Payroll Fraud Costs Company $300,000

An employee of Atlanta-based Candy Crown was sentenced to seven years in prison after pleading guilty to embezzling over $300,000 in funds through payroll fraud over a 3 year period.

The employee, Katrina McCutchen, must also pay $327,000 in restitution to her former employer.

She worked for the small family business that makes and distributes candy nationwide since 2010 and commenced her payroll fraud activities soon after starting with the company. She managed payroll and worked in collusion with an employee to pad work hours and write payroll checks to non-existent employees. The prosecutor estimated that total losses to the business amounted to over $800,000, but a company audit could only prove $298,187 in losses through the illicit payroll activities.

The audit alone cost the company $30,000, and to add insult to injury, the company owes $200,000 to the IRS as a penalty since W2’s weren’t file for the stolen money.

According to the Associated Association of Fraud Examiners, payroll fraud is the #1 source of losses to US businesses. A contributing factor to the fraud is paper-based time sheets that are often based on an honor system. FieldLogix provides a mobile time clock that verifies your employees’ locations when clocking in and out in the field by using GPS technology. This gives organizations the ability to ensure that the employees are only paid for work performed and helps to eliminate payroll fraud.

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