A longtime manager at CBS Employees Federal Credit Union has been charged with two felony accounts for the alleged embezzlement of over $40M. He was detained on March 12th as both a flight risk and an economic danger to the community.
According to an affidavit filed with the criminal complaint, beginning sometime before 2000 and continuing until March of this year, the former employee used his position as manager of the credit union to make online payments from the credit union to himself or to forge the signature of a co-worker on checks made payable to himself. An NCUA examination was performed up to February 28th revealing a potential loss to the CBS Credit Union of $40,541,130. The former manager was previously employed as an examiner at NCUA which provided him with the inside knowledge to help avoid detection.
The alleged scheme provided him the financial means to continue his gambling habit, travel by private jet, buying expensive watches and purchasing high end cars. To read more about this loss click here.
Prevent this from happening to you!
Employee embezzlement can happen in any company because too often we don’t have the proper checks and balances in place. Here are some recommended tips to maintain controls that may help reduce the changes of embezzlement.
- Mandatory annual vacations of at least one uninterrupted week, preferably two, for all officers and employees with their access to the credit unions systems suspended during that time.
- For a better audit trail, consider separate accounts for accounts payable and accounts receivable and having each of those accounts managed by different employees.
- Have someone independent of check-writing responsibilities reconcile your company bank accounts.
- Know your employees – Often times, the ‘trusted’ employee is responsible for embezzling funds.
Pay close attention to changes in employee behavior including not taking time off, lavish lifestyles well above their level, gambling or drug and alcohol abuse, etc. as they can be potential indicators of employee theft.
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