I haven’t written much lately. I have been drowning in the accounting records of a friend and fellow dog lover who is an amazing dog trainer and horrible business owner. She is also the most trusting soul on earth and assumed that when a fellow colleague recommended a bookkeeper for her business, that life would be good.
Well it was far from good when I met with her a month ago. She was in trouble and the sheriff was headed to her rented space to evict her just a week ago, when I rushed a check into her property managers office on her behalf. Her business was facing life-threatening failure, but not because she had lost her ability as a trainer.
It was because the trusted bookkeeper took something more valuable than all the money she stole. The trainer’s reputation had vanished overnight. She had spent all of her life building it up, putting up with the craziness of owning your own business and rising to the top of her profession. One minute she was riding high and the next, she was about to be evicted within hours.
The professional bookkeeper and thief quit a few months ago. She covered her tracks by telling all of the large vendors and colleagues of the trainer that she could not work there any longer and watch the the owner/trainer be so careless about the company’s money. The trainer lost her accreditation with several organizations due to this blatant lie. The bookkeeper had absolutely no conscience about stealing upwards of $50,000 or more, and ruining the trainer’s life along with that of her husband’s and young daughter’s.
On top of all that, her Facebook page shows that she went to a Christian university and she professes her faith publicly. She is a perfect example of the hypocrites described in the Bible. Luke 16:12-14 states that “If you have not been faithful with what belongs to another person, how will you get what you believe is yours? No one can serve two masters; you cannot devote yourself to God and yet be a slave to money at all costs to your soul. You cannot fully love both God and money.”
It is one thing to steal money, but to steal one’s reputation is appalling and sickening. The trainer can always earn more money during the rest of her life, but it is really hard to redeem her reputation that was built on a lifetime effort of waking up each day and giving it everything she had. Her reputation had been successfully tarnished by this selfish and heartless bookkeeper.
Within hours of opening up the first folder, I was sick inside. I was uncovering a crime that would be hard to prove. She had convinced the trainer to move the accounting software to online, thus allowing herself the ability to pay bills and deposits online to herself, while recording the names of the actual vendors on the payments even though the routing and account numbers were her own.
Upon checking with Key Bank, I was told that this was not a crime, by giving the bookkeeper online access the owner had authorized these fraudulent payments, this was merely a civil matter. Further, the thief had erased all of her tracks by deleting all vendor payments with the routing numbers that would have shown where the money went. When a customer deletes the vendor payment information in the online software, the history is wiped away at the bank. Key Bank keeps none of the vendor history including the routing number and account number.
Another dead giveaway that she was stealing from the company was that she threw away the in-house ledger that tracks all of the income that comes in every day along with copies of the checks being deposited. She obviously knew exactly what she was doing, she had everything figured out. This wasn’t the first or last time that she stole from businesses. She still is working and has many other clients.
Further, while there is proof of where payments are deposited with an actual hard copy of a check. Key Bank refused to provide any information about the electronic transfers. The police wouldn’t take any of my findings without “hard” proof. I was attending a writers workshop on Friday, when a thought came over me. I sat transfixed in a trance at a conference table outside of the seminar, hundreds of writers chatting with other writers about their blogs while I searched crazily through the Quick Books records. I had taken the software offline and transferred the file to my computer a week ago so I was able to work while the conference swirled around me, horrified by what I was looking at.
I had not considered that she wrote actual checks to herself since I had found that all of the payments for the past three months were electronic transfers. She was not as clever and devious in the beginning and here was four handwritten checks supposedly signed by the owner. The problem was that not one signature looked the same. I finally “had” her and called the detective assigned to the case.
She will go to jail once the detective gets through his huge stack of similar cases in about a month. This happens all the time and is more difficult to prove in our increasingly digital world. I have been working with clients for 35+ years and have never experienced this, and his desk is overflowing with these kind of electronic theft cases.
The takeaway is that small businesses should never rely totally on a bookkeeper. No matter how busy the owner, they have to carefully review the accounting records as they have a responsibility to assure that their business is sustainable through the good and bad times.
I strongly recommend that accounting records should be kept on a desktop.
Access to electronic deposits and payments should never be given to a third party, even if it’s your brother-in-law. I personally believe that electronic deposits and checks should never be done, use the old-fashioned way of doing business to assure the success of your business.
Most importantly, use a bank that is concerned about electronic theft and maintains all records of vendor payments even if a vendor is erased. I believe that Key Bank has a fiduciary responsibility to this account holder and I will be pursuing the matter with them.
While this is the first time that I have uncovered theft at a small business, not one of my clients ever knew how to reconcile a bank account. This dog trainer is no different than most other small Mom-and-Pop businesses. Protect yourself and learn the basics to avoid such an agregious act. Review deposits and checks each week to monitor your accounting records.
Work as hard on the accounting of your business as you do your reputation.