You are about to read a true story, though all names have been changed.
The Incident
Do you remember the rush of inspiration you felt when you began exploring the field that would later become your career? Maybe it was because of a training course or apprenticeship – opportunities that many unions make possible every day. The union in this story did just that: it provided training and apprenticeship courses to its members interested in learning the trade. As the programs grew, so did the need for more classroom and workshop space. So, the union went to their bank to obtain $2M of financing for a new building.
But everything changed when the recession hit, impacting the union’s industry and the nation’s economy. Current and projected demand for training programs disappeared almost overnight. Still, in the early design phases, the building project was suspended indefinitely.
A few months later, the Operations Manager, Claire, opened a bank statement that was sitting in her inbox. She noticed an odd $500,000 withdrawal toward the end of the month, so she went to visit the Accountant, Jerry. He was a trusted team member, working so hard over the past few months without so much as a single PTO day. Jerry explained that the bank accidentally withdrew money from the union’s account and they would reverse it the next month. He told Claire that the bank was very apologetic and would see that it did not happen again.
The next day, Jerry did not show up to work and was unresponsive to her calls. It happened the next day and the next day. As a mix of curiosity and concern grew in her mind, she reviewed bank statements for the past several months. She noticed several unusual withdrawals for amounts of $250,000 and $500,000. The total of these mystery withdrawals was $2,000,000. Then she saw a loan statement disclosing that the full loan amount had been withdrawn.
Over the following days, an urgent and extensive investigation was performed where Claire, union officers, bank representatives, and the police discovered that the unthinkable had happened. Jerry, now missing, had stolen $2,000,000 through a deceitful array of forged loan withdrawal forms, falsified construction invoices, and board minutes.
The Takeaway
This incident may have been thwarted without any financial loss to the organization if:
- Management and directors spent 30 minutes each month reviewing bank statements and pursuing any and all unexplained transactions immediately.
- Dual signatures and/or electronic approvals for all bank and loan withdrawals
- For particularly large withdrawals, exercise additional due diligence such as corroborating the explanation directly with a bank representative.
Although this may sound like a time commitment now, it is far less than the potential loss and time spent seeking restitution.
Authors: Ashleigh Hall | [email protected] and Brittanee Ramos | [email protected]
Contact Us
Spend a little amount of time now to protect yourself and your union against loss in the future, reach out to a member of Withum’s Labor Organization Services Team today.
