Auditors Inc. Battle small business fraud and embezzlement from Baltimore, MC

Auditors Inc.

  • Auditors Inc., filed for incorporation on May 22, 1997 in the state of Maryland.
  • We are a group of CPAs and small business certified/full charge bookkeepers with more years of experience than we care to admit to in all facets of small business administration, management, accounting and bookkeeping. In short, we are small business specialists.
  • But we also have one other distinction. We have each started, operated and sold our own small business and so we understand the “sweat equity” required of every business owner and their respective families.
  • We understand digging into our checking account to cover a payroll.
  • We understand working into the wee hours of the morning and finally falling into bed.
  • We understand the exhilaration of making that first sale.
  • We understand signing on the dotted line when we take a 2nd mortgage to support the business’s growth.
  • We understand feeling guilty about neglecting the family because we just have to do one more thing before the day is over.
  • We understand the pride of accomplishment.
  • We also understand the visceral wrenching feeling when you first discover that someone you have trusted has just placed the financial knife in your “innards”.
  • That’s why we are here!

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Auditors Inc.
2833 Smith Avenue
Suite 330
Baltimore, Maryland 21209
(O) 757-676-0622

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Auditors Inc.
2833 Smith Avenue
Suite 330
Baltimore, Maryland 21209
(O) 301-715-3811


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5. Media Spotlight

Expert: Embezzlement is ‘fiscal rape’ of an employer
By Donna Roberts
North Adams Transcript

ADAMS — The legal definition of embezzlement is the act by which someone fraudulently takes ownership of some property that has been entrusted to him temporarily by another party.

But for many businesses, especially smaller businesses, it can mean so much more.

Embezzlement can be done in many different ways by many different people. Sometimes it’s a new employee. Other times it’s a person who has been with the company for years.

It can even be a family member.

Det. Lawrence Ordyna of the Adams Police Department said Friday that embezzlement often occurs because the employee has built a trusting relationship with the business owner.

“You have a business, and I’m talking a major business with a lot of financial stability, where the owner trusts the bookkeeper,” he said. “It’s up to the accountant to come to the owner when there’s a problem. Sometimes businesses have two people, the bookkeeper and accountant, to watch things. But usually for small businesses, no, medium businesses, some [have two], and larger businesses, definitely.”

So in many cases, there is only one person who handles the books and financial aspect of the business, he said.

Sgt. David Buell of the Berkshire County State Police Detective Unit agreed.

“Often times only one person does the books, and they can even get things past auditors if they manipulate the paperwork right,” he said. “It usually goes unnoticed until the business notices they’re losing money or they’re not doing as well. Most people take small amounts over an extended period of time, so it’s not easily detected.”

Business today is often transacted through checks rather than cash. Because of this, taking money can be easier to hide over a period of time, Ordyna said, but also, easier to track once the problem is discovered.

“Checks definitely leave a paper trail, that you can usually track back to the bank to begin comparing figures,” he said.

Buell said he has come across some cases that involved more cash than checks. But once he started looking at bank statements and checking who had access to the deposits, it often lead to one person handling the money.

This leads to the number one practice that can save business owners from embezzlement, which is to understand and check your own books.

“Take the time once a month to go through paperwork,” Ordyna said. “Go through the book work just to make sure the numbers match up, and look up people’s accounts. Because that’s where you might see numbers crossed out or messed up figures.”

Another good practice is to do thorough background checks on new employees, no matter what kind of reputation they bring with them.

“Then make sure people know they will be watched, and watch them,” Buell said. “Because the only fool-proof way is to do the books yourself and do the deposits yourself. And I know that isn’t always cost-effective for smaller businesses. It’s difficult to put in a system of checks and balances with less employees.”

What especially makes it difficult to spot an embezzler is that many are seen as exemplary employees by both customers and the employer.

William Elder, owner of McClelland’s Printing of Williamstown, found out his bookkeeper, Jayne Manoogian, had embezzled $271,000 from his company, after she worked there for 15 years. And the reason he trusted her, he said, is because she had a good rapport with both the employees and customers, and never caused any trouble.

Ordyna said many embezzlers do not buy lavish gifts or do anything out of character like take extended vacations with the money.

“In my experience, the people either have debt or a drug addiction,” he said. “Most people don’t go out and buy expensive things like cars or homes.”

Elder reported Manoogian to the police after his accountant was able to track down some of the discrepancies in their books. Such a large sum of money made a difference in the business’ finances after a number of years.

Ordyna said most cases he’s been involved in have dealt with figures, large and small, that either would have put the company “in the red” or out of business. Others that he heard “through the grapevine” and weren’t reported would not have affected the company’s operation as much.

Ruth Crane, a bookkeeper with Auditors Inc., in Maryland, who helped to create, said embezzlement “is the last of the financial scandals primarily hidden in the closet, with the average embezzlement being $125,000.”

Crane, along with two other long-time bookkeepers, polled over 200 certified public accountants in their area, and in Virginia, Delaware, and Pennsylvania, to come up with an idea of how much embezzlement gets reported. They found out that 20-40 percent of small businesses in that area are embezzled from, but only 2 percent are reported.

“It’s a serial crime. People who do it don’t normally do it once,” Crane said. “They often times just pay the restitution and move onto somewhere else.”
Crane said she herself has come upon a check that had her signature forged on it, and has spoken with dozens of other business owners who have been the victim of embezzlement.

“This may sound strange, but I’ve noticed that victims of embezzlement use the same language as rape victims to explain what happened,” Crane said. “I consider it fiscal rape. They talk about the violation, the embarrassment, the shame, sometimes they feel partially culpable and don’t want anyone to know.”
Punishment for embezzlement often depends on the situation. For over $250, one type of sentencing can be no more than five years in state prison and no more than a $25,000 fine, although that fine can be tripled, Ordyna said.

In Manoogian’s case, she was sentenced to one year in jail, five years probation, and ordered to pay the remaining restitution, $221,950, after the business’ insurance covered a small amount.

Donna Roberts’ e-mail address is, telephone extension 227.