Case Histories
From tt-inc@inetia.com Mailing List

I know of two cases of misappropriation:

One was a couple that lived in a neighborhood I lived in as a child. The man in the house across the street was an insurance agent, and took money from the public on newly written or renewed policies but did not deposit the money right away with the insurance company. He deposited in a personal account, using it for awhile, living on the float. There was a gap in time for various policies, where the public thought they were covered but were not. Went on for years or months until one day one of these suckers uninsured who thought they were insured had an accident. I don't know what the outcome was, but he doesn't sell insurance anymore.

The Second was a situation that arose internally in an employer, decades ago. This firm had a man in accounting, accounts payable where they paid for supplies the company used, who set about stealing and got caught red handed. The department had checks and balances, requiring more than one person to get a check out the door. As I recall, this man had a friend in another state who faked invoices. The insider was responsible for checking and approving invoices as representing valid shipments received. Maybe he used the same shipment over and over again, I don't know, or maybe he was just required to initial the invoice as having been checked. Then a second person wrote the checks.

They got caught only because the associate was in the midst of a messy divorce, and the soon to be ex-wife told on her husband, probably to get back on a philanderer. Maybe this scheme would have been caught at year end, when the goods received and checks paid out did not balance, but if he was forging loading dock forms, they would never catch this! Maybe a foreman down there would be asked why he needed so many boxes or something, but it could have gone on forever in a large company without notice!

Now, given those types of situations, how to build in controls that are not overbearing and impossible to implement?