Wednesday, July 12, 2006

Bookkeeper Adorns Herself With $1 Million

A trip to a day spa can be a very nice way to pamper yourself, and when you're the bookkeeper at such a business the temptation to treat yourself to its money can be overwhelming.  Such appears to be the case for Ruth Fallis, the bookkeeper at the Perry Anthony Design Group in Pike Creek, Delaware, a suburb of Wilmington, who from 2001 to 2005 embezzled over $1 million from the salon/day spa.  She was arrested and charged with interstate transportation of stolen property and wire fraud.

How do you steal that much money, including over $500,000 from the cash receipts, without anyone noticing?  It appears that Ms. Fallis was the only one responsible for the money, and as happens quite frequently in smaller businesses -- and some not so small ones, like Patterson-UTI -- she was able to manipulate the books to keep her theft under wraps (so to speak).  In this case, she stopped paying the taxes for the business and had the IRS deficiency notices diverted so that the owner never learned about the scheme until the business was $1.3 million in the hole.  Where did all that money go?  According to a press release issued by the U.S. Attorney's Office for the District of Delaware (here), she used a good chunk of the money to pay credit card bills:

A review of Fallis’ AmEx statements showed that she used her AmEx card to buy first class plane tickets for herself and her family, take trips to Europe, go skiing with her family out West, stay at expensive resorts and hotels, and go on shopping sprees in New York City. In addition, Fallis wrote eleven checks totaling  $40,913.50 to herself. She also wrote one check in the amount of $5,716.41 to pay a Diner’s credit card bill, two checks totaling $9,180 to pay for landscaping work done at her home, and five checks totaling $43,692 to pay for contracting work done on her home.

As usual, the boodle is probably long gone and it's unlikely much  money will ever be recovered.  And, the IRS does not accept excuses like "the bookkeeper ate the tax payments,", so the spa owner will still be liable for the non-payment of taxes. (ph)

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One of the first things they teach in basic accounting courses is that for control purposes, separation of duties is essential when handling cash. It's difficult to muster any sympathy for business owners, even small business owners, who don't take responsibility for oversight of their finances.

Posted by: DJ | Jul 13, 2006 7:39:55 AM

The only thing the business owner is guilty of is TRUSTING this long-term employee (she'd been with the company since 1992) who cooked up this ingenious scheme to rob him and frame him. Perry is a good man, and DJ's comments are very unfair. Apparently Ruth had been a trustworthy employee for some years, until she decided to steal and get away with it by framing Perry for tax evasion!

No, the crime is HERS, and she actually bragged that she would never go to jail, since she had such high connections.

Whoever her high-powered friends are, they certainly can't help her now! She's going to jail, and will pay restitution and a $1 million fine to the owner, who undoubtedly will pay his taxes with it.

Posted by: GeekSquadGirl | Apr 5, 2007 1:28:37 PM

Has Ms. Fallis been sentenced? If not when is sentencing and what are the sentencing guidelines. What is the probable sentence?

Posted by: Rick Caudill | Apr 30, 2007 7:35:44 PM

She has been sentence to just three years and has to pay all the money back in restitution. No news yet on what Federal pen they're going to put her in though.

Posted by: GeekSquadGirl | Nov 5, 2007 10:25:02 AM

uh.....excuse me, how did her husband, Matt, NOT know what she was doing???

Posted by: Eileen Maahs | Dec 4, 2007 11:48:20 AM

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