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February 6, 2023

Your Naughty Corporate Controller of the Day

When I first started writing for Going Concern as a freelancer in October 2017, I did a series of articles about the role of the corporate controller. Caleb made me asked me to write articles on how controllers transitioned from public accounting to industry, what paths they’ve taken toward SOX compliance, how they can survive their first IPO, and why they should play nice with audit committees, among others.

One topic I didn’t write about is how corporate controllers embezzle millions of dollars from their employer, like this guy, Paul Harmon, who pleaded guilty to one count of wire fraud in Pittsburgh federal court last Tuesday.

According to the DOJ:

During his plea hearing, Harmon, 63, admitted that for over 40 years he was the corporate controller for Butler-based Fuellgraf Electric Company, and an affiliated company, Technical Management Associates, which supplied electricians and related services to a variety of industrial and commercial business customers located primarily in Pennsylvania and Florida. As controller, Harmon admitted that he exercised day-to-day responsibility for and control over Fuellgraf’s finance, accounting, and treasury functions. He also maintained check-writing authority for Fuellgraf’s business bank accounts and control of Fuellgraf’s internal books and records.

Between at least October 2009 and his termination in December 2018, Harmon admitted that he misappropriated approximately $1.5 million in Fuellgraf funds and concealed his theft through manipulation of Fuellgraf’s books and records. As part of Harmon’s scheme to defraud Fuellgraf, he admitted stealing funds in a variety of ways, including by: causing the company to issue over $470,000 in duplicate or inflated payroll disbursements to Harmon, initiating electronic payments toward his personal credit card balances totaling approximately $500,000, issuing approximately $10,000 in corporate checks to pay his personal credit card balances, issuing almost $80,000 in corporate checks to himself, and misappropriating $200,000 in corporate checks written to cash. In addition, Harmon admitted that he issued Fuellgraf corporate checks to an entity he controlled, PM Accounting, totaling more than $200,000, for purported accounting work performed on behalf of Fuellgraf, when, in fact, no such work occurred. Harmon concealed his misappropriation by creating hundreds of false entries in Fuellgraf’s books and records that masked the true nature and purpose of the expenditures.

As part of a written plea agreement, Harmon agreed to make restitution to Fuellgraf in the amount of $1,466,456.71.

If convicted, Harmon could face up to 20 years in prison for his malfeasance.

[Justice Department]

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