On Tuesday, July 12th, the U.S. Attorney’s Office announced that Kathleen Baker, a former office manager at Bathgate, Wegener & Wolf (a real-estate partnership in Lakewood) has admitted to embezzling $1.14 million over six years. Prosecutors say that Baker created a fictitious company (also known as a “straw man” company) called “Corporate Solutions,” and directed funds to a bank account under its name. The money was subsequently used to pay off her credit card bills and personal debts. Baker faces up to 20 years in prison.
Baker’s embezzlement appears to be the result of either a lack of proper internal controls or the failure to enforce the controls in place. Her type of fraud was a classic “Fraud 101” ploy. It was unsophisticated and can generally be prevented with proper segregation of employee duties and more owner involvement in the bill paying process. The controls, if absent, would not have been costly to implement—a fraction of the roughly $190,000 taken each year.
For more details about case see Embezzlement at Bathgate Law Firm
At Urbach and Avraham CPAs, our audit team has been assisting our clients for over 20 years with internal control structuring, regardless of company size.