hotel, he got hired at another hotel in town and still has that job to this
day.
Leah Wietholter:
Oh, wow. As a GM.
Tracy Coenen:
Yeah.
Mary Breslin:
No background check.
Tracy Coenen:
Right, right. So they went after him immediately with a civil suit, and they got the police involved
immediately. And what was interesting was my report ended up being a lot more complicated than I
reports to be. I’m, I’m always one who likes to break it down, super simply take someone from point A
to B to C to D. But these entries were confusing to explain, and I was really worried that the police and
the prosecutor weren’t going to understand why I have proven that this cash is actually missing because
they were confusing entries and it was, so I had gigantic spreadsheet with every day on it for a two year
period with each day individually reconciled and with a code for which type of theft or which adjusting
entry he made.
Leah Wietholter:
Oh, wow. Yeah. So I guess they followed it though. If they got it prosecuted...
Tracy Coenen:
They did.
Leah Wietholter:
Took it and prosecuted. So it was prosecuted at the state level.
Tracy Coenen:
Yes.
Leah Wietholter:
Something that I thought was interesting that I’ve been talking to my team about lately is, and we have
lots of internal auditors that listen to this podcast, so this is a lot of love for internal audit. This is just
distinguishing between an internal audit. They noticed weird things, but then they asked you to come in.
And the way I would interpret what you said, hopefully I’m not putting your words in your mouth, was
they needed to know the story, the story behind, and how to put together the evidence behind what
actually happened. Where did that money go?
Tracy Coenen:
Right. I think that’s where fraud investigators and forensic accountants are really beneficial is we know
how to present that story and present that data in a compelling way. I think people who don’t do fraud
all the time, they do the best they can with the tools that they have, and they come to correct
conclusions. But when it comes to presenting them, it’s not often as understandable as maybe a forensic
accountant might put it together. So also love for internal auditors, right? They are holders of all the
data and they can find the answer to anything. But I love it when they say, okay, we need a little help
here to fully close the loop on this fraud.
Leah Wietholter:
And they know their business and they know the analytics, so they know what looks, so they know, it’s
like that starting point. And then by connecting, either learning how to do a fraud investigation or
connecting with forensic accountants or fraud investigators to take that to the end. And because you
were looking for evidence of the story as well, not just the evidence of the loss. So what was this guy
doing to hide it? So that’s a really interesting story. So good for this group to really go after him.
Tracy Coenen:
That’s what kind of made this one fun. The level of detailed work in reconciling every day was a lot more
than I anticipated on the front end. I was like, oh, okay, simple reconciliation type of thing. And it ended
up being a lot more detailed and a little bit frustrating, trying to sort all of that out and make sure, okay,
did I reconcile that day or not? Right? Keeping track of all that. But it was super satisfying because this
company was just not going to let this go. They were like, no, we are holding him accountable for it.
Leah Wietholter:
Well, thank you Tracy. Great story. When I joined the financial investigation industry over 15 years ago,
my goal was to work as many cases as possible, but getting those first few cases felt extremely
challenging. For example, how do I get the case work without the experience? And then how do I get the
experience without the case work? And when I get the case work, will I know what to do? So I wrote
Data sleuth, Using Data in Forensic Accounting Engagements and Fraud Investigations to solve this very
problem. It is the book I needed so many years ago. In this book, I explain how to start a financial
investigation from case planning to finding best evidence, to incorporating non-financial evidence like
interviews and open source intelligence, and ultimately how to put it all together for your client or even
law enforcement with step-by-step details and case examples. If you want to gain confidence in financial
investigations to build your case experience, you need to read my book. Data Sleuth is available on
Amazon, Goodreads or wherever you like to buy books. All right, Mary, it’s your turn. What do you have
for us?
Mary Breslin:
Even more torn now? Because one of my more recent big cases was a hotel case, a resort case, but I
think I’m going to save that for another day, Leah, because that one really, the story is really around
data analytics more than anything because similar to Leah’s story, the reconciliation was even more
than by day, which we had to do by day. So similar, it was interesting listening to your experience
because I had a similar one. We also had to do it by individual line item. So we had to follow drinks and
food through movement because they were using transfer scheme in the system to commit the fraud
and steal cash. So that story’s more about data analytics. So I’ll save that for another day. I’m going to
talk about something I encountered when I was at Mining company where I more love to the internal
auditors was the chief auditor.
My background is I’m lifetime auditor, but I’m also a forensic accountant and been a certified fraud
examiner for I don’t know how long, 15 years or so. And I showed up at work one day after being out on
travel for quite some time. Company was a huge mining organization, big global footprint. So a lot of us
did a lot of international travel. I’d been gone for a couple weeks, I come back, I pull into the parking lot
and there is a $250,000 car parked in the parking lot, like sideways, across four spots. Still have dealer
plates on it, the whole nine yards. And I knew it was not an executive car because the executives had all
just gone through this car buying competition like six months earlier. And they didn’t buy fancy cars.
They bought, I think the most expensive one they bought was an Audi R6 or Audi A6.
This transcript was exported on Oct 18, 2022 - view latest version here.
And their competition was to see who could get the best deal, get it over better on the sales guy kind of
thing, right? Instead of buying Maseratis and Lamborghinis and stuff, they were trying to get the best
deal and compete with each other. So I’m like, I don’t think this is an executive’s car. I got to figure out
who this is. So I walk in and of course who always knows everything, the receptionist. So I go straight to
her and I’m like, who’s got the fancy Audi A8 out there? And she’s like, Oh, that’s Charlie. And I’m like,
Uh oh, in my mind, because I know who Charlie is. And since I’m the chief auditor, I know how much
Charlie makes. And Charlie is either up in his eyeballs to debt, with debt, or he’s living in a van down by
the river, right? So I walk to my office and I’m thinking about this and having done dozens upon dozens
of fraud cases already in my career, at that point, I knew that this was a huge red flag.
But because somebody bought an expensive car does not mean I can start a fraud investigation on
them. I don’t have predication, right? So I go to my boss who happens to be general counsel, and that’s
how much fraud we had in this organization. I was in charge of fraud investigations that I reported
administratively to general counsel as opposed to the CFO’s house, because a lot of the problems were
the CFO’s house. I still reported the board, of course, but so I go and I tell him about the car and he’s
like, well, are there any other suspicious activities or red flags? And I go, not that I know of. And he’s
like, okay. And what this gentleman did for us was he was in charge of our fleet management. We had
about a hundred thousand rolling vehicles in the organization, and it was his job. He was hired about a
year and a half earlier to come in and right size the fleet, which meant we were selling thousands upon
vehicles through auction and buying thousands more to replace them.
There was a lot of movement. And we all know fraudsters love chaos. They love complexity and they
love volume. And we had all three going on in that particular scenario. Another red flag was when right
before we brought this guy in, we had audited the fleet management process because we were looking
for somebody to hire to right size it, to fix it. We knew it was a dumpster fire, what was going on with all
of our vehicles. And so we had done this great audit and Charlie kept coming back with the audit going,
hey, here it says that this could be a problem. Why? Very interested in the audit. This says this could
lead to potential fraud. How? Right? And leaning on hindsight, little too interested. We were just excited
somebody cared that much about the audit. So we got bamboozled on that one. Now, just because I
didn’t have predication to start investigation didn’t mean I can’t use some of the techniques that
fraudsters use, right?
So I social engineered him, I waited till it was cake Day. We had cake Day. A lot of people have cake Day
in their organizations prior to the pandemic when sharing food was a thing, Celebrate everybody’s
birthday. And I bumped into him on cake day in one of our bigger break rooms, knowing that he’d never
missed cake day. Bumped into him being, I hung out there for 50 minutes waiting for him to show up.
And I waited to eat a big old mouth full of cake. And I went over to him, I’m like, hey Charlie, when did
you get that brand new car? That is my husband’s absolute favorite car. It is gorgeous. Can I take a
picture sitting in it and send it to my husband, make him all jealous? Ooh, can I ride it? Can I drive it?
You’ll take a video and then I can send it to my husband. He’s like, that thing [inaudible 00:18:08]. And as
I’m doing this crazy female thing, I can just see all the colors raining from his face because he knows who
I am and he knows what I do for the organization. And he says, well, you’re never going to believe this.
It’s a funny thing. And I go, huh, I think I’m not going to believe it in my mind. He goes, this is incredible,
you’re going to be so surprised to hear this. And I go, I bet I am. And he says, my wife inherited $250,000
from...
Leah Wietholter:
Inheritance, always the inheritance.
Mary Breslin:
She didn’t even know she had. And two things went through my mind. The first one was nonsense. They
don’t even do that in movies cause it’s so not believable. The second thing that went through my head
was, your wife inherited $250,000 and she’ll let you spend 200 of them on a car.
I don’t think so. And so we have this moment. I look at him and he knows I know. And I know he knows I
know, and I know he knows that I know he knows I know, right? It’s like one of those exchanges. And we
kind of both walk away and I go straight to general counsel and I go, I got him. This is a problem. And he
is like, all right, well go do your thing. You have permission. And so I pull my team in and I’m like, we just
audited this a year and a half. Pull out the audit, we know what’s going on, call my data analyst. I’m like,
get online with the two auction houses. We’re using two major auction houses. One that was
headquartered out of New York State, one that was headquartered out of California. And they had
locations all over North America.
And the plan was once he finished in North America, he was going to move on to South America, then
Australia, then Africa. So this was going to go on for a couple years, this right sizing. And so we get the
data, we get the raw data from the two auction houses. They supplied it to us within hours. Both of
them, sent it over electronically, so we had all of the sales, every single sale that had been done. We
pulled the contracts for both of the deals that we had made with these two auction firms. And we
looked at them and right away we noticed a couple things because we were looking at it with an auditor
eye and fraud examiner eye at this point. And we noticed that in the contract, the check for the sale was
supposed to be a live check from each of them. And it was supposed to be mailed directly to him at the
company.
That’s not what normally happens in a situation like that. It should be a wire transfer if you want to send
him the reports, great. So it turned out he was receiving the check and the mail with the report from
both of these. And he had gone down to our bank, down the street, our bank where we banked and had
opened up three accounts. All three of them being look-alike accounts. One looked like our company, one
looked like the auction house company on the north in New York. The other looked like the auction
house in California. And he would deposit the check. And he was all friendly with the folks at the bank.
We interviewed all of them. He went in with the story, hey, we’re doing this special project, we want a
special account just for, and they were like, okay, here, let’s sign you up. And then he had electronically
remotely opened up the other two accounts under pseudonyms.
And he would deposit the account, he’d move the funds over to the lookalike account for the auction
houses. He would get those reports. He had them mailed to him, but he had also asked that they be
electronically sent to him so he could file them electronically. So he received the PDFs, he used Adobe
Pro, he changed the report each and every time. Took a couple thousand dollars off every single time,
printed up the new report, printed out a new manual check of the lookalike account. Took that check,
took the new report that he had skimmed thousands of dollars off of, folded it back up, put it back in the
original envelope and took it to accounting.
And it took us about 24 hours to have him nailed dead to rights. We had it all figured out to the penny
using data analytics. Cause we just pulled all the information out of our system, everything that was
recorded in accounting, everything that the auction houses has sent us. We went back, we pulled all of
the information that he had provided to accounting. We can see where all the numbers had been
changed. We had all the original electronic reports from the two auction homes. And within about 72
hours, we had him taken out in handcuffs. He stole $1.8 million in under a year and a half,
And he got two years. So what was interesting is I had to go back to my boss and say, hey, I might have
taught him how to do this because he had so much interest in our audit and we kept answering tons of
questions for him. And I think maybe we need to think about how we present some information. I
certainly don’t want to teach people how to commit fraud. And he was like, okay, well we’ll talk about
that. The day after I had that conversation with him, my boss calls me back into the office. He’s like,
you’re never going to believe this, the assistant attorney general for the state of New York just called
me. And I was like, okay. And he goes, they have a warrant for Charlie. And I go, What? He’s like, it turns
out Charlie committed pretty much the same fraud at his last organization. It took them two years to
figure it out though. So after he got out of jail for us, he was tried for that and got another five years.
Leah Wietholter:
Wow. Do you know how much that case was?
Mary Breslin:
I think that case was a little bit less. It was just under a million.
Leah Wietholter:
Yeah. That’s so elaborate. So much time out of his day doing this to think about how to do that. So I
guess you actually didn’t teach him how to do it if he had already been doing it.
Mary Breslin:
No, I didn’t. My validation was finding out that he had been doing it prior to us. He was probably
needling us for specific information that he needed. Probably trying to find what would be the most
likely approach for stuff, but...
Leah Wietholter:
Yeah. Wow.
Tracy Coenen:
And to quote Mary, fraudsters like chaos, complexity and volume.
Mary Breslin:
Yes.
Tracy Coenen:
Right? So true.
Mary Breslin:
Yeah. Cause they can hide in it. They can hide in plain sight. And that’s why anybody who’s listened to
me speak before knows I was a very early adopter of data analytics. I’ve been doing it for over 20 years.
And to me that’s my pseudo armor, is the data analytics, because you’re not going to hide in chaos,
complexity and volume. If I’m looking at your stuff.
Leah Wietholter:
That’s awesome. What a fascinating scheme for this guy. Because in a larger organization, in smaller
organizations that can’t afford to maybe have the recommended segregation of duties and internal
controls, we can kind of see, okay, this is where the risk would be. But in something like this, he had to
interview you guys to see, okay, where are the loopholes here? Because there would’ve been internal
control, segregation of duties.
Mary Breslin:
He created his own loophole. He was heavily involved in negotiating the contract with the auction
houses because that’s what he was hired for. This was his fleet management, was his career. And so the
lawyers, I spoke to our legal counsel team afterward. They were so focused on certain terms and
conditions, and this is what happens period with professionals is we get blinded because we’re focused
on one little aspect of something, right?
This is cognitive bias. We talk about this all the time, that streetlight bias. We get very focused. That’s
what was happening. The lawyers were very focused on particulars about the legalese. And they did not
even notice when he changed the remit to information so that it came to him. And it’s not something
they would’ve picked up on because it would, Oh yeah, he’s in charge. And they would’ve just like
breezed right past it, which I’m sure more than one of them read it. And then it didn’t click that that was
problem. An accountant would go, wait a minute, no, why would we ever, we would never want paper
checks, risk. But the legal team didn’t even notice they did from that point forward. I’m sure that
became a checklist item when it came to contracts after that, but, he created the loophole. Yep.
Leah Wietholter:
Yeah. Wow. Well, to kind of piggyback off of both of your stories, I have a smaller case that was just a
several hundred thousand dollars loss, but it was a small business owner in oil and gas, kind of oil and
gas consulting. So a really small team. And so the bookkeeper of course, handled everything, trusted her
for years, yada yada. One day he just notices something’s wrong with cash. He’s also an accountant and
is like, Gosh, I really think we should have more money than this. So he goes and looks at his bank
statements and then notices that there are credit card payments paid out of the bank account. And he
says, we don’t even have a credit card like this. Why are these being paid? And there were several and
there were some confusion about the credit cards and then also just kind of some weird purchases that
he noticed.
So he decided, he hired, contacted his attorney and they confronted the subject and said, hey, we want
you to go through all of these and identify all of the loss. We want you to tell us. We know these aren’t
for the business, so we want you to identify it. Well, then they called us and said, hey, we want to put
together a restitution agreement, and she’s just going to agree to pay this back, but we want you to
check her numbers. So we said, Okay. And so we go in and of course, and this is how it kind of
piggybacks both of these.
So we used our data analytics, or what we call our Data Sleuth process to run something really simple.
First of all, just our source and use, which says, here’s where money came from, here’s where money
went. And so we wanted to verify, all right, the business owner knows about all these credit card
payments and maybe a couple other payroll that looked a little weird, but we wanted to see is this
completely, I mean, she said she stole this money and she’s marked all the bank statements saying, yes, I
did this, I did this.
But there’s no way just looking at bank statements that a subject can quantify all of that and get that all
right, plus why not skip a few? I mean, she didn’t know if somebody was going to check her work. So we
run our source and use. And in doing so, we actually discovered that she had created a ghost vendor, a
fake vendor, and it looked very oil and gas related. And so nobody had picked that up, and that was a
couple hundred thousand dollars more. Then of course, she had skipped, just accidentally skipped a few
extra payroll payments to herself and things like that. So I think all in all, our total was over $500,000 to
this company, where beforehand it had been just a few hundred thousand dollars. I mean a few. The
owner was still mad no matter what. Right? But we ended up quantifying this larger loss.
And so I think that is one of the benefits in the fraud investigation of even when the business owner
says, okay, we found this issue by using data analytics by looking at what we call our source and use. And
then we also ran our interesting data findings where we run a bunch of analytics on bank and credit card
and payroll information to identify, hey, these things look weird from a data perspective.
Nine times, I don’t think there’s been a case yet. We thought we would have one case, it was a theft
from a bank. We thought maybe they had quantified their loss accurately, and then we just needed to
verify it as a third party. But to date, we’ve never had a client who captured a hundred percent of the
loss. We’ve always found more by using data analytics. So that was it, she ended up since, it’s really
funny because the owner was like, if she’ll just pay me back, I’m not going to prosecute all these things.
And he was going to go the state route. And then whenever he saw that she lied to him, not once by just
how she was stealing, but twice in identifying which of those payments had been hers or for her benefit.
Oh yeah, it was gloves off. He was taking her.
Mary Breslin:
That’s a new one for me. I’ve never heard of the victim going back to the fraudster and going, tell me
how much you took. That’s spectacular. [inaudible 00:29:50]
Tracy Coenen:
...my clients. So how much do you think is missing? And they say, oh, we think maybe a $100,000. Okay.
My rule of thumb is multiply that by three. And that’s probably the number that’s really missing.
Mary Breslin:
Yeah. I agree.
Leah Wietholter:
For sure. For sure. Yeah, this client was funny because he really didn’t want to pay professionals to
figure it out because he was an accountant, and so he just thought, well, I’m just going to go ask her. But
yeah, if she lied to you once, she’s probably going to lie to you again. That’s what we kept telling
[inaudible 00:30:21]
Mary Breslin:
...never admit to everything ever. Even when you have it all in front of you, they don’t admit to all of it.
Leah Wietholter:
I know, I know.
Tracy Coenen:
It was just a mistake. That’s all.
Leah Wietholter:
Just a mistake that it went into my bank account and I spent it, but...
Mary Breslin:
It’s my bank account and I spent it.
Leah Wietholter:
Right. Well, Tracy, Mary, this has been so interesting. I love these stories. This is so much fun. Tracy, if
our listeners want to get in touch with you, what’s the best way to do so?
Tracy Coenen:
They can find me on LinkedIn, just search for Tracy Coenen, or they can go to my website,
sequenceinc.com for the company name Sequence Inc.
Leah Wietholter:
Yeah, that would be good to know. And then Mary, what’s the best way for somebody to contact you?
Mary Breslin:
Same thing. You can find me easily on LinkedIn, Mary Breslin, or you can find me through my company
website, Verracy. V-E-R-R-A-C-Y.
Leah Wietholter:
All right, perfect. Thank you both so much for your time.
Mary Breslin:
Thank you.
Tracy Coenen:
Thanks.
Leah Wietholter:
Thank you for listening to the Investigation Game podcast. If you enjoyed this episode, please leave us a
review wherever you listen. The Investigation Game Podcast is a production of Workman Forensics in
Tulsa, Oklahoma. To learn more about our investigation, services and resources, please visit
workmanforensics.com. If you have an investigation case story you’d like to share on a future episode,
please email us at podcast@workmanforensics.com.