Case #5: Scouts Honor—No Organization is Immune

The Conviction:
In February 2010, after entering guilty pleas to three felony theft charges and one misdemeanor, this former volunteer Cub Scout treasurer received a sentence of 45 days in jail and 100 hours of community service for stealing more than $4,000 from a Cub Scout pack’s funds.

The Alleged Scheme:
Unbeknownst to anyone other than the perpetrator, between December 2008 and March 2009, a total of over $4,000 was deceitfully removed from a Cub Scout pack’s funds. An investigation revealed that these thefts started in December 2008, only a few months after the defendant began volunteering for the Scouts as their treasurer. Furthermore, according to court documents, the defendant’s purposes was to deprive the Cub Scout pack of their funds by writing checks made out to cash and cashing those checks at local banks in three towns.

The Scheme’s Downfall:
The thefts continued from December 2008 until March 2009, when the scout pack’s leader discovered money missing from a checking account.

Lessons Learned:

• The most frequent enabler of internal fraud or theft is that many of those responsible for providing supervision do not have reasonable knowledge of how internal fraud and theft occur and what actions they should take on a regular basis to prevent such crimes from happening. Education and re-education are key when it comes to fraud prevention.
• Internal fraud does not “just happen”. Fraudsters are generally very cunning people who depend upon coworkers or management misinterpreting the obvious—or upon their skill to divert attention away from their deceitful act. Internal fraudsters are generally the people that employers trust the most.
• Unqualified trust causes an overwhelming number of owners and managers to fail in their jobs because they naively assume that their operation is immune from internal fraud. After all, these managers reason, they have loyal, long-term and highly trusted employees or volunteers handling their highest-risk financial activities. Few understand that whenever trust is incorrectly bestowed, problems are likely to follow.

It does not matter where you look these days, incidents of dishonesty and deceit are happening practically everywhere, and it is becoming more and more difficult to know whom to trust.

So, whom can you really trust? Chapter 9 of Business Fraud: From Trust To Betrayal is packed with information revealing the answer to this question as it describes how minimizing internal fraud within any operation can be very simple.

Be informed – learn from the experiences of others. Get involved – and YOU will be prepared.

Read more in Business Fraud: From Trust To Betrayal