Diary of a Bad, Bad Bookkeeper: (Day 149) The Collusion Scam

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Dear Diary,

Today was a not-so-great day.  Apparently, I have a partner now.  I never intended to have a partner, but it appears I have no choice in the matter.  Here’s what happened:

I was in my office (innocently shredding checks), when I suddenly heard a man say, “I know what you’re doing.”

Quickly slipping the leftover checks back into my desk drawer, I looked at him with my most innocent expression.  “What do you mean?” I asked sweetly.  It was Ernie, one of the flooring installers that handled the bigger clients.  He was considered the boss’s second-hand man.  “What do you think I’m doing?”

“You’re destroying the evidence.”

Crap.  How did he know? But I decided to play it cool.  “What evidence?” I scoffed.  “I don’t know what you’re talking about.”

“Those checks you’re shredding are the checks you’ve forged.  Am I right?”

“Why would you say that?” I demanded, pretending to be affronted.

“Because I’ve seen all the signs before.  The new car…the fancy clothes.  You order lunch all the time instead of bringing it from home like the rest of us do.”  He glanced down the hall behind him, then stepped into my office, lowering his voice as he did.  “I know what you’re doing…and I want in.”

In?  Was he nuts? “I don’t know what you’re talking about.”

“Yeah, you do.  And you can either cut me in, or I’ll rat you out.”

Cold chills ran up and down my spine, and my palms were actually sweating.  I could tell by the smug look on his face that he knew he had me between a rock and a hard place.

“Look,” he continued, propping himself onto the edge of my desk and leaning toward me.  “You don’t have to tell me everything you’re doing.  I don’t really care.  I just want a piece of the action.  And I have the perfect way to do it.”

I narrowed my eyes.  “Oh yeah.  What’s that?” I asked.

“Simple.  I have a friend that runs his own construction company and can get us plenty of jobs.  You cut some checks to his company with an additional amount of money, and he’ll pay the rest of the money back to us.  The boss won’t ask questions because he’ll be able to see that the work is getting done, and we can make a tidy sum on the side.  So what do you say?  Should I call my friend?  Or should I call the boss?”

“The boss won’t believe you.  He trusts me 100%.”

“He trusted his last bookkeeper too – until I accused her of a few things.  And I’ve been here for seven years.  Who do you think he’s gonna believe?”

And just like that, I had a new partner.  But at least if we’re both stealing, he can’t accuse me of anything without me making a few accusations back.  I won’t be going down alone if he decides to betray me.

On the plus side, it is a quid pro quo situation. I help him make a little extra money, and he gets me new carpeting in my entire house.  I think I want purple…

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How to Stop the Collusion Scam:

Spotting and stopping the Collusion Scam is really difficult.  For one thing, the invoices that the bookkeeper receives will match the checks going out.  That makes embezzlement even more difficult for an auditor (or auditing accountant) to find because there’s legitimate backup and everything appears to be “on the up and up.”  For another thing, the money being paid out will not have your bookkeeper’s name on it, and the money they’ll be taking home will be coming from one or many of their colluding partners.

Therefore, to spot and stop this scam, you need to trust your gut.  Pay attention to who is hanging out in your bookkeeper’s office.  Most bookkeeping positions involve staring at a computer all day, and if someone is spending more time than necessary or usual, take note.  Begin observing that employee as well and see who they recommend as “work associates.”  Keep an eye out for how many checks they receive each month, and if those payments seem a bit high.  Also, look for signs that those employees are spending more money than they’re making.  Oftentimes, an employee’s spouse will make a lot more money than the employee, but there will be a consistent spending pattern if that is the case.  It’s the sudden changes you want to look for.

Also, since one of the easiest ways to stop embezzlement is to be the only person who opens bank statements as they come in, you want to keep an extra watchful eye out for checks to vendors or customers that also seem “a little too high.”  If you feel like a company is making too much money for various projects…shop around.  Call that company’s competitors and see what they would charge.  And stay open to switching vendors.  Because the truth is – you never know when someone is going to decide to steal from you…”by any means necessary.”

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Originally posted 2010-07-28 00:30:47. Republished by Blog Post Promoter

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19 Responses to Diary of a Bad, Bad Bookkeeper: (Day 149) The Collusion Scam

  1. Victoria Kamm says:

    One of the best suggestions I ever heard was to have the monthly statement sent to the owner’s home. Bottom line is that if the owner pays attention the “trusted bookkeeper” would never be able to take advantage.

  2. Drew Smith says:

    Hi E.T.
    Your Diary of a Bad Bookkeeper series is such a fun way to educate business owners and managers about fraud. Just wondering if you have any plans for a movie…Angelina Jolie could play Betty.

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