Controller Takes a Bite Out of DC Area Restaurant with Embezzlement SchemeBondBeebe
Alex Helfand, ENCE, Computer Forensic Specialist
Whether it is for a business lunch or a quick bite with friends, local DC restaurant Clyde’s is a popular dining option. Unfortunately, the restaurant has become a fraud statistic as their former Controller recently pled guilty to embezzlement.
Nancy Preston, Clyde’s Controller of 30 years, recently pled guilty to embezzling $647,547 over the span of a decade. She used these embezzled funds to pay personal credit card bills and also contracted with a Clyde’s vendor to purchase items for her personal use. In order to conceal her crimes, Preston altered documents, sent false emails to colleagues and falsified credit card statements. She even went so far as to ask vendors to alter invoices for items purchased for personal use. Preston will be sentenced on December 12 and faces a prison sentence of up to 20 years.
This is an unfortunate circumstance for Clyde’s. While we don’t know what internal controls the restaurant has within their financial system, your organization can use this as a learning opportunity. To prevent or more easily detect embezzlement, your organization should implement controls and processes in the following areas:
- Surprise Audits – Organizations should conduct surprise audits to keep employees on their toes so that they don’t become complacent with routine environments. Surprise audits can prevent employees from taking advantage of the areas that lack proper controls.
- Corporate Credit Cards – Don’t overlook corporate-issued credit cards! These cards are one swipe away from employee abuse. If not closely monitored, employees may start using them to charge personal expenditures (just like the Clyde’s Controller).
- Beware of the Loyal Employee – Often, we think of employees with long tenures as the best assets to a business, and generally this is true. However, fraud is often committed by long time employees because they are trusted and given the opportunity. Every company needs proper internal controls, regardless of employee dedication and trustworthiness.
- Provide a Hotline – Hotlines are an easy way to allow employees to anonymously report suspicious activity without fear of being labeled as the office snitch. They are often an effective, low cost way to reduce the risk of undetected fraud.
Embezzlement is by no means easy to detect and the above controls may not have prevented or even detected Nancy Preston’s embezzlement. However, by being cognizant of potential areas of risk and implementing preventive measures, your organization can reduce the chance that an employee will walk off with company funds.