CASE 1: THE GHOST EMPLOYEE

 

A bookkeeper in a New York City condo put a dummy person on the payroll and, for a year-and-a-half, sent salary checks to a post office box. "There was an actual person cashing the check and splitting it with the bookkeeper," Glodstein says.

The bookkeeper, however, knew the chance of getting caught was low. She had worked for the condominium association for over five years, and, since it was convenient for the board to give one person sole responsibility for paying its bills, she controlled the checking account.

"Because the board trusted her," says Glodstein, "they thought she would never take money." But after about three-and-a-half years of this, the bookkeeper, very simply, added the name of a relative to the list of maintenance employees. Neither the board treasurer nor the condo's accountants ever tried to verify all the employees' existences, and there was no red flag since it was slow and consistent.

Eventually, however, "a member of the board came to us because he noticed there was a person on the books, and he didn't know who this person was," Glodstein says. Armed with some basic research from this member, the board called in Glodstein's company. In typical forensic-accounting fashion, an accountant went in person to the building to look at the condo's books and records, and an investigator started interviewing staff – none of whom were notified beforehand in order to prevent staff members from colluding and "getting their stories straight."

The scheme began unraveling when they talked to the bookkeeper. "We didn't even know she was doing anything wrong," Glodstein says. "But you talk to everybody, try to find out what their responsibilities are, and follow through. She was handling all the money coming in and going out. That gives you the feeling that something could go wrong here."

Then they got their break: a name on the employee list suspiciously similar to the bookkeeper's. Under questioning, the bookkeeper eventually allowed that he was a relative. They took that information to the board treasurer, who confirmed he didn't know who the person was. That did it. The sordid scheme was out in the open.

But unlike TV's CSI, the perpetrator profited and didn't go to jail. The condo association fired her, but since the roughly $15,000 she'd stolen was already spent, the board felt it would cost more to pursue the case than what might eventually be recovered. "The sad part in these situations," Glodstein says, "is these people move on to the next gig, and they know that, in the majority of cases, they're not going to get prosecuted."

Read the next case >>