How Did This Employee Steal $1.8 Million From Her Employer?

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(This post originally appeared on Inc.)

An Indiana bookkeeper was charged this week with stealing $1.8 million from her employer. That’s a lot of money.

Over the course of four and a half years, according to this press release from the Department of Justice, Julie Ann Ashman allegedly was able to siphon money from the accounts of a small business that repaired and refurbished X-ray medical equipment to her own personal bank account. She did this by cutting checks to herself and then understating the company’s revenues to cover up the missing cash. What’s really disturbing is the frequency. According to the DOJ, Ashman was “reimbursing” herself for anywhere between $3,000 and $5,000 up to 15 times a month! In total, it was found that she wrote 436 company checks to herself for a total of $1,805,015.12.

The press release from the DOJ doesn’t disclose how she got caught. But I’ve got a hunch. It’s how most fraudsters, particularly those responsible for the money in a small business, get caught. I’m betting Ms. Ashman missed a few days of work.

When a financial employee misses work – for sick days or vacation – the business must still continue, of course. Checks need to be written, invoices sent, cash collected, records updated. I’ve got a hunch that Ashman missed a few days, or even a week. Maybe she was sick or a family member was ill. Maybe (but not likely) she decided to take vacation. I’m betting it wasn’t voluntarily though. So when someone filled in for her, it probably didn’t take too long for an anomaly to be detected.

I can picture the scene. “That’s strange, what are all these checks to Julie for?” “Wait, didn’t we do work for this customer in June? It’s not recorded anywhere.” Alarm bells were raised. The sky began to fall.

But unfortunately for the owners of this small business, the $1.8 million was already gone. Good luck getting it back. Ms. Ashman, of course, didn’t pay taxes on the money she stole, so the Feds got involved. Now she’s facing up to 25 years in prison. And her bosses are wringing their hands over the hard-earned money that they will likely never recover.

Could they have avoided this? They absolutely could’ve. This had been going on for four and a half years! This woman was cutting checks at an average of four per week! Assuming the fraud was uncovered when Ashman was away, then it’s clear that it could’ve been uncovered much, much earlier if her company enforced a very key internal control: requiring employees to take vacation.

I know you’re working hard, and I know you’re trying to keep your overhead and payroll low. It’s great when you find that diligent employee, particularly one who’s responsible for all your financial recordkeeping like Ashman was. It’s impressive when that person comes in early, stays late and refuses vacation due to his or her dedication. But that’s not what you want. You want your employees to take vacation. It gives them balance and time off to recharge. But just as important it gives someone else in your company the opportunity to learn that person’s job just in case that person suddenly leaves or…is doing something naughty like Ashman.

“We count on the people we work with to be honest, especially people who occupy positions of trust,” said United States Attorney Josh Minkler. “Exploiting that trust for purely personal gain can devastate an organization, especially a small business. Those who choose to commit fraud will be caught, prosecuted, and held accountable.”

Unfortunately, those business owners who allow the fraud to be committed are just as responsible.

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