Finding Sherlock: In-House vs Outside Investigators

Careful Oversight Can Prevent Losses Like This!!
by Nic Smith

A recent article in the Los Angeles Times reported:

"A Ferrari-driving vice-president of Fry's Electronics Inc. who was allegedly such a heavyweight gambler that casinos chartered private planes to fly him to Las Vegas has been arrested on charges that he embezzled more than $65 million from the retailer to fuel his lavish lifestyle and pay off debts.

Ausaf Umar Siddiqui is accused by the Internal Revenue Service of concocting a hugely profitable scheme in which he cut side deals with some of Fry's suppliers, buying their goods at higher prices than they would normally get and buying more of them than he normally would in exchange for kickbacks of as much as 31% of the total sales price."

What could the management of Fry have done to protect itself from this sort of damage?

They could have done something as simple and as inexpensive as an annual review of public records for executives and other people in positions of trust within the company. If they had done so, they would have discovered that on February 4th 2002 Trump Taj Majal in New Jersey sued Siddiqui for $5.85 million dollars!

Siddiqui was earning $225K a year as a vice-president of Fry's, and here he was being sued for the equivalent of twenty years of his salary! He was also sued again in August of 2004 for $2.5 million! Both of these matters were settled (paid off) in September and December of 2005. They were obviously paid off with the money being kicked-back by the vendors selling the price-inflated goods to Fry's.

A simple public records check, conducted at minimal expense could have alerted Fry's of Siddiqui's financial problems and, at the very least, could have triggered a conversation with Siddiqui to explain how he came to be indebted at this level.

At Parrent Smith Investigations, we encourage our business clients to be careful and conduct background checks on a regular basis, even when it comes to long-term and trusted employees. A family problem or a gambling or other addiction can cause a once honest employee to steal from the company, if they have the access and opportunity. The nominal cost of a yearly review of employees with access to company funds would have saved Fry's millions of dollars.