Dave and Adam's employee theft

Wow, that is a crazy number of cards. There will be some big players who were buying from those three; I bet this stays interesting for a while...
 
Wow, is all I can say! Greed got the best of them. Had they kept is smaller, probably never would of been detected. Glad they were greedy, because now they are caught, and are gonna get what they deserve. I hope when D+A recovers some, or most of their losses either through insurance, or restitution (less likely :rolleyes:), then they can hire back the employess they let go. They don't deserve to be the ones who have to suffer because of the wrongs of 3 others, who have no regards for others. Human junk! :mad:
 
The worst part of it all is the 5 people that had to lose their jobs... Hopefully something will happen for them out of all this.
 
The article I read had the 3 employees names as well as the approximate value each one stole. One employee stole about $800,000 of the $1.3 million.
 
As someone that has worked consulted and owned small to $25M companies...

I have to ask:

How in the world do you not realize that you have an inventory problem?
Your inventory tracking can't possibly mesh with your cash flow.
Their margins are not that great on wax, you would think that there would be bells going off when the losses in the wax division started piling up.


We have determined fraud before for as little as $10k in cost inventory - and our margins are WAAAY higher than theirs.

I feel bad for any kind of theft - just wondering how they can absorb numbers like that??
 
From what I understand, they made it appear that the items were paid for through the POS system, when in actuality no money changed hands? If your POS system is saying that you sold $10K worth of wax that week and the inventory was not on your floor, why would you question it? The only time flags would be raised when you actually audited your bank accounts.
 
It seems like hardly a week goes by where you don't read about someone embezzling thousands of dollars from a company or even worse a charitable organization, and more often than not they say "I'm not a bad person, I just got caught up in the whole thing and lifestyle" Well these people are bad people, as there are many people who have the opportunity to steal that don't do it, or as the story says, they could have reported the loophole and maybe gotten a bonus from their employer.

My best,

ken
 
TanguayFan said:
From what I understand, they made it appear that the items were paid for through the POS system, when in actuality no money changed hands? If your POS system is saying that you sold $10K worth of wax that week and the inventory was not on your floor, why would you question it? The only time flags would be raised when you actually audited your bank accounts.
Click to expand...

Blame the thiefs of course, but their bookkeeper/controller/accountant dropped the ball here too. They should be reconciling their bank at least once a month (no need to audit it to discover this). How long did it take before their accountant/bookkeeper said "Hey Dave and Adam, we have a huge receivable from the credit card companies that they aren't transferring to our bank."?

Either they don't enter their daily sales into their GL on a daily, even weekly, basis or they have an underqualified accountant and they have no controls in place to catch fraud. I can tell you that as a CA/CPA, I would have caught this within a week if I were their accountant.

Employing a qualified bookkeeper/accountant could have nipped this in the bud MUCH earlier.

All that said, enjoy jail you scumbags.
 
Rob,

I would not be missing the merchandise - I would be missing the $$ that the sales would have generated. As Jeremy says - this should have shown up within the second month at the very latest - and if they had good software - within weeks.


Here is a number that will make it real for you:

Lets say that you are missing $1.25 Million at Retail inventory.
Your gross margins are 40% (doubtful), your actual cost of goods is $750K.
even diluted over a year you would be missing $62,500 cost dollars EVERY MONTH which you need to pay your suppliers, rent , electric etc etc.
Not to mention the $104,000 in cash every month that those sales should have generated.

Forensic accountants catch thieves because a business generally has trouble paying it's bills all of a sudden , even though their sales are up to or over plan. Not many business can miss that amount of actual cash before they run into trouble.

As Jeremy infers - the bookkeeping/accounting staff should be fired. This never should have gotten this far.
 
I was going to post this story when it came out but I forgot.

The only thing I notice about their POS system is that they usually will give customers the club discount without scanning the card. I mean, they made the cards but I've only had it scanned twice. And it isn't a thing where the guy at the counter knows me because I'm not that regular and visit their stores randomly. The company is losing money right there.

If you've ever been to their retail store all their stuff (wax and packs at least) have 2 prices on them. If you aren't in the club you are supposed to pay the higher price.
 
As Jeremy infers - the bookkeeping/accounting staff should be fired. This never should have gotten this far.
Click to expand...

From the articles that I've read, it doesn't give you much. But how do we know that one of the three that were caught, wasn't the actual accountant. And working with the other two. All person(s) involved could have had a specific roll in the operation.

Regardless, sucks for the Martin family, and the folks who were involved.

Cheers,
Eli:beer:
 
I feel for the owners of the business...but

This was ongoing from Jan 2013 to July 2014.

Once you start making money, more money than you thought you would, some people stop doing the things that made them successful in business. Being hands on in everything in the business is usually the first to go.

Too much trust placed into people.
 
craxz said:
I feel for the owners of the business...but

This was ongoing from Jan 2013 to July 2014.

Once you start making money, more money than you thought you would, some people stop doing the things that made them successful in business. Being hands on in everything in the business is usually the first to go.

Too much trust placed into people.
Click to expand...

That might be the problem and unfortunately/fortunately, it'll change them. I've known Adam for about 18 years and he is a GREAT guy. This has to put doubt in his mind and I'm hoping it doesn't change who he is but changes how he runs his show.
 
Wow, that reallys sucks, too bad for Dave & Adams just goes to show you can't trust anyone. That was just pure greed, sneaking a box or two every so often is bad enough, but pallets! Wow, just wow it took them 1.5 years to catch them. I hope I didn't buy anything off them on ebay.
 

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