After embezzlements in Modesto area, DA investigator explains why employees steal
Why do employees overcharge customers and keep the difference, write company checks to themselves or engage in other types of embezzlement?
Stanislaus County District Attorney’s Office Senior Investigator Terry Seese said it’s sometimes because they see a need, like paying for a child’s private school tuition or for an elderly parent’s care. They do it when the employer doesn’t have sufficient checks and balances in place to curb the temptation to steal, he added.
Seese recalls one woman he interviewed who over a couple of weeks embezzled about $2,000 from her employer. She said she needed to pay for her child’s senior trip.
“Every human being can be tempted if there are not procedures in place,” Seese said. He said those controls include having company checks signed by two people and monthly reviews of bank and other statements, as well as verifying them against other records.
For higher-level employees, he said, the embezzlement may “not necessarily be a need thing but a greed thing.” Because of their positions and authority, they may believe they can get away with it, Seese said.
The Modesto area has had three recent examples of admitted or alleged embezzlement:
▪ Former Patterson Unified School District Assistant Superintendent Jeffrey Menge, 43, and former Information Technology Director Eric Drabert, 44, pleaded guilty Feb. 1 in Sacramento federal court to theft concerning programs receiving federal funds.
They are not in custody and are scheduled to be sentenced May 30. Menge admitted embezzling $1 million to $1.5 million from 2019 to 2022 and Drabert admitted stealing $250,000 to $300,000 from 2020 to 2022, according to court documents.
The money the pair stole was used to remodel homes and purchase cryptocurrency, computers and vehicles, including a Ferrari sports car.
▪ Modesto-based Boyett Petroleum sued its former marketing director, Anne Benisch, on Feb. 15, alleging she used her company American Express card to make $1 million in unauthorized purchases over five years, including for women’s clothes, shoes, beauty products, rent, utilities and housecleaning. Benisch, 35, has not responded to requests for comment.
▪ Modesto-based Stainless Distributors sued its former accounting office manager, Kelly Bradley, last month in Superior Court, alleging she embezzled $1.86 million. The lawsuit says she hid the embezzlement by making false entries in the check disbursement journal. The District Attorney’s Office has charged Bradley with embezzlement and money laundering.
Bradley, 50, has posted bail and pleaded not guilty to the criminal charges. She has declined to comment regarding the allegations in the lawsuit.
Embezzlers ‘blend into a business’
Embezzlers become trusted employees and are “often charming and educated culprits, not easily made into villains before judge and juries,” according to posts on the website of the San Francisco law firm Stimmel, Stimmel & Roeser. “While criminals can be violent or antisocial, embezzlers by their nature have to blend into a business ... and spend most of their time being good employees ... .”
The Association of Certified Fraud Examiners states in its “Occupational Fraud 2022: A Report to the Nations” that the top two reasons employees were able to commit fraud is their organizations had no internal controls (29% of the cases) or fraudsters circumvented the controls (20% of the cases). The report is based on a survey of 2,110 cases in 36 countries involving a total loss of $3.6 billion.
Seese said businesses, nonprofits and other organizations often lack policies and procedures, the separation of duties, and oversight. “Where companies fall short,” he said, “is they get so trusting in one person. No one is reviewing what they are doing until it’s too late.”
He said an organization needs to spell out in detail how it operates and the responsibilities among employees. An example of separation of duties is one person receives cash but another deposits it.
The organization also needs a policy that states employees will be prosecuted if they embezzle, though Seese acknowledges organizations may be reluctant to do that.
He said the reasons can include the personal relationship between a longtime employee and the organization, with the employee reimbursing the organization. Another reason is an organization not wanting the embarrassment, potential harm to its reputation and questions from the public if it pursues criminal charges.
The ACFE report states that organizations pursued civil litigation in 29% of the cases and criminal charges in 58% of the cases.
Seese recommends organizations set up an anonymous tip line. The ACFE annual report states that tips (42% of the cases) were the top way fraud was detected. Internal audits (16%) and management review (12%) were second and third.
This story was originally published March 4, 2024 at 12:00 AM.
