Embezzlement and Gambling… In Connecticut?

After speaking at a recent session following a presentation of gambling as an addiction, I started paying closer attention to this issue.  In Connecticut we have two casinos that opened about ten years ago.  While embezzlement to support a gambling problem has come up in my cases, it hasn’t been as prevalent as one would think with two casinos in the state.

What amazes me more than the gambling is the amounts that can be lost, and with the embezzlements, the amounts that can be diverted from an organization to support gambling without the organization missing the funds.

Case in point comes from an article in today’s Journal Inquirer, a local Connecticut newspaper.  “Woman gets 9 months for thefts.”

The woman in the article was convicted of embezzling $335,000 from a local school lunch program.  She was the director of dining services for the local town, and took cafeteria receipts, concealing the thefts with falsified logs.  The article also stated she lost more than $380,000 over six years gambling at the slot machines.

The real questions I have after reading this article are 1) how much funds flow through this town’s cafeteria services to have been able to loose $335,000 and not miss the funds, and 2) where were the basic level internal controls over cash receipts, collections, entries and deposits to have both prevented this from happening in the first place, and also to have detected discrepancies as soon as they started to occur?

I guess a third question would be fair as well – towns like this town undergo annual financial audits by outside accounting firms.  Given the existence of casinos in CT and the high risks of gambling and embezzlement, why wasn’t such a large theft detected as part of any year’s audit?

Just makes me wonder just how much fraud, theft and embezzlement is occurring as we speak, waiting to be detected or discovered, or more likely, waiting for accidental identification after the snowball effect has occurred.

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14 comments on “Embezzlement and Gambling… In Connecticut?
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  13. Steve,

    As usual, good post.

    It seems the old school embezzlers could always hide behind drinking, women or betting. Now, as you have indicated before, this is the age of entitlement.

    Having the gambling establishments in your own back yard certainly makes gambling easier. Ross Perot had it partially correct when he described the “Giant Sucking Sound.” He was referring to the NAFTA legislation. He could have just as easily been describing the casinos in Southern Connecticut. I wonder how much money has gone through their doors this past decade.

    As far as audits go, what can you say? These run the spectrum form the absurd (think Arthur Anderson and Enron) to the (fill in the blank) sloppy ones. One would think organizations would spend more time having better internal controls.

    Keep up the good work.

    Regards,

    Thomas F. Scanlon, CPA, CFP®

We have the resources to get to the bottom of your most complex financial matters. Our team of forensic accountants brings a varied background of experience to each matter.

Heading the team is Stephen A. Pedneault. A CPA and forensic accountant, Steve is also a Certified Fraud Examiner (CFE), Certified in Financial Forensics (CFF) and is a Forensic Certified Public Accountant (FCPA). He brings nearly three decades of accounting and fraud investigation experience to the firm.