Takeaway:

Financial crimes are not exclusively available to senior management, but rather anyone with access to company information could misuse confidential data.

Financial crimes are no longer strategic and singular, they are common and crude. Financial crimes, like fraud in general, is on the rise. While COVID-19 has created a remote work environment over the past year, it does not fully account for the steady progression of fraud in recent years. Financial crimes are no longer exclusively available to senior management. In fact, PwC’s 2020 survey, “Fraud and Economic Crime” indicates (click here for full PwC survey):

• 24% of fraudsters are operations staff,
• 42% are middle management, and
• 26% are senior management.

Embezzlement, a common financial crime, is often committed by employees with access to company information. These embezzlers, with a penchant to misuse company information, may skim cash for years before being detected.

One such example is the case of Danielle Strother-Rush, an accounting manager from a non-profit in Pittsburgh, PA who plead guilty in the U.S. District Court on March 11, 2021, to one count of bank fraud. Ms. Strother-Rush embezzled over $321,000 in the most conspicuous way: she wrote herself checks. Ms. Strother-Rush worked as an accounting coordinator for Eastern Minority Supplier Development Council (EMSDC). EMSDC is a non-profit organization focused on supporting minority-owned businesses in the northeast. As an accounting manager, Ms. Strother-Rush had access to bank accounts, but did not have signature authority herself. From August 2014 through August 2016, Ms. Strother-Rush wrote checks to herself and forged her supervisor’s signature. Ms. Strother-Rush faces sentencing on July 15, 2021.

Despite the prevalence and damage fraudulent acts have on companies, PwC reports:

• only 7 in 10 organizations use corporate controls to detect fraud;
• 10% of companies don’t have a formal fraud program at all;
• only 50% of companies conducted an investigation after the last major fraud; and
• only 1/3 reported fraud to the board.

These statistics pave the way for fraudsters to exploit their position, whether they are staff operations, middle management, or senior management. If you are in the 10% of companies who don’t have an internal fraud prevention program, or in the 50% of companies who didn’t conduct an internal investigation, or if you want to detect and deter fraud, we can help. Pietragallo’s team of experienced lawyers will work with you to create appropriate corporate policies and controls to detect fraud.

To read the press release issued by the U.S. Attorney’s Office of the Western District of Pennsylvania on Ms. Strother-Rush’s case, please click here.