Former CEO charged with defrauding employer to fund lifestyle
The CEO of a U.S.-based power utility cooperative has pleaded guilty to one count of wire fraud for his role in defrauding his employer more than $500,000 for personal expenses.
Donnis Mizelle allegedly siphoned funds from Hendricks Power Cooperative by submitting fraudulent business expense claims for personal purchases. In one instance, Mizelle claimed $650 as a business entertainment expense when he had, in fact, purchased a black sapphire bracelet and a Montblanc pen (a luxury brand pen) for his personal use.
In another example, Mizelle claimed $1,250 for a “business-related dinner event”, while in actuality he used the funds for a train pass for a European family vacation. On a smaller scale, Mizelle also claimed $20 to cover the costs of a “business lunch”—or in this case what was really a pizza delivered to his home on a Friday night.
While Mizelle is guilty of submitting fraudulent expenses, one question that remains is what—if any—internal controls were in place at Hendricks Power Cooperative to prevent expense reimbursement fraud?
Although the answer to this question is unclear, it’s safe to say that many companies face this same type of risk similar risk. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse, expense reimbursement fraud was reported in 14% of asset misappropriation sub-schemes. Of these, the median loss for this type of fraud was $40,000.
To combat this type of fraud, the ACFE recommends that appropriate internal controls be in place, including:
- Implementing a formal travel and entertainment (T&E) expense policy
- Holding management accountable for reviewing and approving employee expenses
- Implementing a continuous controls monitoring software
If your company uses an expense management solution like Concur to manage business expenses, you can work with CaseWare Analytics to continuously monitor 100 percent of the expense data and detect potentially fraudulent and non-compliant expenditures.
With the CaseWare Analytics for T&E Monitoring solution, you will be notified of control breakdowns, including: 1) unauthorized card use; 2) transactions that exceed cardholder’s, velocity or daily thresholds, and 3) split transactions across one or multiple cards. Notifications for control breakdowns can be set up as they occur, eliminating the need to examine years of expense data to check for potential fraud.
Want to know how to catch fraudulent transactions like those submitted by Mizelle? Download our complete list of transaction alerts and internal controls monitoring that CaseWare Analytics can implement for you.
About Anu Sood:
Anu Sood is the Director of Product and Corporate Marketing at CaseWare Analytics and is responsible for the company’s global marketing strategy. Prior to CaseWare Analytics, Anu worked in various roles in the high-tech industry and her accomplishments range from writing software for telephone switches to launching a new global satellite communication service. Anu has extensive experience in strategic marketing, corporate communications, demand generation, content marketing, product management, product marketing and technology development.
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