Investigating Cash Skimming Cases

They are impossible to solve. They are too time consuming. The documents don’t exist. Tiffany Couch, CFE, CPA/CFF, Principal Acuity Forensics, reviewed these three myths surrounding cash skimming schemes to start off her breakout session at the 28th Annual ACFE Global Fraud Conference.

She shared four case studies to dispel these myths and illustrate a few ideas on how to effectively investigate and prove cash skimming schemes. We’ll take a deeper look at one of them, which she dubbed the “Busy Mom” scheme.

The Busy Mom

Couch worked with a statewide youth basketball league in Washington, and after hearing one of Couch’s presentations, the board from a local league implemented stricter controls. As part of their revamp, they asked the treasurer to start sending in her financial documents. That month she didn’t get the documents in, claiming she was a “busy mom” and didn’t have time. Three or four months went by. Still no documents. At this point, half the board started to get antsy and wanted to confront the treasurer. The other half of the board, who knew this “nice lady,” were affronted on her behalf. In effect, the board was hushed. Later, they told Couch, “I felt bad. I felt guilty for asking for basic bank statements. I felt like I was doing something wrong.” This debate went on for two seasons.

Finally, a few new board members came on during the second season and demanded to see some paperwork. The woman cried to her friends, claiming the board was bullying her. Luckily, one of the woman’s friends came over to get the documents in an effort to end the whole mess. Instead of meeting her friend face-to-face, the treasurer put tubs of documents on the porch and refused to answer the door.

Four days later, the treasurer came to the board with a $4,000 check saying, “I just borrowed the money, and I’m sorry. But here’s all the money I took.”

With this quasi-confession, the league called Tiffany in to investigate the case and find out just how much money was missing.

The first step was the easiest. Couch identified the theft of player registration fees. Sure, there was a huge chunk of missing cash already, but Couch had a feeling this fraud was more complex. She looked at the concession stand sales because, as Couch mentioned several times, inventory is a great place to start digging for evidence. The league had documentation of all the supplies they’d purchased over the past several years. With this, Couch figured out the cost of goods sold — how much money they used to buy supplies for the concession stand compared to how much money they deposited from concession stand sales.

The cost of goods sold before this woman became treasurer was between 49 to 52 percent. When she became treasurer in 2013, it skyrocketed to about 78 percent. By the time they hired Couch, it had reached 100 percent.   

Using this, Couch could present a case with viable data that clearly proved a cash skimming scheme had occurred.

The Outcome and Lessons Learned

Before this unfortunate event, the league thought they had strong controls in place. Two unmarried parents worked the stand together, and each person counted the money, agreed on the amount and signed off on it. They placed the money and count sheets in the safe. “Guess whose job it was to take it to the bank?” Couch asked. Of course, it was the treasurer. “Do you think she retained those count sheets anywhere? No, we never got them back. She never took any of the money to the bank.”

Although they had great controls in place for the people manning the concession stand, there were no controls in place for the treasurer — a trusted member of this community — so she got away with this scheme for more than eighteen months.

The $4,000 she turned in didn’t cover the amount of money that should have been deposited to the bank. In fact, they were looking at a $20,000 to $25,000 loss.

Since the victims of this fraud were the children, it was investigated by the sheriff, which resulted in a guilty plea by the fraudster and a restitution award.

Each of the three myths Couch discussed at the beginning had been dispelled with her methodology, and as a result, one more fraudster was brought to justice.

Couch is a regular presenter at ACFE conferences and events. Register now for next year's 29th Annual ACFE Global Fraud Conference, June 17-22 in Las Vegas, to see speakers like her.