Examiner who helped in $2 million fraud case offers tips for businesses
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IDAHO FALLS — The forensic auditor who helped on the Charlotte Pottorff fraud case has some tips for business owners.
Daniel Packard, a partner at Cooper Norman CPAs & Business Advisors, is a certified public accountant, certified fraud examiner and certified valuation analyst. He assisted Val Erickson in discovering the amount Pottorff embezzled from Ericson’s companies.
Pottoroff embezzled more than two million dollars and spent it gambling. She pleaded guilty to two counts of felony embezzlement, one count of perjury and one count of felony tax evasion.
Packard said her crimes can serve as a lesson to everyone.
“No one is immune from fraud,” Packard told EastIdahoNews.com. “It’s an interesting crime, in that, those who perpetrate fraud look like normal people. They’re people that you and I run into on a day to day basis. They’re parents. They’re often times active in their church. Fraud is just one of those crimes that can attract nearly anyone.”
The Association of Certified Fraud Examiners found in a 2014 study, on average, businesses lose up five percent a year due to fraud.
Packard said businesses need to be aware of what situations can foster fraudulent activity.
“Fraud occurs when three things happen: One is, there is a pressure to commit the fraud,” he said. “That pressure could be a gambling habit or a drug habit — a significant financial loss or a medical issue. The next thing an individual needs to have when perpetrating fraud is a rationalization to do it. Every time I’ve dealt with a case I always hear things like, ‘I was only borrowing the money’ and ‘I planned to pay it back.’ The final thing an individual needs to commit fraud is an opportunity to do so.”
With that in mind Packard has four tips businesses can take to protect themselves from fraud.
- Be aware, fraud can happen to anyone.
- Investing resources in fraud prevention is cheaper than detecting fraud after the fact.
- Separate business functions:
- Custody of assets.
- Record keeping.
- Auditing the books.
If a business owner suspects fraudulent activity, Packard said that person needs to contact a certified public accountant right away then get legal advice.
“So many business owners are hesitant to report fraudulent behavior to law enforcement or to other people because they want to be kind to the person that they care about or they want to be charitable,” he said. “The problem is that in doing that, they’re just encouraging that behavior to happen again. Fraudulent behavior is highly addictive and if you let the person go without some degree of punishment then your exposing the community to that behavior.”
Packard said in the last year alone in eastern Idaho he has seen two or three cases with a similar level of theft to what Charlotte Pottorff stole.