50 Case Studies for Management and Supervisory Training

Case 49: A Problem in Security

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Case 49 (continued)

Part 3—A Problem in Security

Despite the general favor B.L. enjoyed at GSCU, things were not all sweetness and

light. His battles with Accounting had raised the ire and concern of Denise Hatfield.

This concern was magnified as a result of a chance meeting between her and B.L.

when he was dining with his family at a local restaurant, late in February. At that

time, Denise learned that B.L. had taken his entire family for a two-week vacation

to Colorado. Denise kept wondering about how he could pay for such a vacation on

top of his expensive clothes and jewelry.

In addition, Denise learned from Dorothy McPatrick that B.L.’s area had not

been audited in over three years. Dorothy was the one-person auditing department

of GSCU. Now 64-years-old and looking forward to retirement, Dorothy had

avoided B.L. almost from the start, explaining that he frightened her. Denise

reminded Dorothy that an audit was long overdue.

In early March, Dorothy began a routine audit of his area. All seemed to be fine

except for a curious finding about three checks made out to different contractors. In

looking at copies of the checks, all three were cashed by the same teller. According

to GSCU policy, checks made payable to businesses can only be taken as deposits;

it was against policy to cash these checks.

In looking further, Dorothy discovered that even though there were three differ-

ent business names, two of the businesses had the same address. A quick call to

Personnel confirmed that the address was B.L.’s home address. The third was sent

to a post office box with the same Zip code. When the endorsements were exam-

ined, although the names were different, B.L.’s characteristic chicken-scratch

handwriting was clearly evident in all three. Finally, in looking at the records, B.L.

made deposits of almost the same exact amounts cashed from the checks into his

personal checking account a short time thereafter.

Dorothy and Denise were convinced that B.L. was embezzling funds from

GSCU. They looked back through the records of contractor invoices submitted by

B.L. for the past three years. Excluding the vendors, which Denise knew were

legitimate and concentrating on the “five-day discount” invoices, Denise and

Dorothy estimated that the credit union paid out almost $130,000 in questionable

funds during that time.

Amos Baker is briefed on the matter and decides it is time for action.

CASE QUESTION

What steps should be taken at this point?

Note: Banks are under regulatory guidelines to file reports with, and involve

federal agencies in, suspected cases like these. Exclude those required actions

from your analysis.