A CPA's Observations on White Collar Crime in the Roaring Fork Valley
Why is it happening?
During the past year, my firm has been involved with three major white collar fraud cases. This compares to an average of one case every four or five years during the preceding 22 years. Why the increase? I am sure there are as many reasons as there are people committing financial crimes.
In recent years, Aspen and the Roaring Fork Valley have attracted more and more wealthy people. It seems to me that people with the desire but not the financial resources to live a wealthy lifestyle being constantly exposed to wealthy people serves as an incubator for crime. An attitude of "I deserve to live the good life just as much as anybody and if I don't have the money I'll steal it from my employer or partner" seems to prevail.
How are they stealing?
The following is only a partial listing of ways Aspenites are stealing from one another (Names have been changed to protect the guilty):
Freddy Socializer submits false expense reimbursements to his partnership for non-existent or personal expenses.
Janet Gypsy pays personal living expenses for her extended family out of partnership funds.
Jake the Tool charges his partnership with $170,000 in non-existent leasehold improvements.
Danny Divertit opens several bank accounts with names similar to his partnership name and diverts hundreds of thousands of dollars in sales to the off-book accounts.
Polly Payroll pays herself extra payroll checks through a series of schemes.
Lovemy Coworkers tampers with the payroll records and reallocates her W-2 wages to other employees' W-2s. (An excellent tax planning move if you can get away with it)
Imma Eraser has her employer sign checks to vendors, then erases vendor names, enters her name, and deposits checks into her personal bank account.
Cash Forme, a trusted employee, steals cash from sales deposits of retailer over a several year period.
Myboss Afool, armed with blank checks signed by his employer, fills in his name and deposits the checks into his personal account.
What to do in case of a crime?
What should you do, as an attorney, if your business owner client tells you they think an employee or partner is stealing from them? A good first step would be to meet with the client and an accounting consultant to discuss conducting a fraud investigation and what the primary objectives of the investigation should be. The objectives should include some or all of the following: