A former executive of the Virginia Birth-Related Neurological Injury Compensation Program pled guilty to embezzling over $4.8 million from the fund. As the CFO and Deputy Director, the 38-year-old was responsible for overseeing the program’s finances, which included managing approximately $650 million in investments. The program provides financial assistance to families of infants with brain or spinal cord injuries resulting from birth, which cause developmental or cognitive disabilities.
According to court documents, from January 2022 to October 2023, the Virginia man used his position to initiate at least 59 unauthorized wire transactions, transferring funds to his own accounts. He also used the program’s debit card for personal expenses, spending the embezzled money on luxury vehicles, gambling, cryptocurrency, private jet travel, and other personal indulgences. His purchases included eight luxury golf carts, a Chevrolet Suburban, and private limousine services.
The former CFO and Deputy Director obstructed the program’s mandatory audits by delaying the provision of necessary files, causing a delay of over three years in the audit process.
The Providence Forge man pled guilty to mail fraud and money laundering offenses and faces up to 30 years in prison, with sentencing scheduled for February 27, 2025.
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Prevent This From Happening TO YOU!
To mitigate the risk of internal fraud, especially within the accounting department, companies can adopt several best practices. Some of these include:
- Implement strong internal controls: establish clear policies and procedures for financial transactions and ensure they are followed consistently. This includes segregation of duties, where different individuals are responsible for different aspects of financial activities, to prevent any single person from having too much control or opportunity for fraud.
- Regularly review financial records: conduct periodic internal audits and review of financial records to identify any irregularities or discrepancies. This can help prevent fraudulent activities early on and prevent further losses.
- Conduct periodic external audits: engage external auditors to conduct independent reviews of the organization’s financial records and internal controls. This can provide an objective assessment of the effectiveness of internal controls and identify areas for improvement.
- Monitor and analyze financial data: utilize data analytics tools to monitor financial transactions and identify any unusual patterns or anomalies that may indicate fraudulent activities.
Source: journalofaccountancy.com, smallbusiness.chron.com
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