Last week, at Saratoga County Court, I attended the sentencing of one of my client’s former employees who, ultimately, admitted she stole $500,000 and plead guilty to grand larceny and falsifying business records. It is rewarding to know that I was able to help the company’s owners achieve this outcome. That is the best part of my business! Without my objective forensic accounting analysis, my clients would not be able to make informed decisions about the financial dispute, litigation or other critical business challenge they are currently faced with! The issues I am hired to assist with vary widely from shareholder/stakeholder disputes, divorces, bankruptcy matters, employee fraud, construction contract accountings, personal injury losses, to business lost profits and other economic damages in contract disputes and medical malpractice matters.
In this case, I investigated the employee’s theft through detailed review of the company’s accounting records, credit card statements, receipts from vendors, etc. and determined the amount of losses. I reported my findings to the company’s owners, their attorney, and the Saratoga County District Attorney’s office and assisted the DA’s office as they processed this case.
I was retained by the company after the employee was arrested. However, sometimes I am hired at the onset of the concern or awareness of red flag(s) to help with the initial investigation as well. I have also been hired by the accused when they are defending against the allegations.
In addition, I assist the victim organizations with the proof of loss submitted for the insurance claim. Unfortunately, though, companies usually don’t have enough coverage to recoup their losses. I recommend that companies re-evaluate the amount of their fidelity (crime) insurance coverage considering the Association of Certified Fraud Examiners reports that the median (mid-point) loss for cases of fraud perpetrated within an organization is $150,000 and it can be much greater.
Organizations can better prevent fraud by evaluating and improving internal controls. This should include making sure employees, particularly those within the accounting departments, do not have too much responsibility in relation to key accounting functions, and/or implementing proper checks and balances, which will also help to detect a fraud scheme quicker.
How this forensic accountant revealed $500,000 in employee theft.
Published 10/9/17 By Chelsea Diana
Pamela Wickes, a CPA and forensic accountant, was behind the recent discovery that an employee of Creatacor stole $500,000 from the company over more than four years.
Discovering theft within companies is one of the specialties Wickes explores at her accounting firm, Wickes Forensic Accounting & Consulting, LLC. The firm focuses on forensic accounting, litigation support, consulting and divorce financial services.
The case Wickes worked on was settled last week, when the Creatacor employee, Jean M. Hatalsky plead guilty to grand larceny in the second degree.
Hatalsky admitted on Thursday to the Saratoga County Court Judge that she stole $500,000 from her employer, Creatacor, between January 2011 and September 2015. She also admitted to falsifying business records to conceal that she was stealing money from the company.
Hatalsky’s false entries made it look like the money was spent on business expenses. She was actually using the credit cards to purchase personal items for herself and her family, including vacations and meals at restaurants.
She has agreed to pay the full amount back to Creatacor.
Wickes said Creatacor reached out to her to uncover and trace the theft back to Hatalsky after a preliminary investigation.
“They realized they needed to dig in a lot deeper,” Wickes said. “They hired an attorney and that’s when they reached out to me. They needed to get behind what was going on. Get some guidance.”
Wickes said most cases of fraud are detected by tips and that companies should have a safe way for employees to report potential mismanagement.
“The first thing I always do is ask, of the person who they are suspicious of, ‘what are their roles and duties, the things they do on a daily basis and what their oversight is?’,” Wickes said.
Creatacor designs and builds trade show exhibits, stage sets and retail store displays for clients like The Lego Group, GE, IKEA, Babies R Us and PrimaLoft.
The company was started by Tom Lemery, who spun it out of GE’s corporate exhibit operation in the late 1980s.
“While the crime was bad enough, the betrayal of trust was so much more painful,” Lemery told the judge, according to the Times Union. “She was one of our most loyal and trustworthy employees and had worked with us side by side most of our professional careers.”
Wickes said companies can look for various red flags to prevent employee theft.
“I’m always trying to educate companies on what the red flags are,” Wickes said. “Someone living beyond their means; a spouse or that employee having gambling or financial problems; seeing that an individual doesn’t like to be out of the office — they don’t want someone stepping in and finding what they’re trying to hide.”
Wickes said she sees several of these cases a year. Sometimes companies want to press charges, and sometimes they handle it internally.