In a reminder for businesses to get their Accounting systems in order, a South Australian man today went to gaol for fraud against his employer.
Christopher Wayne Fuss, 47, started misappropriating funds six months into his employment at Adelaide’s Flinders University and continued for two years resulting in more than $27 million, has been sentenced to nine years in jail.
He transferred money into his personal bank accounts and invested large sums, even sponsoring the Adelaide 36ers basketball team donating up to $200,000. All but approximately $1 million has been recovered.
In sentencing, Judge Mark Griffin said about Fuss “In this case the number of transactions, the vast amount of money you diverted, the financial and reputation losses to the university and its staff and the fundamental breach of trust all combine to demonstrate that this is among those most serious examples of this type of offending,”.
“As to your prospect of rehabilitation I suspect that you will not commit this kind of offence again, mostly because no employer in their right mind would ever trust you again.”
Well you would be surprised how many of them end up back in employment. Many of them too do it again.
Peter Gill from Flinders University said it has been an expensive recovery process involving senior staff, professional accounting advice and the involvement of police. He said “We’ve tightened our financial controls and we’re confident we now have measures in place to prevent this.”
So how did he do it? Fuss wrote cheques to himself and electronically transferred the millions of dollars over two years. He used his own password and another of a colleague, who was unaware, for access to the university’s computer system.
During sentencing submissions, his lawyer David Edwardson QC said Fuss had pretended to be a broker and intended using the money for an investment scheme but had not realised it was a scam. Mr Edwardson said Fuss had been encouraged to invest in a prime bank placement scheme and was promised he could double the university’s money.
How did the offending go undiscovered for so long? “Most institutions notice 27 cents, let alone $27 million,” said Judge Mark Griffin. “It’s just staggering that there were no audits or safeguards.” He said it was fortunate the offending was discovered before the money went to an offshore investment scheme.
Prosecutor Gary Phillips said the offending would affect Flinders’ standing.”The co-workers are also victims and feel guilt and shame and many have worked extra hours, sometimes without pay, to assist in the investigation.” He told the court the university has spent more than $750,000 in legal fees and on investigations to recover the money.
I can tell you that it is impossible to buy this amount of cover under a Crime or Fidelity cover. Even if you could, they would never pay the premium required.
The best thing to do is effectively manage the risk with effective systems of cross referencing, regular audits and reconciliations.
I can also tell you that Boards of Directors and Boards of Governors are also held accountable in these situations. See the National Safety Council matter from twenty years ago.