Risk Management

Reports of Small-time Crime March On

Even in a time of major abuses, finance executives are embroiled in allegations of lesser wrongdoing from Arkansas to California. And on a larger s...
Stephen TaubMarch 9, 2009

Even in a time of large-scale financial wrongdoing, allegations of smaller-scale crimes march on.

Two peculiar cases showed up in press reports from the Midwest and West Coast over the weekend. One, in San Marcos, Calif., involved charges of embezzlement by a financial executive alleged to have used ill-gotten gains to purchase 400 pairs of shoes and designer clothing.The other, in Arkansas, resulted in a 16-month sentence for mail fraud.

In San Marcos, Annette Yeomans, a former finance chief at the small cabinetry business Quality Woodworks Inc., was charged with grand theft and embezzlement for taking $9.9 million from her company, according to the Associated Press. Authorities alleged that nearly $25,000 was spent converting a bedroom into a closet for her extensive shoe and clothing collection, including the pairs of shoes that cost $600 each. The designer clothing alleged to have been purchased with embezzled proceeds was worth $300,000, with 160 purses valued at $320,000, according to the San Diego County Sheriff’s Department. The closet remodeling added a granite center island, crystal chandelier, and 32-inch plasma television, authorities said.

“A Sheriff’s investigation revealed that on a weekly basis, Yeomans would spend $25,000 on her credit card and then pay off the balance the following Monday with company funds,” according to a press release from the sheriff’s office, which alleged that thefts took place between 2001 and 2007.  Yeomans also was alleged to have used company funds to remodel her home, finance shopping trips to Italy, and purchase luxury vehicles.

“As a result of Yeomans thefts, the business was eventually forced to lay off employees and restructure their operations,” according to the sheriff’s announcement.

Attempts by CFO.com to reach Yeomans were unsuccessful, and the representative of Quality Woodworks answering the phone said the company had no information about the case.

In the Arkansas matter, Todd Tiefel, former CFO of Little Rock-based trucking company Continental Express Inc., was sentenced to 16 months in prison in a cased involving charges of federal mail-fraud charge. He also will be on supervised parole for three years after his release and must repay the company more than $582,000 in restitutions, according to the report, according to the Associated Press.

Tiefel pleaded guilty last year to the mail-fraud charge, and testified against former president Kelly Wooldridge during his January trial, according to the wire service. Wooldridge and Tiefel schemed to divert funds away from company owner Ed Harvey between November 2002 and May 2005. In December, a subsidiary of the Celadon Group Inc. bought Continental Express for $24 million, according to Arkansas Business.

On the other side of the globe, alleged financial fraud of a more major nature continues to resonate, as Satyam Computer Services Ltd. received regulatory approval to sell a majority stake in itself. The Indian outsourcing company was rocked two months ago when founder and Chairman Ramalinga Raju admitted the company’s earnings were inflated and its assets falsified. IBM, which was at the center of speculation as being a possible bidder, was reported by Reuters Monday to be unlikely to enter the competition for Satyam. The reason: legal and financial risks related to the scandal were still too difficult to evaluate.

Last week, India’s Business Standard newspaper had called IBM the “front-runner” to buy Satyam, and Reuters said the publication had claimed that Big Blue had brought in a team of bankers and lawyers to India to assess the deal size and risks.

Meanwhile, former Qwest Communications International Inc. CEO Joseph Nacchio was ordered late last week to report to a minimum security prison in Pennsylvania on March 23, after his conviction on 19 counts of insider trading was reinstated by a federal appeals court, according to Reuters.