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Accountants Behaving Badly: Ex-CFO Busted For Embezzlement; Fraudulent Timesheets; Ripping Off Client

Posted on by Jason Bramwell

Plus, an accountant is accused of keeping a domestic slave at his house and an accounting officer is going to jail for swindling his firm out of £3 million.

Former Walton Beverage financial officer sent to jail for embezzling company funds [The Bellingham Herald]
David McLeod, CPA, the former CFO of Walton Beverage in Ferndale, WA, will spend eight months in jail for embezzling roughly $150,000 from the company over several years.

David McLeod

He was ordered to pay $150,000 in restitution to Walton Beverage, according to his July 25 sentencing. He has already paid $110,000 and will continue making payments on the remaining $40,000.

McLeod was using an unauthorized American Express card to steal money from Walton Beverage. He would use the card to issue himself reimbursement checks disguised to look like he had paid a Walton Beverage supplier with his own personal funds. McLeod falsified American Express statements to justify the reimbursement.

McLeod was fired from Walton Beverage on Sept. 1, 2017, court records show.

Fraudster accountant McKeown given 48 hours to repay £4k [Belfast Telegraph]
Darien McKeown, an accountant who defrauded more than £4,000 from a recruitment company, was ordered by a judge on Aug. 1 to complete 60 hours of community service.

District Judge Mark Hamill told McKeown the only reason he was not imposing a jail sentence “is on the basis that the money is paid back within 48 hours.”

McKeown had earlier pleaded guilty to a single count of fraud by false representation, committed between Dec. 10, 2017 and Jan. 9, 2018. It was revealed that McKeown had been submitting fraudulent timesheets.

Tax accountant receives probation for theft [WNEP]
Melanie Huynh, owner of Century Accounting and Tax Service in Williamsport, PA, was sentenced to five years of probation in late July for overcharging a client by almost $70,000.

Court documents say Huynh ripped off the owner of Future Nails, a salon near Williamsport, for tax services between 2011 and 2013, and also failed to file taxes for that client on time.

Accountant accused of keeping domestic slave granted bail [Belfast Telegraph]
Osarobo Izekor, an accountant accused of keeping a Nigerian woman with the mental age of a 4-year-old as a domestic slave in Belfast, was granted bail on Aug. 1.

Izekor, 33, is to be released from custody under conditions including a £15,000 cash surety bond and a ban on entering the city. He is charged with requiring a person to perform forced or compulsory behavior. His wife, Precious Izekor, 26, is already out on bail on the same charge.

They allegedly kept the 31-year-old woman in servitude at their home between Dec. 31, 2016 and Oct. 1, 2017. The alleged victim claimed that over a five-year period spent with the couple, she was beaten, mentally abused, and called a slave.

The couple deny any wrongdoing, claiming they just tried to help her settle and obtain work in the U.K.

Accountant gets 3 years for swindling his firm out of £3m [Law360]
Ben Wiley was sentenced to three years and eight months in prison on Aug. 5 after the former DG Robson employee pled guilty to one count of fraud and another of transferring criminal property.

Ben Wiley

Wiley, 28, admitted to abusing his position as DG Robson’s accounting officer by transferring £2.94 million ($3.47 million) belonging to the mechanical services contractor—a subsidiary of building services firm T Clarke PLC—into bank accounts that he controlled between May 2013 and October 2016.

Wiley pled guilty early in the proceedings and his cooperation in the investigation were contributing factors to a lower sentence, the court heard. The maximum sentence for fraud by abuse of position is 10 years in prison.

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GSI Group: Internal Controls Won’t Be an Issue Going Forward

GSI Group Inc. (GSIG) said it reached a settlement with the U.S. Securities and Exchange Commission by consenting to a cease and desist order related to accusations that it improperly recognized revenue on certain transactions at its semiconductor business from at least 2004 through June 2008, partly because of insufficient internal controls. The SEC alleged that as a result, the supplier of precision technology and semiconductor systems had overstated revenue by 0.7% in 2004, 1.4% in 2005, 17% in 2006 and 5% in 2007 and by 13% and 5.6% in the first and second quarters of 2008. The company said it agreed to the settlement without admitting or denying the SEC finding and wasn’t charged with fraud or required to pay any penalties. “GSI fully cooperated with the SEC in its two year investigation and has undertaken a number of corrective actions and internal control enhancements,” said Chief Executive John Roush. [Dow Jones]

More Proof That Busy Season Could Kill You

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.

During the tax season of 1995-1996, Norm Lorch was not feeling well. He had a sore throat, but told himself it would go away. In any case, he did not have time to go to a doctor.

Lorch is principal of Owings Mills, Maryland-based Norman J. Lorch, Chartered, a firm that assists contractors, accountants, and attorneys in areas unique to government contracts.

Eventually, he spoke with a doctor on the phone who prescribed antibiotics – two weeks on and off – but he still did not feel much better. At one point, Lorch passed out, but he told himself that he had tripped on something, picked himself up, and went back to work.


While attending an American Bar Association conference, Lorch met a friend who would be conducting the session he was planning to attend. The friend told him in “pretty clear English” how he looked and said he needed to see a doctor. Lorch said no, but the friend insisted, saying that if Lorch didn’t call a doctor, he would stop the session.

Lorch set up an appointment for the next day. The doctor’s diagnosis was strep throat and made an appointment with a cardiologist for the following Monday. At first Lorch said “No, I have to go to Chicago,” but eventually he acquiesced. The strep had settled in Lorch’s aortic valve and destroyed it, causing congestive heart failure. He was given three to five days to live if he did not have immediate surgery.

“This is a crazy profession. Accountants are nuts. We work ourselves to death. I had allowed my clients to be the most important thing in my life. I didn’t listen to anybody,” Lorch told AccountingWEB.

“Making a few bucks less won’t kill you. When you are tired, quit. When you don’t feel good, stop working. Yes, some clients may leave, but they are going to find someone else if you die,” he said.

“I made a lot of money that year and eventually earned a penalty for underpayment of estimated taxes. I called the Internal Revenue Service to explain, spoke with a supervisor, and she said, ‘if you receive another penalty notice have them contact me.’

“Now, my priorities are my health and my family. My daughter had to leave college during her exams because of my medical condition, and I nearly missed her graduation. My clients can wait, and those that can’t wait can go. When you remember what comes first, everything else will fall in line,” Lorch said.

“When I teach, I tell everybody about this and what stress can do to your health because if I can help one person, it is worth it. I persuaded the moderator at an AICPA tax conference to allow me to speak to a group of 50 or 60 people when I wasn’t scheduled. As we were leaving, one man said, ‘Thank you very much. I am going to the hospital,’ Lorch said.

Since his illness, Lorch has lost weight and is careful what he eats. He walks five to seven days a week for one and a half miles. When he doesn’t feel well, he calls his doctor.

A specialist in financial oversight, compensation, and administration of U.S. government prime contracts and subcontracts, Lorch travels at least 50 percent of his working hours, but now plans travel with his health in mind. “I try to extend the hours, spreading two days of work over three.”

Earlier:
BKD Partner Found Dead at His Office

The National Society of Accountants Has a Bone to Pick with the AICPA

A couple weeks back the AICPA gave its members the go-ahead to Crtl+C, Crtl+V its letter to the IRS about how certain parts of the proposed tax preparer regulations were a load of crap.

We just assumed that everyone in the accounting biz was on the same page here but boy we’re we wrong. The National Society of Accountants sent this letter to Treasury honcho Geithner stating that they don’t want any tax preparers exempted from obtaining a PTIN (among other complaints):

NSA Letter Regarding CPA Firm Exemption


What’s especially interesting is that the AICPA is not named in this letter once, however they are named specifically in the NSA’s press release:

Now, at the 11th hour, just before the registration process is scheduled to begin, some – including the American Institute of CPAs – are demanding that staff members of ‘CPA firms’ be exempted from the registration requirements. This flies in the face of why this registration program was set up. The point of the new regulations is to ensure that all tax preparers are accountable for their work in preparing returns, and that should include anyone who paid to prepare all or substantially all of a return, no matter where they may work.

The basic tenet here is that big firms will get away with letting the underlings preparing the returns not be held accountable for their (apparently) shoddy work. The NSA’s position is that if every single legit tax professional is registered then they can track down the shitty ones and the IRS can act accordingly. The NSA claims that the “loophole” proposed by the AICPA will let these amateurs skate the testing and registration requirements and thus won’t be serving taxpayers one iota.

On the one hand you might have been totally against the tax preparer regulations from the start but now that they’re unavoidable, the AICPA’s request for exemptions in some cases may burn the unlucky bunch that wouldn’t get to enjoy waiver.