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He would have gotten away with it if it weren't for the HR exec seeing a red flag. Makes you wonder how many other frauds are never discovered. One other thing

He would have gotten away with it if it weren't for the HR exec seeing a red flag. Makes you wonder how many other frauds are never discovered. One other thing: These types of face-to-face, "close on a handshake" negotiations are really open to various types of fraud. I was thinking about this when listening to a friend discussing how he had negotiated a $12,000 discount for his child's base college tuition, by talking over the phone with someone in the college admissions office. Or a commercial real-estate deal that I participated in some years ago that involved several rounds of negotiation. If one or both sides of these transactions wanted to extract some financial benefit "on the side," it would be so easy to do it ... which leads me to believe it happens all the time, anti-fraud laws and signed declarations be damned.

jmull 7y ago
It doesn't sound like his plan to repay the $9 million up-front payment over time according to the original payment schedule is likely to have worked. Now, if he'd restrained himself to the $4.4 million that no one actually knew about, then it really would have come down to an observant HR exec. But, of course, the kind of guy who pulls a scam like that probably doesn't know how to restraint himself.
- zozbot234 7y ago
  Yup, his scheme had plenty of pitfalls, obviously. Which is why people didn't really buy the notion that he was going to pay restitution down the road. Really, the only thing which could explain how someone could come up with something like that is pure complacency and foolish, short-term greed. Reality has a way of catching up with these games; it's not something anyone would want to get involved in otherwise.
TheSpiceIsLife 7y ago
I’m willing to bet the overwhelming majority of white collar crime goes undetected. Detection is probably difficult, and the agencies charged with investigating and prosecuting are likely over worked.
- deleted 7y ago
  [deleted]
- Scoundreller 7y ago
  Could make it easier and do something like what Quebec does in small-claims courts: don't allow lawyers. Should be fine for those with tax returns that are simple enough to understand. Not so much for those that choose complicated financial structures.
  - asdfasgasdgasdg 7y ago
    In a criminal context in the US, you have a constitutional right to legal representation. I suspect Canada is the same, but I don't know for sure. In any case, this isn't a viable solution, even if it were a good idea, which I'm skeptical of.
- pmart123 7y ago
  I've also heard that a significant amount of the detected fraudsters are simply let go. Essentially, a company would rather ask the current CFO to leave about learning the information rather than admit it had a CFO who was able to steal millions.
  - deleted 7y ago
    [deleted]
- datavirtue 7y ago
  Especially at banks. Very embarrassing and not worth the attention it would garner if they pressed charges. There are a lot of financial institution that have very weak controls. I've seen it first hand.
  - IllusoryReverb 7y ago
    Anecdote from third world country here. Friend works in 'IT security company', told me banks are the worst here. One bank had guys in the IT department work for a couple of months then quit, one after the other, apparetly after having stolen 'enough' money (whatever that means to a thief). Rinse and repeat, till their company got called in. That bank's systems were apparently that bad. I always wondered whether it was that the bank had no proof of the theft or an image thing where they could not afford to go after them because customers would lose confidence in them.
yellow_lead 7y ago
I wonder if he paid taxes on these payments. If not, I'm sure the IRS would eventually get him.
- gamblor956 7y ago
  It appears he prepared fake K-1s for his investment "partners" so he was filing tax returns for his "investment" company. Based on this, he likely reported those payments as capital invested in the partnership, not income.
  - yellow_lead 7y ago
    Interesting, nice find.
burtonator 7y ago
A guy I used to work with was fired for these types of bribes. This was like 20 years ago when I was just a 17 year old lowly tech IT nerd. They fired the guy and he was the entire IT guru for an office of about 120 people so I was flown down to Florida to try to size up what was happening. He went against corporate policy and was buying from and off-brand computer vendor because he was receiving bribes. He magically had two jet skiis one day and the company sort of put two and two together. It was a nightmare though... no one had the network passwords to the Netware server so I had to copy ALL the data to another box and then migrate everyone over to Windows NT... It was like 150GB of data back when a large HDD was 150MB... I think we had to split it up across multiple RAID arrays or something crazy. Took forever!
- ChuckMcM 7y ago
  I have similar examples in my experience. If you run operations it is something you need to watch out for because, in my experience, every vendor extends feelers to see if this is a possibility. It goes unnoticed by accounts receivable because the vendor marks the price up with the 'extra' so they see an invoice, and pay it and get the equipment, none the wiser that is some % higher than it "could" be. This is amplified by vendors of IT gear that quote a "high" MSRP, and then offer a big discount. So the vendor has rack switches for $4500 MSRP they are selling you for $3000 when the 'standard' discount would be $2500 (45 points off list). The accountant sees the 33% off list so they are happy, the vendor gets more than they need to make their margin, and the IT guy on the inside manages to pocket a few thousand that arrives via a side channel. Everyone gets a little something and everyone is happy as a clam. It is fairly insidious and difficult to combat unless you can pit distributors against each other or vendors in order to force out what their real bottom line is.
  - yummypaint 7y ago
    This cancer has been finding its way into academic purchasing offices. Researchers could use procurement cards to buy what they needed with their grant money, now administrators are chipping away at this to force people to use shopping portals that directly enable this. It almost never saves money, and the extra time and delays associated with it probably cost money overall, yet its of critical importance to purchasing admins that everyone use this nonsense so they can get their kickbacks.
hammock 7y ago
Just wait until you realize how many kickbacks are LEGAL and commonplace in many, if not most, industries.
- drtillberg 7y ago
  From a U.S. perspective, I question the categorical statement about 'legality.' See, e.g., Operation Varsity Blues.[1]. Maybe 'commonplace', but unless the folks involved have happily run it past their GCs and the local U.S. Attorney, don't get ahead of yourself there... [1] https://en.m.wikipedia.org/wiki/2019_college_admissions_bribery_scandal https://en.m.wikipedia.org/wiki/2019_college_admissions_brib...
- sjg007 7y ago
  Referrals are a common one.

jmull 7y ago

It doesn't sound like his plan to repay the $9 million up-front payment over time according to the original payment schedule is likely to have worked. Now, if he'd restrained himself to the $4.4 million that no one actually knew about, then it really would have come down to an observant HR exec. But, of course, the kind of guy who pulls a scam like that probably doesn't know how to restraint himself.

zozbot234 7y ago
Yup, his scheme had plenty of pitfalls, obviously. Which is why people didn't really buy the notion that he was going to pay restitution down the road. Really, the only thing which could explain how someone could come up with something like that is pure complacency and foolish, short-term greed. Reality has a way of catching up with these games; it's not something anyone would want to get involved in otherwise.

TheSpiceIsLife 7y ago

I’m willing to bet the overwhelming majority of white collar crime goes undetected. Detection is probably difficult, and the agencies charged with investigating and prosecuting are likely over worked.

deleted 7y ago
[deleted]
Scoundreller 7y ago
Could make it easier and do something like what Quebec does in small-claims courts: don't allow lawyers. Should be fine for those with tax returns that are simple enough to understand. Not so much for those that choose complicated financial structures.
- asdfasgasdgasdg 7y ago
  In a criminal context in the US, you have a constitutional right to legal representation. I suspect Canada is the same, but I don't know for sure. In any case, this isn't a viable solution, even if it were a good idea, which I'm skeptical of.
pmart123 7y ago
I've also heard that a significant amount of the detected fraudsters are simply let go. Essentially, a company would rather ask the current CFO to leave about learning the information rather than admit it had a CFO who was able to steal millions.
- deleted 7y ago
  [deleted]
datavirtue 7y ago
Especially at banks. Very embarrassing and not worth the attention it would garner if they pressed charges. There are a lot of financial institution that have very weak controls. I've seen it first hand.
- IllusoryReverb 7y ago
  Anecdote from third world country here. Friend works in 'IT security company', told me banks are the worst here. One bank had guys in the IT department work for a couple of months then quit, one after the other, apparetly after having stolen 'enough' money (whatever that means to a thief). Rinse and repeat, till their company got called in. That bank's systems were apparently that bad. I always wondered whether it was that the bank had no proof of the theft or an image thing where they could not afford to go after them because customers would lose confidence in them.

yellow_lead 7y ago

I wonder if he paid taxes on these payments. If not, I'm sure the IRS would eventually get him.

gamblor956 7y ago
It appears he prepared fake K-1s for his investment "partners" so he was filing tax returns for his "investment" company. Based on this, he likely reported those payments as capital invested in the partnership, not income.
- yellow_lead 7y ago
  Interesting, nice find.

burtonator 7y ago

A guy I used to work with was fired for these types of bribes. This was like 20 years ago when I was just a 17 year old lowly tech IT nerd. They fired the guy and he was the entire IT guru for an office of about 120 people so I was flown down to Florida to try to size up what was happening. He went against corporate policy and was buying from and off-brand computer vendor because he was receiving bribes. He magically had two jet skiis one day and the company sort of put two and two together. It was a nightmare though... no one had the network passwords to the Netware server so I had to copy ALL the data to another box and then migrate everyone over to Windows NT... It was like 150GB of data back when a large HDD was 150MB... I think we had to split it up across multiple RAID arrays or something crazy. Took forever!

ChuckMcM 7y ago
I have similar examples in my experience. If you run operations it is something you need to watch out for because, in my experience, every vendor extends feelers to see if this is a possibility. It goes unnoticed by accounts receivable because the vendor marks the price up with the 'extra' so they see an invoice, and pay it and get the equipment, none the wiser that is some % higher than it "could" be. This is amplified by vendors of IT gear that quote a "high" MSRP, and then offer a big discount. So the vendor has rack switches for $4500 MSRP they are selling you for $3000 when the 'standard' discount would be $2500 (45 points off list). The accountant sees the 33% off list so they are happy, the vendor gets more than they need to make their margin, and the IT guy on the inside manages to pocket a few thousand that arrives via a side channel. Everyone gets a little something and everyone is happy as a clam. It is fairly insidious and difficult to combat unless you can pit distributors against each other or vendors in order to force out what their real bottom line is.
- yummypaint 7y ago
  This cancer has been finding its way into academic purchasing offices. Researchers could use procurement cards to buy what they needed with their grant money, now administrators are chipping away at this to force people to use shopping portals that directly enable this. It almost never saves money, and the extra time and delays associated with it probably cost money overall, yet its of critical importance to purchasing admins that everyone use this nonsense so they can get their kickbacks.

hammock 7y ago

Just wait until you realize how many kickbacks are LEGAL and commonplace in many, if not most, industries.

drtillberg 7y ago
From a U.S. perspective, I question the categorical statement about 'legality.' See, e.g., Operation Varsity Blues.[1]. Maybe 'commonplace', but unless the folks involved have happily run it past their GCs and the local U.S. Attorney, don't get ahead of yourself there... [1] https://en.m.wikipedia.org/wiki/2019_college_admissions_bribery_scandal https://en.m.wikipedia.org/wiki/2019_college_admissions_brib...
sjg007 7y ago
Referrals are a common one.