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A Direct Line Blog

Pay Attention to Fraud Stories

September 19, 2018 7:30 am

By Donya Parrish, VP-Risk Management

Every now and then, a story comes along that really catches my attention. I read nearly every fraud article I see, so I can get a better understanding of what happened and how a credit union or business could have prevented it. Last week, a very new angle to a credit union embezzlement surfaced, and it is one I think we all need to pay attention to.

It is surprising that an employee can steal millions in this day and age with so many internal control recommendations and technologies to assist with control. When that person is a mailroom employee, it’s shocking. “Who mails out that much cash?” was my first reaction.

If you read the story of Duane Sikes, you start to understand. He managed to exploit the trust of the credit union and the process it had in place for filling their postage meter. It appears there was little-to-no control over the procedure or checks that were cut each week, and Duane figured out a way to profit.

The lesson provided (not “learned,” since clearly many organizations haven’t learned from the problems others have had) is that no employee should be trusted at a level that allows for opportunity. Having controls and parameters in place does not constitute mistreatment or reflect poorly on an employee, no matter how long they have worked for you, or how loved they are. It is a sound business decision that protects your credit union, the credit union’s assets, and, most importantly, your credit union’s reputation.

And, if you are looking for some great resources on Internal Controls, our December blog features a few from CUNA Mutual Group.

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