Jennifer Lynn Horton, a 49-year-old from Shepherdsville, Kentucky, was sentenced to 30 months in federal prison, followed by one year of supervised release, for embezzling more than a million dollars from a family-owned contracting company in Greenfield, Indiana.

Horton, who worked as the office manager for the company from 2011 to 2022, was responsible for managing payroll, customer invoices, and company credit cards. Starting in January 2016 and continuing through December 2022, Horton executed multiple schemes to defraud her employer.

Horton inflated her salary on 466 separate occasions, totaling $515,000, without approval. Additionally, in December 2020, she added her husband to the company's payroll, even though he was not an employee, stealing an additional $107,000 under his name.

To conceal her actions, Horton edited the company's payroll data to make it appear that she was being paid her agreed-upon salary and to delete the payments to her husband. After the edited data was approved, she reverted the payroll system to make the unauthorized payments to herself and her husband.

Horton also misled her boss about the company's financial reports, causing significant financial strain on the company when the true information was discovered.

She redirected credit card payments made by the company's customers into her own personal bank account more than 185 times, concealing the theft by altering the company's accounting records to delete invoices or falsely marking them as "paid in full" to the company.

Furthermore, Horton abused the company credit card to pay personal bills and make personal purchases, including a house, cars, and clothes. In total, Horton stole approximately $1,116,258 from her employer.

Commentary

Oversight in payroll processes is crucial to ensure accuracy, prevent fraud, and maintain compliance with regulations.

Two important loss prevention practices are: (1) providing notice when payroll data is altered and (2) employing a third-party payroll provider.

Begin with notice of changes to payroll status:

• When payroll data is changed, notifying multiple people helps in preventing fraudulent activities and errors. It ensures that no single individual has unchecked control over payroll processes, reducing the risk of unauthorized changes or embezzlement.
• Involving multiple people in the oversight of payroll changes promotes accountability and transparency. Each person involved can verify the accuracy of the changes, ensuring that all modifications are legitimate and properly documented.

Many third-party providers provide notice independent of the person in charge of the account.

Utilizing third-party payroll providers also provides loss prevention value:

• Third-party payroll providers implement robust security measures to protect sensitive payroll data. They also have systems in place to detect and prevent fraud, reducing the risk of financial losses for the organization. By outsourcing payroll, organizations can benefit from the provider's expertise in managing payroll risks and ensuring data security.
• Third-party payroll providers specialize in payroll processing and stay up to date with the latest tax codes, labor laws, and compliance regulations. By outsourcing payroll to these experts, organizations can ensure that their payroll processes are always compliant with current laws, reducing the risk of penalties and legal issues.

The final takeaway is that notifying multiple people when payroll data is changed ensures accountability, transparency, and compliance, while using a third-party payroll provider reduces risk, making it a best practice for organizations.

Source: https://www.legalreader.com/former-office-manager-sentenced-to-2-5years-in-for-embezzling-over-1m-from-family-owned-business-in-greenfield/