CASE STUDIES & LESSONS FROM THE FIELD THREE BIG FRAUDS IN ONE SMALL TOWN

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1 CASE STUDIES & LESSONS FROM THE FIELD THREE BIG FRAUDS IN ONE SMALL TOWN Three major frauds; one small town. This employee embezzlement case study will reveal how small business and small-town dynamics perpetuated each of these devastating schemes. You will learn how the fraud examiner s role can be paramount to navigating the client through the uncertain waters of an internal fraud. TIFFANY COUCH, CFE, CPA, CFF Principal Acuity Group PLLC Vancouver, Washington Tiffany Couch, founder of Acuity Group PLLC, has more than 14 years of experience in the combined areas of accounting, fraud examination, litigation consulting, and business analysis. Her professional background and experience include audit, tax, and consulting work for government entities and privately held businesses in a range of industries. Prior to founding Acuity Group, she was a manager with Moss Adams Litigation and Financial Investigations group. Ms. Couch is an honoree of the 2007 Accomplished and Under 40. Southwest Washington community businesses and agencies recognize their rising stars in this event. Acuity Group is a three-time winner of the Vancouver Business Journal s annual Business Growth Awards. Acuity was awarded the 2007 Start-Up Business of the Year, and the 2008 and 2009 Fastest Growing Business in the 1 5 year category. Ms. Couch is also a faculty member for the Association of Certified Fraud Examiners (ACFE). ACFE Faculty Members are some of the most highly-rated speakers in the antifraud profession. Association of Certified Fraud Examiners, Certified Fraud Examiner, CFE, ACFE, and the ACFE Logo are trademarks owned by the Association of Certified Fraud Examiners, Inc. 2011

2 Introduction Professional Background Objectives The Perpetrators The Victims The Fraud Stories Navigating the Investigation(s) Common Issues Outcomes Lessons Learned The Perpetrators Sandra Guerrero Page Mother of one daughter How her colleagues viewed her Experienced fraudster Christi Lee Erickson Mother of two sons How her colleagues viewed her Experienced fraudster David Charles Lenihan Father of a son and daughter Community and professional status How his colleagues viewed him The Victims St. Paul Cathedral School Kershaw Fruit and Cold Storage Underwood Fruit and Washington Fruit

3 The Fraud Stories The Martyr I was just trying to keep the lights on The interviews The principal, the priest, and the nun The unassuming school secretary The schemes uncovered Skimmed cash Theft of SCRIP The Good Mom I just wanted to buy Christmas gifts for my kids The interviews The IT guy The best friend The scheme uncovered The Man About Town I was just borrowing the money Interview of perpetrator The schemes uncovered Loan write offs Fraudulent financial statements Navigating the Investigation(s) Interviews Why? Who? Follow-up Documents

4 Key documents Client Dynamics Employee assistance Insurance The Media Local Authorities Limitations Jury pool The big picture our role Federal Authorities Limitations The big picture our role Common Issues Trust Internal Controls Perception of Individuals by Owners/Bosses Perception of Individuals by Colleagues Background Checks Outcomes Legal Outcomes Pleas or trial? Jail? Jury trial? Financial Outcomes Insurance? Restitution? Lessons Learned The Key to Interviews Capitalize on Client Resources The Solid Investigation Report

5 Navigating the Legal System (and your client!) The Emotional Impacts