TZ Limited bookkeeper sentenced for $130,000 fraud: Three other major bookkeeping fraud cases

A former bookkeeper of logistics group TZ Limited has been sentenced after pleading guilty to making false entries worth approximately $130,000 in the company’s books.

The incident is yet another case of financial fraud affecting businesses in Australia, with both SMEs and larger companies struck by fraud – with bookkeepers often at the centre of the controversy.

The Australian Securities and Investments Commission said in a statement yesterday that Mr Fagredin had been employed as a bookkeeper at TZ Limited, when he recorded payments made to himself totalling $130,000 between October 2007 and January 2009.

Fagredin was ordered to enter into “self-recognizance” in the sum of $2000, given his early guilty plea, the impact the offence will have on his registration and the fact he had already entered into a repayment plan with TZ Limited.

The charge comes alongside investigations conducted by ASIC into the “suspect misappropriation of several million dollars” by former directors of TZ Limited.

But this isn’t the first time a bookkeeper has been at the centre of a fraud controversy. In several cases, bookkeepers have been found guilty of stealing money from their employers.

As fraud experts point out, bookkeepers are in a prime position to conduct financial fraud. They’ve usually been with the business for a long time, so no one suspects them, and they have access to financial records and other important information.

Giving themselves a few extra payments here and there isn’t likely to be noticed, which is why these frauds often occur for several years before they are found.

Fraud experts regularly tell SmartCompany how businesses can protect themselves – and as KPMG forensic partner David Luijerink has said before, such protections are critical.

“A small business only needs to have one of these events, and it could possibly take the business down,” he said earlier this year.

Clearly, these are a minority and the vast majority of bookkeepers are honest employees. But they are in a position of power, and Australian bookkeepers have been at the centre of some of the biggest frauds over the past few years. Here are just a few of them:

Stealing money for luxury

Back in 2011, a contractor bookkeeper working for a group of direct sales companies called the Comunicom Group funnelled $891,000 into her possession.

She used the money on luxury goods and to pay back her mother’s gambling debts. As is the case with many of these frauds, the incidents occurred over several years between 2005 and 2009.

In his judgment, County Court Judge Michael Rozenes pointed out when the bookkeeper was confronted about the missing money she replied to the business owner he needed to improve his business practices.

“Theft from an employee whilst in a position of trust and over an extended period of time is a serious breach of duty and a serious offence,” Rozenes said.

The Clive Peeters incident

Back in 2009, the Clive Peeters chain of homewares stores was hit by a massive fraud of $20 million, conducted by a payroll officer.

But while most fraudsters would take the money and spend it on luxuries, Sonia Causer used the money in a different way – to buy property.

Thankfully, Clive Peeters was able to recover most of the money as the properties had risen in value. It’s an unusually happy ending to a story such as this.

But just as David Luijerink warns, one fraud is enough to take the company down. The business eventually suffered huge financial problems and eventually collapsed.

A bad hair day

In August 2011, the bookkeeper of hair and beauty franchise Hairhouse Warehouse was sentenced to four-and-a-half years in jail after embezzling $1 million from the company over two years.

Illias Karaliamis worked at the company’s head office from 2004-06, and over those two years stole nearly $1 million by mainly falsifying cheques.

At the time, KPMG forensic partner Gary Gill told SmartCompany the incident was yet another example of employee fraud conducted by a long-term worker.

“It really is the onus of the business owners to keep a good eye on things and at the end of the day make sure they know what’s going on in the bank account,” he warned.