Monday, April 18, 2005

We Don't Need No Stinking Criminal Background Checks

From fellow LawProg blog CrimProf comes a link (here) to a story from Newsweek (here) about how TIAA-CREF hired one Sonia Radencovich for a tech position without checking her background.  It seems that Sonia came from a "preferred vendor" and TIAA-CREF assumed the vendor had checked her background.  Unfortunately, under her other name, Sonia Howe, less than two weeks before starting at TIAA-CREF she was sentenced to four years in prison for her part in the Martin Frankel insurance fraud that landed Frankel in jail for 16 years after he disappeared amid smoking documents in a fireplace in his Connecticut mansion.  Her role in Frankel's scheme was described by the U.S. Attorney's Office for the District of Connecticut in this way in a press release after her sentencing (here):

HOWE, a purported trustee of the Thunor Trust, the entity through which FRANKEL allegedly controlled the insurance companies, was convicted of participating in the racketeering enterprise through which FRANKEL and others were able to obtain the insurance company assets and convert them to their own use and benefit. HOWE admitted that she created bogus monthly statements and confirmation slips that were sent to the insurance companies that falsely reflected that the insurance company assets were safe and secure. HOWE was also charged with and admitted laundering the proceeds of the fraud through her receipt of various funds.

HOWE was described by the prosecutor as instrumental in Frankel’s successful “ponzi scheme” that left seven insurance companies looted and in receivership. However, HOWE cooperated with federal authorities and was granted a downward departure from the applicable guideline range of 188-235 months in prison as a result. The Court also departed on the basis of HOWE’s stated motivation for becoming enmeshed in Frankel’s scheme, that is, her belief that her children had been abused by their father and her efforts to prevent further harm to them.

According to the Newsweek story, Radencovich/Howe worked at TIAA-CREF for two months, and downloaded data from accounts related to at least three colleges (Purdue, Michigan, and Harvard) on to her personal laptop computer.  It's not clear whether she did anything with the data.

TIAA-CREF has garnered a bit of bad publicity lately.  It removed two board members last year because of disclosure issues related to consulting work they did with the company's auditors, Ernst & Young, and the SEC initiated an informal investigation of E&Y regarding auditor independence (the firm was replaced by PwC last month).  Also, the company's current CFO, Elizabeth (Betsy) Monrad, worked at General Re before joining TIAA-CREF and had some contact with the reinsurance transaction that is the focus of the widespread investigation of AIG and General Re.  In the interest of full disclosure, not that anyone should care in the least, I have a sizeable chunk of my retirement money invested with TIAA-CREF -- although perhaps I will change that to "had."  (ph)

Fraud, Investigations | Permalink

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