Hey! Have you guys listened to “Oh My Fraud” yet? It’s a new podcast on the Earmark CPE platform hosted by our good friends Caleb Newquist and Greg Kyte. And Earmark CPE was created by another pal of Going Concern’s—Blake Oliver. The latest episode of “Oh My Fraud” is about the massive fraud in Dixon, IL, where the city’s former comptroller Rita Crundwell is currently serving a 19 1/2-year prison sentence for stealing more than $53 million from the small northwestern Illinois city’s coffers. Give it a listen, it’s worth your time.
With that unpaid endorsement out of the way, here’s a fraud that is unlikely to make Caleb and Greg’s podcast anytime soon, but it involves Heidi Royal, an accountant for a wealth management firm, who fessed up on Valentine’s Day to bilking an old woman suffering from dementia out of about $800,000.
The Atlanta-based wealth management firm is not named in the release from the US Attorney’s Office for the Northern District of Georgia, but an online search shows a Heidi Royal who was an accounting manager at Homrich Berg, a personal wealth management firm based in Atlanta. Here are the gory details from the office of US Attorney Kurt R. Erskine:
Heidi Royal, who was employed as an accountant at an Atlanta-based wealth management firm, has pleaded guilty to federal charges arising from a scheme to defraud one of the firm’s clients.
According to Erskine, the charges and other information presented in court: Heidi Royal’s employer was registered with the US Securities and Exchange Commission as an investment adviser. The firm provided investment advice and financial services to C.K., an elderly widow suffering from dementia.
As the firm’s Accounting Manager and Bill-Pay Supervisor, Royal had access to C.K.’s Social Security Number and the usernames and passwords for C.K.’s investment accounts and bank accounts. As part of her duties and responsibilities at the firm, Royal provided professional accounting services and bill-pay services to C.K. for more than 10 years. During that time, Royal gained C.K.’s trust and developed a close personal friendship with her. Royal even told a co-worker at the firm that C.K. was like a grandmother to her.
As a person associated with an investment adviser, Royal owed a fiduciary duty to each of the firm’s clients, including C.K., and Royal was required to act in C.K.’s best interests at all times. Royal was not permitted to pay her own debts and expenses with C.K.’s money.
From approximately June 1, 2010, through March 17, 2021, however, Royal misappropriated approximately $800,000 of C.K.’s money and converted it to her own use.
As part of the scheme, Royal stole C.K.’s annuity payments, wrote more than 200 fraudulent checks on C.K.’s bank accounts, forged C.K.’s endorsement on checks, withdrew cash from C.K.’s bank accounts and converted it to her own use, fraudulently used the electronic bill-pay feature associated with C.K.’s bank accounts to divert money to herself, used PayPal to make electronic payments to herself from C.K.’s bank accounts, impersonated C.K. in telephone conversations with financial institutions; and made false and misleading entries in C.K.’s financial records to make the fraud harder to detect.
In addition, Royal fraudulently used C.K.’s name and Social Security Number to open a secret bank account for the purpose of concealing and disguising the fraud proceeds.
In mid-March 2021, when the firm learned that checks drawn on C.K.’s bank accounts had been deposited into Royal’s personal accounts, the firm immediately terminated Royal and reported the matter to law enforcement.
Royal, 52, a resident of Dallas, GA, pleaded guilty on Feb. 14 to wire fraud and aggravated identity theft, according to the US Attorney’s Office. She is scheduled to be sentenced on May 31.
A spokesperson from Homrich Berg sent us the following statement regarding Royal’s actions: “Homrich Berg became aware of suspicious transactions involving a former back office employee involving one client. Given the seriousness of the accusations, HB quickly terminated the employee and has been actively working with the client and law enforcement to ensure that the case is handled swiftly and appropriately. The result of this cooperation was a guilty plea entered by the former employee. Our findings and the findings of an outside forensic accountant confirmed our belief that this misconduct was limited to one employee and one client. We reimbursed the client for lost funds and believe this was a unique situation that will not occur again.”