Medius Podcast Series

Speaker 1

You're shaking, you don't know what you're going to read, you want to cry, you don't want to read it, you don't want to look, you want to be in denial because he's your son and he can't do, you can't do this.

Speaker 2

Welcome to season two of Accounts Deceivable, a podcast about a growing category of white collar crime, invoice fraud, and the devastating impact it has on people, companies, and communities.

Through interviews with victims, perpetrators, and experts, this series explains how fraudsters pull off invoice fraud and exposes systemic flaws that stop people from getting justice.

In this episode, we meet Nicholas Humphrey Smith, a small business owner in the cathedral city of Canterbury in Southeast England who lost over £1,000,000 in two financial scams spanning three decades. Worst of all, it wasn't clever con artists or devious employees that stole the money. It was his own father and his own son. This is a story of deceit and betrayal worthy of a Greek tragedy.

It also begs a fundamental question: When it comes to money, is blood really thicker than water?

To the outside world, Cecil Humphrey Smith was an impressive figure: A staunch Roman Catholic, a successful business owner, a leading genealogist, a member of the Sovereign Military Order of Malta, and a father of six, he was well connected in the upper echelons of the church and the local community. To his family, though, he was a tyrant and a bully. His son Nick describes his behavior as manipulative, powerful, narcissistic, and abusive.

Nick got married, aged just 19, in order to escape his father, left the family home, started a family, and built a career as a successful sales exec specializing in bathrooms and bedrooms.

Although his wife eventually left him for the next door neighbor, he remained a devoted single dad to his two kids, Michael and Samantha. Life was hard, money was tight, but it was good. However, in the winter of 1989, Nick received a call that would change his life forever.

Speaker 1

And now I get a call from one of the directors of my dad's business saying, Look, dad's not well, and the business is failing really quite badly and he won't want to tell you this but he really needs you back especially with all your sales experience now. Mum's saying I don't think you should Nick because I think you might fall out. But everyone else is saying, Come. So I go down there. You've got to believe because I'm still a Catholic now at this stage, but I haven't broken away from the Catholic church.

Speaker 2

So Nick packed up his family home in Northampton, put Samantha and Michael in the back of the car, and drove two and a half hours around the M25 and down the M2 to Canterbury. As he pulled up in the car and switched off the engine, he felt the panic rising in his chest.

After spending his entire life running away from his father, he was about to go into business with him again. Was he crazy? Do people really change? However, six months later, things were going pretty well.

Speaker 1

I've got a six month target of turning the business round. Within those six months, I'd trebled its turnover, and the business is back up and running. I didn't do anything magical. They were just not doing the basics.

And so I think 'ninety two, summer off, so after two years, dad decides to resign and put me in place as managing director.

And I would only accept that on the conditions that I was the major shareholder, which he agreed.

Speaker 2

For the first time in his life, Nick was CEO, Chairman and major shareholder of a growing business, Achievements Limited, specializing in genealogy and heraldry products and services. During his first two weeks in full control of the company, he made calls to the other shareholders to listen to any concerns and discuss his future plans.

A couple of those phone calls revealed some worrying news.

Speaker 1

I have a talk with the accountant and the company's lawyer. Both of them are a bit concerned that dad decided to resign, just like that. The accountant says, can't tell you too much, but you need to dig. So I phoned up this director in Malta and said, I've been told to dig. Dad's he says, oh, I always thought there was something funny going on. I says, well, you better come over.

Speaker 2

In an old filing cabinet, Nick discovered a black book going back decades. In his dad's scrawled handwriting, it showed records of cash coming into the company's accounts and being siphoned out without ever officially going through its books.

He found evidence of properties belonging to the company being donated, but without records of deeds being officially transferred. It was also clear his father had exploited a charitable arm of the company to commit tax fraud.

Nick hired an ex Scotland Yard detective to investigate who uncovered more shocking news. Despite constantly pleading poverty, his father had private bank accounts with hundreds of thousands of pounds sitting in them. Nick had always wondered how he'd managed to put six kids through private school, own properties, and take expensive holidays. Worse still, the company was the subject of two separate investigations, one by the charity fraud department, the other by the Inland Revenue. Nick called the police and voluntarily offered to assist in their investigation.

Speaker 1

The police are in the building because I've given them permission to seize whatever they wanted because they've already seen the evidence. They just needed more.

Speaker 2

While the police raided the office, something dawned on Nick. He hadn't been given the shares out of the kindness of his father's heart, and his decision to resign wasn't unprompted. His father was going to make him the scapegoat and pin the fraud on his shoulders.

Speaker 1

He thought he could teach me a lesson and I was the scapegoat, 100%. And he had three barristers and a lawyer, I just had a country bumpkin lawyer that I could afford when I sold my antiques.

Speaker 2

Sure enough, at an emergency general meeting on the 11/18/1993, whilst the fraud police were in the building gathering information, the shareholders voted to remove Nick and all the company directors.

Speaker 1

My dad won, and they even got psychiatrists in there because they were trying to make out I was insane. Mum even came around to talk to my wife at the time to say, look, now Nick's going through a breakdown. And she goes, there's nothing wrong with Nick. It's dad. It's what he's doing to to the business. Nick's just trying to save it.

Speaker 2

Angry, betrayed, hurt, Nick stood up, walked out of the boardroom, and back to his private office. He collected up his belongings and then turned around and looked at his empty desk.

Speaker 1

The only thing I left in here is a coat of arms we've designed, an elephant's head with a tusk and the crest was a phoenix rising from the ashes. I left a copy of that in the middle of my table, so dad knew that I'm now I'm gone, but I'm going to rise.

Speaker 2

Nick's father blamed the whole sorry episode on him, accusing him of stealing £500,000 and successfully tainting his reputation amongst his five sisters and his own kids.

The police, who were thrown out of the Achievements Office straight after the board meeting, were unable to secure enough evidence during their raid to prosecute. Once again, Cecil Humphrey Smith had escaped scot free. Sadly, between that fateful meeting and Cecil's death in 2021, the two men hardly spoke again.

Speaker 1

He was an abuser. At his memorial in Canterbury Cathedral, my first ex wife turned around immediately after the last song, and she said, Well, that's not how I remember him.

I remember him trying to throw Maggie out the top floor window.

Speaker 2

In a minute, we'll hear about a new multimillion pound business rising from the ashes of achievements, another astonishing betrayal, and a terrifying arson attack. But before then, a word from our sponsors, Medius.

Speaker 3

Invoice fraud is costing businesses billions of dollars every year. As cyber attacks grow in sophistication, more and more companies are accidentally paying out thousands, even millions in bogus invoices. Medius is an accounts payable software platform that enables finance professionals to combat invoice scams by protecting the integrity of their supplier data, auditing the invoice process in real time, and monitoring for insider fraud. For more information or a demo, visit www.medius.com.

Speaker 2

Straight after the emergency board meeting in November 1993, Nick walked out of the Achievements office and into the local tavern. It had been a long day and he needed a pint. To his surprise, a group of ex employees were waiting for him. They had a plan.

Speaker 1

There's 20 members of staff in the pub waiting for me to come in, and they're saying, but we don't want to stay.

We want to go. And we're not staying with him. We want to go. And I'm going, well, I'm going back up to Northampton.

I'm not staying here. And anyway, if we were to set up another business, we need money. I've lost and used up all my money on lawyers. I haven't got any more money.

So I've got to move up, sell my house, move up, I'll have some money. And then one ex director says, well, I've got a big job coming in soon. I might be able to put in 50 ks.

The ex bank manager says, I can give you 5. Someone else says, I'll give you two.

And I go, oh, well, okay. Let me think about it. What do we call it? Giles says, well, I've always thought of writing a play called Ancestors. Why don't we call it Ancestors?

Ancestors was born.

Speaker 2

By the beginning of 2008, Ancestors of Dover, a designer and manufacturer of heritage products, was turning over £1,500,000 with 20 staff and counted some of The UK's biggest brands, Hamleys, Harrods, the British Museum, English Heritage and Westminster Abbey as its customers.

Business was booming. Founder and CEO, Nick Humphrey Smith, was enjoying the thrill of running a successful business even if he was finding the workload difficult to handle.

One weekend, Nick's son, Michael, came around for Sunday dinner. As his wife, Anne, prepared roast chicken, Yorkshire pudding, and gravy, Nick opened a bottle of burgundy, poured his son a glass, and asked him how things were going.

Michael sat back in his chair, let out a deep sigh, then poured his heart out. He was struggling to find a job, short on cash, and worried that he wouldn't be able to make this month's rent.

Speaker 1

So Anne suggests that we offer him a job in sales because we're because otherwise I'm doing it all. So we do. And actually it's the biggest mistake of my life. One of my biggest mistakes.

Speaker 2

The two men had a complicated relationship, a problem that could be traced back to, you guessed it, Nick's father, Cecil. For years, Cecil doted on Michael, providing him with money and allowing him to live illegally in one of the houses owned by his charity.

He dripped a relentless stream of poison about Nick into Michael's ear, driving a wedge between them. Little wonder they were estranged for more than a decade. However, the first few months of Michael's employment were promising.

Nick appreciated the extra help he provided dealing with suppliers, quotes, invoices, and handling the distribution of products, and even started enjoying the additional time they were spending together.

Speaker 1

I'm taking him away with me. I go to Thailand an awful lot because jewelry, a lot of jewelry design was done over there and made over there. And I'm sourcing. So I'm doing trade shows in Hong Kong and then Thailand.

And he'd come with me because I'm trying to show him, and I'm going to China. So I'm trying to build him up. He's not the brightest kettle of fish either. But I'm enjoying time.

I would introduce him as my best friend, business partner, my son. That's how I used to introduce him. And that is honestly how I really felt. I thought, I finally cracked it.

We're having fun.

Speaker 2

But as the years passed, the gloss started to come off. Employees complained about Michael's short fuse and hot temper. Staff turnover rose amid accusations of bullying. By 2017, sales had started to fall. Orders from some of the company's biggest and most loyal customers were drying up, and despite Michael constantly talking up his new business prowess, nothing tangible materialized.

Nick had to make a painful round of redundancies. Then it happened.

Speaker 1

Sales are down. I know he's lazy, but we're running out of a particular product that we bring in the component part from China and I'm wanting a quote. Well I know Michael's been talking to this supplier from us for a while and it's easier that I don't have to do everything so I've already asked him for a quote At least two weeks before, I know the supplier's normally within days she's come back with a price. And he hasn't given it to me. So I actually storm into Mike's room, having asked him God knows how many times. Said, Mike, you must have that quote by now. I have got to have it now.

By the time I go back into my office, I want that quote. So send it to me. And lo and behold, it's on my email when I get up and sit back down within thirty seconds or a minute, maybe it is.

And I open the quote, and I see the price, and I think, that's fine. Right. I'll print it out so that I can raise the purchase order. And it's print out, you look at it. And you and now I've I've just seen at the top, oh, it's not made out to Ancestors.

It's made out to, oh, Burnt Toast Solutions.

Speaker 2

Nick assumed the supplier had inadvertently sent him the wrong quote, so he sat down grumpily in his chair and started writing a curt email.

But midway through, he stopped, took a sip of coffee, and scratched his head. Something didn't feel right. This quote was from a trusted, reliable supplier that rarely made mistakes, and the parts described in it matched the stock he had requested. After a minute or so, he opened his web browser.

Speaker 1

I'd like to know. I'm just curious. I wanna know who owns Burnt Toast Solutions because I'm curious about anything. So I type in Burnt Toast Solutions on company's house, and Michael's gone and set up this business back in April. And he's the sole director.

Speaker 2

Head spinning and stomach churning, Nick walked unsteadily downstairs to the office of his company secretary, Tim, and invited him out for a sandwich. In the cafe, they started going through every possible scenario. Maybe it was a mix up or an innocent mistake. However, after a while, they realized there was a plausible, if harrowing, explanation. Michael was running a shadow business inside Ancestors, using their office, equipment and suppliers, siphoning off customers, sending invoices from and diverting funds into Burnt Toast Solutions' bank account.

Speaker 1

You're shaking, hair's on your hands and your arms and all down your back, if you've got any, they've all gone up. You need a drink. I'm not an alcoholic, need a drink.

You want to cry because he hasn't said anything. Then you start to think maybe he's wanting to surprise me because we had talked about setting another company up that could compete against us but as us, because we were doing promotional goods, but to the trade, but we could actually go direct. But if you sell to the trade, can't go direct as well. And I thought, well, maybe not if I'm wrong, and it is up to something.

Speaker 2

Nick and Tim headed back into the office and called their employment lawyers, but after an hour or so on the phone, it became clear they currently had insufficient evidence to prove wrongdoing. It was Friday night, and both men were shattered. They locked up, jumped in their cars, and drove home.

That same weekend, Nick headed back into the office. The whole saga had completely dominated his Friday, and as a result, his in tray was overflowing.

Speaker 1

Sunday, I come in to do some other work and think, okay, right, I finished that. Oh, yeah, right. I'll go on Michael's computer.

And I type in the word burnt toast.

And nothing's coming up. So I'm phoning up Tim, and I say, it's all right, mate. There's nothing oh, it's taken a few minutes to get ahold of him. And all of a sudden, the screen's now loading up with all the hundreds and hundreds and hundreds of emails. Burnt toast.

Speaker 2

Nick told Tim he would call him back. He started opening the emails and found dozens of messages from former Ancestors' clients who were now doing business with Burnt Toast Solutions.

The pattern was the same every time. Michael would offer an inbound prospect or current client a 20% cut in costs if they shifted their business to his new company. He would then use his dad's premises, staff, machinery, and couriers to complete the job, but instead of sending the customer an Ancestor's invoice, he would send one from Burnt Toast instead, with his own account details at the bottom. One email read, I have recently set up a new side business. Please find a lower quote attached.

Paul Ellis at accounts payable software company Medius explains more.

Speaker 4

Establishing illegitimate vendors like Burn Toast Solutions is a common way to commit invoice fraud, simply because it's an easy win for criminals and because checks are rarely carried out to determine the legitimacy of incoming invoices. As a result, Nicholas's son was able to manipulate internal accounting practices to line his own pockets.

Speaker 2

After half an hour or so, Nick smashed his hands down on the desk, his knuckles white with rage. He estimated Michael had stolen tens, if not hundreds of thousands of pounds from him. He was devastated, defrauded by his own son, his own flesh and blood. On Monday, Nick and Tim immediately summoned Michael to the boardroom and shut the door behind him.

Speaker 1

Is there anything you want to tell me? I must have said it four, five, six times. And then he's starting to get a little bit agitated. And I says, well, okay, you don't want to tell me, so I'll have to tell you.

But you'll have to tell me about this. And I turned over the piece of paper that I printed out with his business card on.

Do you want to tell me about this? Well, there's nothing to tell, is there? I mean, what do you mean there's nothing to tell? Well, I've got another business. So?

Well, one, you can't just go and have another business without informing us. But two, you can't have a business taking our customers and using our suppliers, using our equipment, and using our staff.

That's just well, I can. I can. And I anyway, I'm a distributor, and you're you're a manufacturer.

Speaker 2

Michael tried to argue, proclaiming his innocence and arguing that his side business was nothing to do with his father, but Nick wasn't going to be manipulated that easily.

Speaker 1

So I'm saying, we're going to have to suspend you, and I'll need the the card off you. He gives me the credit card, and I said, I'm gonna have to have your phone.

It's my phone. I says, well, actually, it's not your phone.

Yes, is. I says, no. It's our phone. We've paid for it under contract. It's in our contract. We need you for it. You're not having it.

And he's got it up like this. So I go to get it.

And we're struggling with it. And he moves his thumb up, he goes and he touches my hand. You're abusing me. You're abusing me.

So I let go. And I says, Okay, Tim, phone the police then because we're going to have to have he's not leaving until we've had the phone. Alright, you have the phone then says Michael and throws it on the table and then goes to walk out. I say, okay, and we'll send you a letter as to when we want you back in after we've carried out our investigation.

Speaker 2

Minutes after storming out, Michael walked back into the office.

Speaker 1

And five minutes later, comes back in.

Can I have some money for the bus then?

Sorry. It was funny. Can I have some money for the bus? Because my ticket's on my phone.

Speaker 2

An inspection of Michael's phone uncovered the depth of the deception. WhatsApp messages between he and his wife showed it had been carefully planned for months, with the pair hiding the evidence of their treachery every time Nick went over to his son's home.

Speaker 1

We'd gone to a meeting and we're coming back late. We haven't eaten. And he messages his wife saying, What are we having for dinner tonight? Oh, tacos.

Is there enough for dad? Oh gosh, do we really want dad coming? I'd have to hide all the things and put them up into your room. Oh, right.

Well, I haven't got very long to hide the evidence.

Speaker 2

An experienced company director, Nick was acutely aware of his fiduciary responsibilities to the business and its shareholders.

He was also aware that a father investigating his own son represented a significant conflict of interests and a potential breach of the code of ethics. As much as he wanted to stay involved, he decided to hand full control of the case to Tim and recused himself from the proceedings.

The following Friday, under professional advice, Michael was dismissed for gross misconduct. Straight afterwards, Nick boarded a plane and traveled to Thailand for a work trip. He was looking forward to a week away from the drama unfolding back in Kent. However, while he was digging through his bag for mosquito spray, he felt something unfamiliar. It was Michael's phone. He sighed and went to put it back in his bag, but not before he noticed a WhatsApp message on the screen from Nick's estranged ex wife.

Why was she messaging Michael?

Speaker 1

She sent a text to him. She says, I hear you've left your dad. Let's get together so we can compare notes and get him.

Speaker 2

Get him? Thought Nick. What does that mean?

A few days later, whilst working in his hotel in Bangkok, Nick received a harrowing call from his next door neighbor back in The UK. His house back home was on fire, completely engulfed in flames.

Three fire engines were on the scene, and an entire section of his street back in Folkston had been cordoned off. Nick rushed back home and found his house badly damaged. He walked through the ash covered remains in tears as he encountered treasured possessions, paintings, antiques, furniture that were completely ruined. When he reached his bedroom, though, something caught his eye.

Speaker 1

My clothes and my partner's clothes are all cut.

The curtains that my ex made are cut. My the teddy bear that was on the bed that Paula gave me, which is my partner now, is stabbed to death. A picture of us is smashed on the floor.

Speaker 2

Nick immediately thought back to his ex wife's text, let's get him. He also cast his mind back to the day the fire was discovered. At about 1AM UK time, a few hours before the blaze started, he had received a missed call from a British phone number. At the time, he thought nothing of it. Now he had a theory. His ex wife had called him, heard an international dial tone, worked out he was still in Thailand, and that his house back in Folkston was empty.

The police did not take his concerns about an arson attack seriously until he paid a forensics expert to show it had been started deliberately.

Eventually, a 38 year old female suspect was brought into custody.

However, owing to numerous police errors, including a failure to collect evidence at the crime scene, she was released without charge. Nick filed two complaints to the independent office for police conduct that were upheld, but this was scant consolation. To this day, no one has ever been formally charged for the incident.

Back at the office, Tim had assembled a damning portfolio of evidence against Michael. In the months that followed, the crime was reported to the police, then referred to the Crown Prosecution Service. Eventually, Michael was arrested and charged with fraud. In the lead up to the trial, Nick struggled to make sense of it all, the betrayal, the loss of his son, and the fire that destroyed his home. By the time he returned to work at Ancestors, the company was in the doldrums, fatally wounded by Michael's fraud. The COVID-19 pandemic was the final straw. Unable to win back its stolen customers or pay its staff, the company was sold in July 2020 for just £1.

Then the nightmare got even worse. In August 2022, four years after the crime took place, Nick was called as a witness for the prosecution in Michael's trial at Canterbury Crown Court. He would have to testify against his own son.

Speaker 1

And how did you feel?

Mouth dry, you're shaky, and you don't know what to expect.

You first got the prosecution barrister who you've never met in your life because I have not taken him to court. The Crown have taken him to court. Got to make this very clear. It's the Crown.

It's not the company. So the Crown have decided through the CPS that there is a case to answer for fraud. And so I can't talk. I've never spoken to this barrister before, never been in court like this before.

And they're sort of gentle. When the next day comes or when the defense start, it was a barrage of, I suggest that you're a bully. I suggest that you're manipulative. I suggest you're this.

I suggest you're this.

Speaker 2

In September 2022, a jury unanimously found Michael Humphrey Smith guilty of stealing over £43,000 from Ancestors of Dover Limited, although Nick estimates the actual figure is closer to £400,000. Six months later, standing in the dock wearing a brown suit jacket, Michael was visibly distressed when the judge handed him a thirty month prison sentence.

Reflecting on the fraudulent activities of his father and his son, Nick has somber advice for business owners.

Speaker 1

I used to always trust everyone, and I believe that you can't run a business without trust.

What I've learned is what most probably somebody like Sir Alan Sugar learned years ago, you actually can't trust anybody.

Therefore, put software on their computers so that you can see what the keyboard strikes are and what their screenshots are. Put CCT cameras in. Be vigilant. Look at trends. That's how you spot this.

Speaker 2

Paul Ellis from Medius believes technology can play a key role too.

Speaker 4

Invoice fraud is one of the fastest growing crimes in The UK. As fraud thrives, the focus of business leaders needs to be on shoring up their accounting processes, including the use of smart technology.

We're in an age where fraudsters are smarter than ever, so businesses need to be smarter or risk suffering the same fate as Nick.

Speaker 2

Although he is devastated that his son is in jail, Nick doesn't regret his decision to report either of the crimes.

Speaker 1

I run a business, and I'm sorry, but your fiduciary duty comes above any family issues, which it did when I ran Achievements Limited and my father was defrauding.

You don't have a choice. You take on that responsibility and whoever defrauds, you have to deal with it accordingly. Otherwise, you're in jail potentially.

Speaker 2

He also strongly disagrees with the suggestion that as a father, he bears some responsibility for his son's catastrophic choices.

Speaker 1

I think individuals have to take responsibility for their own actions.

No matter how you've been brought up or who's brought you up, it's still your own decision to do what you do.

So I can't blame my father. I can't blame myself. Michael's done it off his own volition.

It's his fault. There is nobody else.

Otherwise, who do I blame for how I've turned out? And all the hell that one's gone through, do you blame your dad? Well. But you get on, you wipe yourself down, shake yourself down, and you get on with life. You can't go around blaming anybody but yourself. It's all your own fault.

Speaker 2

For more chilling stories from victims and fraudsters alike, check out the Accounts Deceivable podcast on Apple, Spotify, or wherever else you get your audio fix.

Speaker 1

Before we start, this episode deals with sensitive subjects such as domestic violence that some listeners may find distressing.

Speaker 2

Waiting for them to come and arrest me was probably the the worst part of the whole procedure basically, because you're constantly looking at, you know, any car that drives past, know, any noise, any phone call, know, you don't know when they're going to come, but you knew they're coming.

Speaker 1

Welcome to season two of Accounts Deceivable, a podcast about a growing category of white collar crime, invoice fraud, and the devastating impact it has on people, companies, and communities.

Through interviews with victims, perpetrators, and experts, this series explains how fraudsters pull off invoice fraud and exposes systemic flaws that stop people from getting justice.

In this episode, we meet Kerry Tucker, a logging company bookkeeper who stole nearly $2,000,000 from her employer over a course of six years by forging checks.

Kerry's story of domestic abuse, a multimillion dollar fraud, and hellish incarceration doesn't just sound like the stuff of Hollywood, it actually did inspire the writers of a hit TV show.

It serves as a stark reminder that white collar criminals are made, not born, and systematic fraud can be worryingly easy to pull off.

It's six a.m. on 08/09/2003, and 40 year old Kerry Tucker is sweating buckets on an exercise bike, but not for the reasons you'd think. As she looks up from her MP3 player and out the window, Kerry's knotted stomach sinks as she sees police officers crossing the parking lot to enter the gym. The moment she's been fearing and dreading for six years is finally here.

But first, let's back it up a little bit. As a young girl, Kerry's childhood was anything but stable. Born in Sydney, Australia, and one of six children, she often found herself competing for attention from her parents.

Her father, an accountant, died when Kerry was young, leaving her mother crippled by the weight of being the sole provider for six children.

Speaker 2

My mother just couldn't cope. She just fell apart and sort of, crawled into a bottle basically.

And because she couldn't cope, there wasn't a lot of attention to me and my younger brother and I just sort of felt that I just wandered through life looking for something.

You know, sort of just bouncing off the walls, working out where I fit.

Speaker 1

Kerry's father's death, combined with her mother's neglect, led to her developing a rebellious streak from a young age, something that caused tension with her mother.

At the age of 16, Kerry's mother arranged for her to be given away at a gas station in the middle of the night, causing a major rift between the two and leaving Kerry to fend for herself from a very young age, until one day

Speaker 2

And then, of course, along come this knight in shining armor, the first person that really showed attention to me.

Speaker 1

The two jumped into a relationship after meeting at a bar one night, and Kerry moved to live with him in Melbourne very soon after. Upon her arrival in Melbourne, the fantasy facade of the relationship came crashing down when it was revealed that her knight in shining armor was married with two young children.

Speaker 2

All of a sudden, not only did I have an ex-wife in my life, I had two small children.

That, you know, when I look back at it now, they were quite bewildered by the whole thing. All of a sudden, walked out on his wife, and here I am.

Speaker 1

Starting over in a new city and thrust back into a life of instability and responsibility beyond her years, resentment grew quickly in Kerry's relationship, which ultimately turned to violence. It didn't get much better following the birth of her own two daughters. Kerry admits that this violence changed her perspective on life.

Speaker 2

It gives you a whole new insight and a whole new drive into how you want to get out of that sort of marriage.

Speaker 1

In the shadow of domestic violence, Kerry was desperate for a way to change things in her life. She did her best to improve the relationship by removing as much friction as possible. She paid bills hypervigilantly and kept her husband's wallet full, tiptoeing on eggshells to avoid any conflict that could potentially set him off. During this time, Kerry had been working as a bookkeeper at a small logging company where she knew the owners.

Healesville Logging was a local business, small and tight knit. The books were kept by one person only, Kerry, and were run the old school way, on paper.

Speaker 2

The firm that I worked for didn't really believe in auditors or paying money for auditors because you know, let's be honest, they trusted me. And I let them believe in trusting me. So you know, I made a point of getting to know the accountants so that they would know me as somebody who you wouldn't look at or suspect anything from because I was helpful, but I was also somebody that you would think that you could trust because the owners trusted me.

Speaker 1

Kerry was becoming increasingly desperate about her situation. She planned to leave her marriage, but she knew she would need money to do so. She was trusted at her company, knew the financial systems inside out. Perhaps, she thought, she could temporarily borrow some cash from her employer. That would allow her to look at organizing herself a divorce and a different life with her daughters.

Speaker 2

Once I knew the system, it was very, very easy for me to do.

Speaker 1

So one day, sitting alone in the empty shipping container that was her office, Kerry slowly looked around before pulling out the company checkbook.

Speaker 2

The first time I did it, I remember it was for it was a check for $3,523 and I was just sweating the whole time. I thought I can do this. I can see the opportunity, I can see the way to do it and of course the rationale was I need to do this. So I just took a cheque, forged the signature, which was very easy to do, and banked it into my bank account.

Speaker 1

Kerry's fraud was remarkably straightforward as her company did not have a formal or up to date accounting process at the time.

She was able to commit this first fraud without even creating an invoice. In twenty four hours, dollars 3,523 had left the logging company's bank account and dropped into Kerry's.

It was simple, it was effective, and in time it would become very addictive.

Speaker 2

You know, there wasn't anything, you know, sort of ingenious about it at all because to me I thought that I would never get caught, of course.

Speaker 1

Don Holm of Medius, a company that protects against invoice fraud, explains why the simplicity of Kerry's first fraud attempt is particularly concerning.

Speaker 3

Invoices are a crucial part of bookkeeping for any organization.

So the fact that Kerry was able to commit this fraud without even creating an invoice shows just how vulnerable her employer had made itself without even having a real financial system in place. Typically, who commit invoice fraud will create a phony invoice and assume that whoever looks after the paperwork won't be checking every last detail. In Kerry's case, she was unchecked in her work environment and her employer had no person or system standing in between her and the company's checking account.

So creating a false invoice wasn't even required.

Speaker 2

I waited about three weeks just to see if there was any ramifications. That was the worst time because I wasn't sure if I was going to get caught and what would happen to me if I got caught.

Speaker 1

After those three stressful weeks passed, a weight was lifted off of Kerry's chest. She had committed the crime successfully without any questioning or blowback. She realized it would be easy to replicate the process, stealing bigger amounts more regularly.

Speaker 2

In my rationale, I was making sure that I was taking money to be able to cover any bills.

Speaker 1

As time went on, it became easier and easier for Kerry mentally to continue committing this fraud, justifying her crimes by telling herself she was doing it to create a harmonious environment at home.

Speaker 2

I just thought it would make things a lot easier if we had a bit more money. It was purely driven by my desire to make things better.

Speaker 1

Each time she wrote a new check, Kerry's newly formed habit grew stronger, and her tactics became more sophisticated and discreet along with it.

Speaker 2

I started thinking if I'm doing this I'm going to need to be able to cover my tracks more effectively because remembering too that you know I wouldn't have to do it for that long because I was always going to pay it back. It was very easy to use invoices to disguise payments and those checks just went straight into my account you know and I would hide it in the balance sheet.

Speaker 1

Except Kerry didn't even need to create a full fake invoice to carry out this invoice fraud. Just a number.

Speaker 2

I just put in an invoice number and whatnot and make a payment against it. No one ever checked to see if that invoice actually existed because it was buried amongst you know 100,000 worth of invoices.

Speaker 1

You've heard Kerry mention twice now that it was always her plan to pay the money back. Although it may be surprising, the notion of paying it back is a common theme in fraudsters. Kerry's intention from the get go was to return the money she had defrauded from the company. She even went as far as purchasing numerous lottery tickets each week, spending $300 at a time to try and win the money back so that she could return it. Did Kerry ever win the lottery and return the money? We'll find out. Before then, a brief word from our sponsor, Medius.

Speaker 4

Invoice fraud is costing businesses billions of dollars every year. As cyber attacks grow in sophistication, more and more companies are accidentally paying thousands, even millions in bogus invoices. Medius is an accounts payable software platform that enables finance professionals to combat invoice scams by protecting the integrity of their supplier data, auditing the invoice process in real time, and monitoring for insider fraud. For more information or a demo, visit www.medius.com.

Speaker 1

We'll save you the suspense. Kerry never did win the lottery and never did pay the money back. While she'd occasionally slip money back in to cover credits on the business account and ensure the balance was enough to make payroll, the fraud continued for six years.

Throughout that time, the amounts Kerry stole remained relatively constant, never slipping below $1,200 and never rising above $7,000 to avoid raising any alarms.

Speaker 2

There were never any really you know amazingly big checks of 20,000 or anything like that you know. One, I didn't I would never have done that because that seemed exorbitant and I know this doesn't make sense at all but in one transaction that seemed exorbitant, know.

Speaker 1

As we know, Kerry's paper cut checks added up to a big bleed for the business, approximately $2,000,000 over six years. Here's Don from Medius on this.

Speaker 3

Businesses need to safeguard themselves against crime like this, and it's actually pretty easy to do. The crimes Kerry was committing were transactions that would have been flagged internally if the business had proper procedures and software in place. A siloed bookkeeper and lack of internal process controls, combined with the fact that everything was being documented solely on paper, made it easy for Kerry to commit this crime so many times over the course of six years.

Speaker 1

Lack of accountability and standardized internal processes explain why Kerry was able to commit the fraud. But a big question remains. How did Kerry spend the money that she stole?

Speaker 2

One of the most outrageous things I spent it on was I'd take friends away for a weekend to either Mildura or to Queensland because I wanted to repay their kindness for standing beside me, you know, with the marriage breakdown and all that sort of stuff.

I still wanted them to think that I was a woman in control, so I was, you know, handling my life and all that sort of stuff. Know, after all of this, I still didn't own my home. I owed $13,000 on my car. I'd never had overseas trips.

Speaker 1

Kerry's fraud went undetected until one fateful day when a check bounced. A partner was made aware of the insufficient funds and called to the police to report fraud.

Speaker 2

So when the check bounced, there should have been, you know, at least $500,000 in the account, know, but there wasn't because that would have been the stolen amount of money that I had. So when the check bounced it was very obvious, something's amiss.

Speaker 1

Another partner, who was a friend of Kerry's, quickly warned her that she'd become a person of interest. Kerry reflects back on the time between this harrowing warning and what happened next.

Speaker 2

The time between that and waiting for them to come and arrest me was probably the worst part of the whole procedure basically because you're constantly looking at you know any car that drives past, know any noise, any phone call, know you don't know when they're going to come, but you knew they're coming.

Speaker 1

This brings us to the moment we began on the exercise bike. On 08/09/2003, Kerry Tucker was at her typical six a.m. gym session when she looked up from her spin bike to see two police officers walking towards her.

Speaker 2

They walked straight through, straight past the receptionist. They obviously knew that I was there. I'd been under surveillance.

They walked straight in and this officer in plain clothes said to me, are you Kerry Tucker? And I said to him, yes, I am.

Speaker 1

From the gym, Kerry was taken to be questioned, where she admitted to the crime and was taken into custody. Through a lengthy trial process, Kerry remained in custody and was sentenced to five years in prison and two years of parole following her release.

The hardest part for Kerry was being away from her two little girls and the trauma of telling them what had happened.

Speaker 2

Whatever rationale you've said, whatever you've convinced yourself, you know, you know you're responsible and you don't think of who it hurts because you're never going to get caught.

I wanted my girls to feel proud of me again, not be embarrassed to be seen with me. So that moment sits with me and always will.

Speaker 1

Despite struggling to be away from her daughters, Kerry found life in prison to be healing. When she was initially admitted, she was examined by a forensic psychologist and diagnosed with dissociative identity disorder, brought on by the trauma of her marriage and the stress of her fraud. Just two years into her sentence, Kerry was reexamined and showed no markers for the disorder.

Speaker 2

I fitted in very, very well because I felt like I deserved to be there. I felt every bit, if not more, guilty about my crime than the girls that were in on drug crimes. Know, I felt that they were treated worse than I was, but I felt that my crime was worse than theirs.

Speaker 1

While in prison, Kerry worked to receive her Masters of Arts. Following her release, she went on to receive her PhD and penned a book entitled "The Prisoner" based on her time incarcerated.

After her release from prison, her diary was used as inspiration by Hollywood script writers for a TV miniseries called Wentworth. The show ran for eight straight seasons, and Kerry was engaged throughout as an authenticity consultant.

Kerry is also a university lecturer, a charity ambassador, and active public speaker on topics including fraud and prison reform. In fact, in recognition of her work in raising awareness on fraud, Kerry's criminal sentence was removed by the Victoria Magistrates Court in November 2023.

She became the first woman in Australian history to have a prison sentence removed from her record.

When it comes to what businesses can learn from her story, Kerry has a few thoughts. Number one is not to blindly trust whoever does your books.

Speaker 2

With small businesses, it's more effective to have one person doing everything and that's obviously just the biggest mistake because you're across everything so therefore you know how to hide everything. The only people that can deceive you the most are the people that you trust the most. It's pretty simple in that, know, and people that are committing fraud construct an image that you know you'll almost feel guilty asking about a suspicious transaction.

Speaker 1

Don agrees.

Speaker 3

At Medius, we actually believe in what we call the four eyes principle. You should have two sets of eyes on everything that occurs. Even in the technology system, you need something that will alert you to anomalies that happen. There's also a big thing about separation of duties. You shouldn't just have one person who's able to create an invoice number and then pay it, like Kerry did. That's a big no-no.

Speaker 1

Kerry's story is a grim reminder that businesses of all sizes need to ensure they have the systems and processes in place to protect their organization from fraud, even from the inside. Kerry's company trusted her as an employee and a friend, leaving her to oversee financial processes completely unchecked. As a result, she was able to steal nearly $2,000,000 over six years. It happened to them, and it can happen to you.

For more chilling stories from victims and fraudsters alike, check out the Accounts Deceivable podcast on Apple, Spotify, or wherever else you get your audio fix.

Speaker 1

It's the vulnerable countries, the vulnerable organizations, and the vulnerable pieces within an organization that's where the the fraudsters are gonna focus on. Absolutely.

Speaker 2

Welcome to season two of Accounts Deceivable, a podcast about a growing category of white collar crime, invoice fraud, and the devastating impact it has on people, companies, and communities. Through interviews with victims, perpetrators, and experts, this series uncovers some of the most infamous corporate heists on record and reveals how those responsible were brought to justice.

In this episode, we meet Doctor Michael Skiba and Doctor Loretta Stallins, two psychologists who have dedicated their careers answering an important question: Why do people commit fraud?

Doctor Michael Skiba is an international financial crime expert and co founder of the International Fraud Training Group. Thanks to his expertise in the psychology of corporate crime, Michael is known as Doctor Fraud.

Michael has balanced his roles in academia and the financial industry for the last twenty two years. His work has encompassed researching criminal justice, law enforcement, and international crime to a more forensic focus on fraud and other financial crimes. In his words, this shift in interests was sparked by the stark psychological factors that made someone a financial criminal.

Speaker 1

You know, by day, I was investigating financial criminals, you know, and and and I started it really started to pique my interest on the motivational factors behind them and how all this stuff that I had learned in PhD school and whatnot just didn't seem to apply to the financial criminal.

Speaker 2

While Michael's investigations of financial criminals led him to try to understand their motivations, a different type of criminal activity was the spark for Doctor Loretta Stallins.

Loretta is a professor of criminal justice, criminology, and psychology at Chicago's Loyola University. After receiving her Ph. D. In social psychology, Loretta began to study intimate partner violence, sex offenders, and sex trafficking. She interviewed over 150 pimps, madams, and sex traffickers to learn how they went about their criminal acts. But as she did so, she noticed similarities between this type of criminality and that employed in phishing and Internet fraud attacks.

Speaker 3

There is no difference between a con game, illicit drug markets.

My own research with sex trafficking, there's a lot of con and manipulation and lying and deceit and they omit to it. And it's the same tools as fault scams or white collar scams.

Speaker 2

Loretta's research focuses on how people's emotions affect their behavior, both for the criminals and their victims.

Speaker 3

The biggest myth, I think, out there is only people who lack intelligence will fall for these scams. That it's really how how humans make decisions. The fought are playing on that. Anyone can become a victim, right?

But they don't report it, they think they're special. And it's sort of like, it's the same thing as in domestic violence or sexual assault. Victims rarely reported it until they were told, Hey, one third are victims.

Speaker 2

The underreporting of crime is a problem Michael knows well. He believes that current crime numbers vastly understate the real problem.

Speaker 1

Statistics are actually incredibly disturbing. And what I found pretty much wholeheartedly was even the statistics that are out there, you know, are not that they're not accurate, but there's just a lack of data gathering, a lot of lack of cooperation both, you know, across industries, across, geographies.

So it's really hard to get a handle on it. And that's that's actually disturbing because we kind of really don't know, you know, what we don't know.

Speaker 2

The numbers might not paint the full picture, but it's clear that cases of fraud are escalating. That growth has two sources. First, opportunistic criminals. The second, organized crime syndicates.

Speaker 1

The opportunistic, fraudster is that is maybe someone that that, you know, wouldn't think about committing a crime. They don't have a malicious intent, maybe going into some sort of relationship with a business.

There's more opportunities for them. But on the flip side of that, big organized crime groups, which drive the big numbers, the big dollars, the losses, the bankruptcies. What I found is even when I started my career, a lot of those groups focused on, you know, we we say those traditional organized crime such as, treason and kidnapping. Now, I mean, they focus on white collar crime because it's easy, it's scalable. They run these organizations and syndicates like businesses.

Speaker 2

It was the opportunistic fraudster that Loretta first encountered on a much more personal level than she might have hoped for.

Speaker 3

I was at two places, one as a graduate student and one as a professional.

And both places had accountants that were embezzling. And the first one would always come up and say, Have submitted your such and such? Because I was a poor graduate student, I was meticulous about checking. But a lot of the busy scholars had retirement funds and stuff taken that he was using for yacht and things like that.

Speaker 2

Loretta became fascinated with the concept of criminal motivation. What makes a fraudster? What are the circumstances that lead to a person seeing an opportunity to commit a crime? Why do people believe they can get away with it?

Speaker 3

Basically, fraud is committed in this triangle. You have to have the pressures, the motivation, the opportunity, and then the rationalizations. The business culture itself allowed the competition, the ambiguous norms, allowed individuals to sort of rationalize and it also served as a motivation because of fear of failure. It's like the rationalization is if I don't do this, someone's going to get ahead of me. I'm not going to be the top person. Other rationalizations, first and biggest one is denial of responsibility.

If you're talking about people in business, they'll say, I didn't know that it was illegal. I didn't know that I couldn't do this. This is what we do. Or I didn't think about it. Then denial of injury, invoice fraud is often about you're not seeing that victim. And the denial of injury, don't think about, oh, you're actually taking money away from the company, the perpetrators are thinking, ah, I'm helping make this company successful. At least the ones committing fraudulent financial statements to up their stock.

Speaker 2

Pressures, motivation, and opportunity. All three have played a part in the stories we have heard in accounts receivable. Family problems and financial pressures are common justifications for opportunistic fraudsters. And since the pandemic, the new world of remote work has opened the door to more opportunity for people to steal from their employers.

Speaker 3

First, victims are isolated, right? They can't go down the hall and say, hey, this looks weird. And second, our own remote isolation makes us less tolerant for other people's situation. We're not as thoughtful or caring and those victims are very distant and the company is very distant. So it's like, you're almost at the company, but not at the company. So it even reduces loyalty even more sometimes.

Speaker 2

Remote work also gives crime syndicates more possibilities to commit fraud.

Speaker 1

I remember, about a year and a half ago, I interviewed a hacker. Right? He actually was a counter hacker, and what he was doing is trying to figure out how others were were hacking in. Well, he got approached by a criminal element, and they offered him.

They said, hey, just do the same thing that you're doing right now. You're not gonna know anything different. Here's a new laptop. The payments are gonna come in, but we're gonna quadruple your salary.

So to this individual working in his office, in his desk, you know, in a suburb outside Chicago, he he didn't care. He didn't know because there was no connection. If that same individual got approached in person by a syndicate, if you work working in an office, I guarantee a 100% of the time that he he would not even have have, you know, taken a meeting or or even talked to them.

Speaker 2

In that particular case, the compromised hacker was eventually caught, ordered to pay restitutions, and sentenced to ten years' probation. While tackling this type of criminal element may seem tricky for the average business, there are ways that companies can start to protect themselves.

Speaker 1

I think some companies, what I find is that they want to showcase that they have strong fraud protection, that they have maybe designated units you know, looking into these things. Others are are the exact opposite, you know, where they don't want they don't want it known. They don't want it they don't want their customers to think that they're investigating them and kind of looking at their transactions behind the scenes.

Speaker 2

Michael believes this fear of potential impact on the public perception of a company can be a powerful blocker to introducing checks and controls. Don Holm from accounts payable software company Medius explains why this can cause more harm in the long run.

Speaker 4

Companies can believe that they're not at risk at becoming a victim of fraud, but all it can take is one error before serious harm can be done to a company's bottom line as well as their reputation. It's important for a business to understand the unknown, giving their accounts payable teams more visibility into fraud and risk exposures while ensuring policies around this activity are enforced.

Speaker 2

The difficulty of assessing risk and attempting to understand the unknown are two very good reasons why training should be the cornerstone of all protective strategies. Here's Loretta.

Speaker 3

My own research shows that cybersecurity training, for example, always focuses on what we call protective strategies versus vulnerable strategies. So protective strategies are like delete this email from an unknown person.

It's not real, delete it. And vulnerable strategies are clicking on links, replying to the person directly rather than going through and checking to see, you know, are they real? That alone, that's what you typically get trained on, right?

That alone will not cut it because the scammer is typically trying to raise anxiety and we differ on anxiety. And those with generalized anxiety typically will respond more quickly.

If they open that email, then they feel pressure, particularly if it says, oh, it's their boss or higher up, those targeted emails. And they're not going to question an invoice then as well, right? For the same reason.

That has consequences, particularly if you have social anxiety.

Speaker 2

Fraudsters learn to manipulate natural human emotions like anxiety to increase their chances of success. Don Holm from Medius explains one principle that can help companies fight back.

Speaker 4

As Loretta says, it's easy for people to feel pressured into signing off on fraudulent invoices they receive via email.

That's why at Medius, we believe in the Four Eyes principle. That means that no one person alone should be able to create or sign off on invoices. Even in a technology system, you need something that will alert you to anomalies that will happen.

Speaker 2

As well as adding checks and balances, Michael believes reframing employee training around the impact business fraud has on employees could make a huge impact.

Speaker 1

Social engineering is the weakest link. And I think focusing on training and education and the damage it can cause a company is really the key. Because in those internal fraud scenarios where those those people go undetected for about a year and a half, that that's what statistics show the average is. If you do training, on how that affects your bottom line and how that's going to affect me and my four zero one ks, my performance bonus, guess what? If I know that John next to me is committing fraud, that's going to be a self motivator for me to go put my number in a hotline or just pass a note to someone and say, just take a look at this guy's transactions. Right?

Speaker 2

Much like a fraudster may rationalize their actions, demonstrating impact to potential victims may help companies to be more secure. But are our expectations of who is most likely to be a victim of fraud in line with reality? Both our psychologists believe there's one group more at risk than others.

Before that, a quick word from our sponsor, Medius.

Speaker 5

Invoice fraud is costing businesses billions of dollars every year. As cyberattacks grow in sophistication, more and more companies are accidentally paying out thousands, even millions in bogus invoices.

Medius is an accounts payable software platform that enables finance professionals to combat invoice scams by protecting the integrity of their supplier data, auditing the invoice process in real time and monitoring for insider fraud. For more information or a demo, visit www.medius.com.

Speaker 2

How do fraudsters select their victims?

Some might aim for a wide-ranging phishing attack on multiple targets. Others will research and target specific individuals.

Speaker 1

By chance for an opportunistic fraudster or the organized criminal knows that's where the weak link is, maybe by some intelligence that they've gathered, and that's where they're gonna focus. So either way, the vulnerable countries, the vulnerable organizations, and the vulnerable pieces within an organization, that's where the fraudsters are going to focus on, absolutely.

Speaker 2

But that weak link may not be the employee you would most likely expect. Both our experts believe that, whilst the popular opinion may be that the elderly are more obvious victims of fraud attacks, there is another group that is perhaps even more vulnerable.

Speaker 3

In 2022, the Federal Trade Commission receives the reports in the US at least for Internet frauds. And young people between the ages of 18 to 25 or so are one of the most frequent victims. And, actually, there's no difference between them and the elderly.

Speaker 1

They're the most tech savvy group out there. But two things. One, they are on devices and phones about 50 times more than the elderly population, which means there's more doors that are open. You know, you got your watch on, your phone, this, you're on your car, your smartphone.

I mean, everything is just smart. That's all opportunities for the fraudster. So they embrace technology. They just leave more doors that could be opened.

Secondly, what I found in and when I teach, their expectation of privacy is incredibly low online. So I would say the elderly, we kind of know that they're at risk, but I really don't see much attention at all to that younger segment, which I think is even more at risk.

Speaker 2

It's not just the increased use of smart devices proving a new threat either. The rise of artificial intelligence is, for Michael, of particular concern.

Speaker 1

Yeah. Three avenues, a deep fake, videos, voice cloning, and chat boxes. And these are really the focus now because the fraudsters can use, AI to just it's on the you know, talk about their return on investment. It's incredible. Incredible. That's really hard because, you know, we're trying to keep up with that from a preventative level, and it's it's it's just advancing at such an incredible rate.

Speaker 2

But while fraudsters can use new technologies like AI for more complex fraudulent activity, AI can also be used for good. Don from Medius explains how the company uses AI as a defense against fraudsters.

Speaker 4

At Medius, we use AI to underpin our autonomous accounts payable products. In particular, our new fraud and risk detection product uses AI to detect anomalies, fill gaps in your existing fraud process, and really give consistency for every invoice that is processed before the invoice is paid.

Speaker 2

The fight against fraud will continue as new tools are developed to combat new threats. And it's with the help of experts such as Michael and Loretta that we can gain a greater insight into who is committing these crimes and find ways to stop them in their tracks.

For more chilling stories from victims, fraudsters, and experts alike, check out the Accounts Deceivable podcast on Apple, Spotify, or wherever else you get your audio fix.

Speaker 1

In the end, you walk away realizing that you overestimated human nature.

Speaker 2

Welcome to season three of Accounts Deceivable, a podcast about white collar crime and the devastating impact it has on people, companies, and communities. This season is about the moment of discovery. What happens to the people who uncover criminal activity in their own companies? We'll help you see fraud through the eyes of three infamous whistleblowers, From the biggest corporate invoice fraud in history to small town criminal masterminds, Accounts Deceivable will explore how fraudsters game the system and hear the stories of the incredibly strong employees who expose them.

In episode one, we meet Sherron Watkins, former Enron vice president known for blowing the whistle on one of the most significant corporate accounting scandals in history.

Growing up, native Texan Sherron Watkins never dreamed of being an accountant. As a student at University of Texas at Austin in the late seventies, she remembers selecting her majors somewhat flippantly at the time, unaware of how this seemingly small decision would affect her life.

Speaker 1

Accounting starts with an a. It was near the top.

Math was easy and a subject I liked. And literally, it was just like, okay. I'm gonna check this box. I really did not envision, like, oh, I wanna be an accountant.

It it just kind of happened that way.

Speaker 2

As Sherron progressed through her four years as an undergrad at UT Austin, it became clear that she was a standout in her field. A notoriously difficult career path for many, accounting came naturally to Sherron. As an introvert, she recalls enjoying auditing the books and being in the background. After graduation, Sherron received a prestigious offer to work as an auditor for Arthur Andersen, one of the world's largest accounting firms at that time. After establishing her career and spending eight years in both the Houston and New York offices, Watkins was hired away by MG Trade Finance, a New York subsidiary of Metallge Schiff, where she worked in the commodity finance field for three years until she felt a pull to come back home to Texas.

Speaker 1

I sent my resume to friends that had been Arthur Andersen colleagues that now worked at Enron and found myself with a job offer, which I was thrilled that was the place to work in Houston, Texas in 1993.

Speaker 2

A skilled accountant with experience in the oil and gas industry from her time at Arthur Andersen, Watkins thrived at Enron. But after eight years at the company, one routine day changed everything along with the course of Watkins life as she knew it.

Speaker 1

I stumbled across horrible accounting fraud. It was income statement fraud.

Speaker 2

At first, Watkins was in shock, trying to make sense of what she had found. As things came into focus, it was undeniable. And Sherron felt a strong compulsion to step forward and report her revelation to Enron leadership. But she didn't act until something unexpected happened.

Speaker 1

Our CEO, Jeff Skilling, surprisingly quit the company. I mean, it was shocking. He'd been chief operating officer since 1997. So three years later, he's getting the top job, and he abruptly quits.

And it told me that what I'd stumbled across really was likely fraud. And he was just getting out while the getting was good. You know, these CEOs don't just decide, oh, I need to spend more family time all of a sudden. Like, they don't just get the job and eight months later quit. You know, there's got to be something more here. So it it was not just me. I mean, it it it was sending a message to the market too that something must be wrong.

Speaker 2

Sherron knew she had to act quickly before it was too late. She decided to write an anonymous one page memo to Ken Lay, the founder of Enron who had stepped up as CEO in the wake of Skilling's departure. She sent the memo anonymously, but eventually decided to identify herself and speak with Lay directly.

Speaker 1

I got on Ken Lay's calendar on a Thursday. I was meeting with him the following Wednesday. And I kept waking up at 2:00 in the morning kind of rehearsing how I was going to present this knowing I might just have thirty minutes.

Speaker 2

Ahead of the meeting, Sherron built her case methodically, gathering evidence from numerous colleagues who she believed supported her. Before we hear from Sherron on what happened next, a word from our sponsor, Medius.

Speaker 3

Not only does invoice fraud cost businesses billions of dollars every year, but it's increasingly difficult to prove as technology has advanced. Whistleblowers put their professional and often personal lives on the line to do the right thing and ensure fraudsters don't succeed. They shouldn't also have to worry about the quality of the proof they bring to the table. Medius is an accounts payable software platform that enables finance professionals to combat scams by protecting the integrity of supplier data, auditing the invoice process in real time, and monitoring for insider fraud. For more information or a demo, visit www.medius.com.

Speaker 2

Now, where were we? Walking into Lay's office, evidence in hand, Sherron felt confident he would see what she saw.

Speaker 1

I really felt like I was providing him with evidence, and the evidence would stand on its own. I also thought I had the backing of all these colleagues.

Speaker 2

Quickly into her meeting with Lay, Sherron realized that the two of them did not view the situation or the numbers the same way. Sherron felt the ground begin to shift under her feet.

Speaker 1

I was ignored. He tried to fire me.

Speaker 2

Walking out of her meeting with Ken Lay, word of Sherron's attempt to blow the whistle spread. Colleagues who had previously supported Sherron in gathering information turned their backs on her. She realized she was on her own and began to feel the weight of isolation. A feeling that many whistleblowers talk about.

Speaker 1

And my colleagues backed away. When they saw that I had delivered bad news to the top and and I was being shot, you know, they just clammed up.

Speaker 2

While many privately supported Sherron, she was the only employee to report their concerns to Enron's leadership. Sherron questioned why her other colleagues didn't feel the same desire to do the right thing.

Speaker 1

Do they lack integrity? Do they lack courage? Why are they going along? Why aren't they saying something? So there's a deep disappointment in not only leadership, but colleagues that back away and and take sort of a safe road.

Speaker 2

Don Holm of Medius says that many whistleblowers suffer in the same way, right at the point when they most need their colleagues' support.

Speaker 4

Sherron was empowered to step up, do the right thing, and blow the whistle to senior leadership because she believed she had the support and backing of her colleagues and peers to step up, do the hard thing, be essentially blackballed for it, and then return to diminished support is a crushing but common reality for whistleblowers.

Speaker 2

Things moved quickly after Sherron blew the whistle to Ken Lay in August 2001. By October of the same year, word had started to get out and Enron's stock price plummeted. From there, Sherron recalls the way things spiraled.

Speaker 1

Enron imploded.

Congress instituted, like, 11 congressional investigations into the demise of Enron. There were shareholder lawsuits, and, of course, the government formed an Enron task force. And the DOJ ended up with, you know, over a dozen felonies, almost two dozen. And over a dozen Enron executives went to prison.

Speaker 2

Sherron counts herself lucky to have closure and the relief that comes with it, something many whistleblowers never get.

Speaker 1

Now granted that took from 2001 to 2006 or 07, but I saw vindication. I saw accountability. I saw justice. So I can leave it behind me, so to speak.

And many, many whistleblowers, the oppressor, the manipulator of truth is powerful and keeps going. And even the people within the organization that had read that had led the organization astray stay in positions of power. So that sense of injustice that a wrong has not been righted, that the good people got squashed and the bad people are still in power, That is the primary story of whistleblowers. That's the majority of them have that story.

Speaker 2

Sherron laments the inevitable conflict that blowing the whistle initiates between employer and employee and also between the employees themselves.

Speaker 1

It's a David and Goliath situation where they get squashed and are caught blindsided by all the different tactics that exist to silence the whistleblower. And it's not just being fired. It's being really blackballed from your industry, retaliated against, your credibility, your sanity attacked, just all kinds of tools that go against the whistleblower.

Speaker 2

Sherron's Enron experience highlights what many people fail to realize are the negative ramifications of blowing the whistle, having to find a new job and sometimes a new career. Some are branded with harmful stereotypes for life.

Speaker 4

Whistleblowers face a harmful stigma, often called names such as rat, traitor, or in Sherron's case, snitch. This poor public reception and slander has created a culture that turns many off from doing the right thing even though they may want to. It's critical for organizations to have whistleblowing policies and protections in place, along with technology that helps finance employees recognize, document, and flag suspicious and potentially fraudulent transactions. With this support and evidence, employees can feel more comfortable and confident coming forward.

Speaker 2

Two decades on, from the event that changed Sherron's life, the whistleblower has gained perspective. How did all this happen? She cites what she calls corporate weaponized incompetence and a mob mentality to turn on anyone who questions the status quo.

Speaker 1

So many times they throw up their hands and say, I don't really understand how these things work, but Arthur Andersen has blessed them. The outside lawyers have blessed them. It must work. You know, I am not an accountant, was kind of the standard phrase by by people.

And I hadn't practiced public accounting in a while, but I just knew that, sorry, accounting doesn't get that creative. These structures just didn't work.

So it was alarming to me that smart people were bothered by the structures, but felt like it wasn't their responsibility to say anything.

Speaker 2

Sometimes it's the very success of a company that causes employees to want to protect the story of that success. However, false it turns out to be.

Speaker 1

When I look at, you know, what was the fertile ground that made fraud happen at Enron, And some of it was the hype. Enron was the place to work in Houston, Texas. And the salaries and bonuses were just higher than any of our peer group. So you were making a great salary.

You were making great cash bonuses. And then Enron was compensating you with stock options and stock grants, the stock price kept climbing.

Speaker 2

Sherron now works as a leadership and ethics advocate, speaking around the world on topics such as ethics, corporate governance, organizational behavior, and the toxic label of whistleblower. Much of her day-to-day work includes mentoring the next generation. Asked what advice she has for young people entering the finance sector, Sherron says it's more important than ever to find a business you believe in.

Speaker 1

When evaluating an organization that you want to work for, look to see that they can have a bad quarter. Like, it's actually positive that they fessed up to things not going their way.

You know, that something happened with the market or they missed, you know, x, y, or z, and we're not going to make our targets. That's actually like, yay. They can be honest. Something bad can happen, and they're being honest with their employees and their investors and their shareholders.

Speaker 2

Today, Sherron spends her time helping to change the stigma whistleblowers face and working to establish protections for those who come forward to do the right thing.

Speaker 1

I think my story as well as so many whistleblower stories is how our naivete. We actually think we're providing evidence of wrongdoing. And not so much that we expect a pat on the back, like, you know, oh, great. I'm so glad you brought this to my attention. You know you're delivering bad news, but you expect leadership to recognize it.

Speaker 2

For more chilling stories from victims and fraudsters alike, check out the Accounts Deceivable on Apple, Spotify or wherever else you get your audio fix.

Speaker 1

What was happening was not ethical. And then as we dug deeper and as we went further into the case, it just became more and more evident that not only were we right and it was unethical practices, it was unlawful practices. And we couldn't trust anybody else but each other because people were, we didn't know it at the time, but people were going behind our backs to our supervisors and trying to get us fired. And it became that the only person that you could discuss this with was each other.

Speaker 2

Welcome to season three of Accounts Deceivable, a podcast about white collar crime and the devastating impact it has on people, companies, and communities. This season is about the moment of discovery. What happens to the people who uncover criminal activity in their own companies? We'll help you see fraud through the eyes of three infamous whistleblowers, from the biggest corporate invoice fraud in history to small town criminal masterminds, Accounts Deceivable will explore how fraudsters game the system and hear the stories of the incredibly strong employees who expose them.

In this episode, we meet Sarah Carver and Jennifer Griffith, two former Social Security Administration professionals who leaned on each other through friendship and a shared moral compass to battle misogyny, gaslighting, and even stalking while uncovering government fraud worth more than half a billion dollars, one of the largest in US history. Their story includes corrupt judges and a lawyer dubbed Mr. Social Security, whose marketing tactics were as dubious as his legal ones. It was a seemingly small town con so crazy that it was made into an Apple TV series. But I must warn you, their story does not have a tidy ending, rather one that cautions the ripple effects of fraud beyond just a legal conviction.

Sarah was the first to join the Huntington, West Virginia-based Social Security Administration field office, soon convincing her friend and fellow former paralegal, Jennifer, to join her. For both, the job started like many new jobs do, filled with excitement and promise for a fulfilling and well-paying career in an area that wasn't known for either.

Speaker 1

She was interested in getting involved in this government position because in our area, those government positions are highly sought after, well-paid, you know, well-benefited jobs, and that just wasn't the norm for paralegals in our area to have good income.

Speaker 2

But sadly, the shine of their new government jobs began to tarnish with their dreams of helping those who desperately needed help with social security claims giving way to a much harsher reality.

Speaker 1

It was a different world for us in government service. I always felt like everything was based on numbers and not so much about the people that we were there to serve, and having had a background as paralegals, we are focused on the client, the person that we're trying to help, the person we're trying to win the case for. And at Social Security, it always felt like that even though they hired us based on our past experience and our education as paralegals, it always felt like it was more about how quickly we could process things and get things out the door. And it was always a, you know, quantity over quality situation.

Speaker 2

The situation only worsened when their hearing office director retired, opening the door for Jennifer's manager to step into the role, where he made it clear that the office's number one priority should be the quantity of cases cleared, ensuring that he had the opportunity for the prestigious and monetary benefits afforded to the top nationally-ranked field offices.

Speaker 3

Everything was a number. So every meeting was, okay, here's our goal. Here's where we're at today.

Here's how many cases are in this status. And here is where we need to be tomorrow. We were always reminded where we were ranked nationally. There was, I think, maybe 140 offices throughout The United States of hearing offices, and he wanted to be in that top three.

And generally, we were in that top three out of all offices.

When he took over, those numbers mattered so much to him that he didn't care how we got to those numbers. And if it meant bypassing the normal procedures and policies, he seemed to be perfectly fine with that as long as he got his numbers.

Speaker 2

This pressure to clear cases paved the dangerous path that allowed one infamous local lawyer to cash in, all but guaranteeing his clients that he could push their cases through the system faster than anyone else. No one could have suspected the lengths he would go to keep that promise. The lawyer? A man ever so ironically named Eric Conn.

Speaker 3

And a month in, you got a sense of there were a lot of Eric Conn cases.

And these cases were treated differently and prioritized over all other cases. We had a large amount of cases. So I would say, you know, we had a good 50 or 60% of cases in our office were Eric Conn cases. It was clear that he was treated different.

Speaker 2

So who is Eric Conn? Well, it depends on who you ask. To many in the Eastern Kentucky area, he was a local celebrity known for everything from his billboards dotting the highways to his Conn hotties, wearing his t-shirts and handing out beads at local festivals to live monkeys featured in many of his commercials. But most importantly to our story, he was considered to have written the book on gaming the social security system.

Speaker 3

He called himself Mr. SSI and had that on his license plate.

Speaker 1

He was over the top in his advertisement of himself. He says in some interviews that some may call him a marketing genius. Well, in our area, nobody did things like that and he did get the quantity of clients in.

But there comes a time in the process of his representing people that he starts to circumvent the normal disability process.

While recording bluegrass commercials and throwing Mardi Gras beads.

Speaker 2

To understand how Mr. Conn was able to game the protocols the Social Security office had in place, we first need to understand how a case makes its way through the official process. Once a case is submitted, it gets filed away awaiting a hearing date. A waiting period that can be anywhere from twelve to twenty four months.

Once a hearing date is established, the cases are distributed at random to a rotation of judges. This step in the process is the most crucial to our story, as it was meant to put a stop to judge shopping, where lawyers try to stack their cases with favorable judges. Yet, Mr. Conn's office did their best to circumnavigate the protections that Sarah and Jennifer's office put in place, even to the detriment of his own clients.

Speaker 3

A lot of times you would call an attorney's office, specifically like Eric Conn, and their secretary or paralegal would say, well, who's the judge gonna be on this case? And if you told them it was, you know, judge John, and they'd be, well, Eric's busy that day. So our office developed a policy specifically to prevent that by saying, these cases are signed out on a rotation.

Speaker 1

Yeah, because they had learned to circumvent the tally count by just saying, oh, we're not available. And then you'd call again, oh, we're not available, and it would go on and on and on. His clients would be missing hearings because he was trying to wait out the judge and it got so bad that when some of his clients would actually get a hearing finally, but it was with a judge he wouldn't want, he would tell them to withdraw that application and basically start over fresh, meaning that they were waiting even longer just so he could get the judge he wanted.

Speaker 2

And who were the judges he wanted? Ones who would be wowed by an extravagant yet questionable lifestyle.

Speaker 3

Eric also started having parties at his house, and he would entertain certain judges at our office at his home where he had a stripper pole in the basement of his home. And he would this was actually done. He would roll out the red carpet literally when certain judges from our office came to his house. Well, then he would have young girls over and some of them didn't speak English.

Speaker 2

Eventually, Mr. Conn found his partners in judges David B. Daugherty and Charlie Paul Andrus, two men with wildly different personalities and office reputations. But I think it's fair to refer to them as two sides of the same corrupt coin. Judge David B. Daugherty was an administrative law judge at our office. He was a previous county judge that heard cases, a magistrate, and he was retired from that.

Speaker 3

We really enjoyed judge Daugherty. Judge Daugherty was always a person who contributed to office parties or a present or a birthday cake. He would take employees out on his boat. He would take them to the country club that were his favorite employees. If he really liked you, he liked you, and if he didn't like you, you knew about it.

Speaker 1

Judge Charlie Paul Andrus was the chief administrative law judge for our office, and then later on down the road after I leave, he becomes the regional chief administrative law judge. So he was essentially over Judge Dougherty. And Charlie Paul Andrus was one of the most arrogant, misogynistic men you'll ever meet. He was difficult to deal with and he was not exactly well-liked and didn't have a high opinion of women.

Speaker 2

Soon, a recognizable pattern started to form. Cases were getting favorably decided far faster than the twelve to twenty four month average. Sometimes only a few days or a few months was all it took for Mr. Conn to have his cases favorably decided and squared away. This was the turning point for Jennifer and Sarah when they realized that maybe judge Daugherty had taken a big step beyond his usual favoritism into fraud.

Speaker 3

We started pulling some of his schedules to see that the average ALJ heard anywhere from four to six cases a day, anywhere from four to five days a week. Judge Daugherty on the other hand would have sometimes 20 cases. And instead of being an hour and a half apart, like most judges would have them an hour, hour and fifteen minutes, his were literally set every ten or fifteen minutes apart. It was a cattle call.

Speaker 2

The timing of hearings is key to this case because each of the hearings involve a vocational expert, a court reporter, an attorney, a claimant, a judge, and oftentimes a witness. So to decide a case in fifteen minutes meant the judge was leaving just enough time to swear in, go on the record saying it's a favorable decision, and excuse all parties involved. This resulted in not only payouts for a large percentage of Mr. Conn's clients, but court reporters and vocational experts fighting to be on judge Dougherty's docket as they made a $175 per claimant. So the more the merrier in their opinion, but the opportunity of payout for Mr. Conn was far greater. Let's put those numbers in perspective.

Speaker 1

If, for example, Eric Conn had 1,500 client decisions a month or whatever, you know what I mean? When they get upset with us because we're bringing these issues to light and they stop all these hearings, that means that every single one of Eric Conn's clients from 2007 until 2011 with this one judge was decided favorably on the record without a hearing, which means they bypassed every protocol, every policy and went straight to "here's a check."

Speaker 2

So it's no surprise that when Sarah and Jennifer started making some noise, trouble found its way to their door. But before we find out just what kind of trouble, a brief word from our sponsor, Medius.

Speaker 4

Not only does invoice fraud cost businesses billions of dollars every year, but it's increasingly difficult to prove as technology has advanced. Whistleblowers put their professional and often personal lives on the line to do the right thing and ensure fraudsters don't succeed. They shouldn't also worry about the quality of the proof they bring to the table. Medius is an accounts payable software platform that enables finance professionals to combat scams by protecting the integrity of supplier data, auditing the invoice process in real time, and monitoring for insider fraud. For more information or a demo, visit www.medius.com.

Speaker 2

We're back just in time to get the real meat of our story. How Jennifer and Sarah went about gathering evidence to prove their increasingly strong suspicions of untoward behavior in the social security office and their first break came because of some unlikely advice from Jennifer's father.

Speaker 1

So I have a nasty habit of putting read receipts and delivery receipts on all of my email. When I took that job, my dad said, cover your ass.

Always. You can't trust anybody.

And I put that read receipt and delivery receipt on my email. Well, what I would find was they would have their messages up on preview so they could see it without actually clicking it open so it wouldn't mark read. So we started spacing down like a full page length in our emails so that they couldn't see it on preview and they had to open it. So everything went out, read receipt, delivery receipt, had the tracking information.

Speaker 2

But the office quickly caught on and enacted several policies they hoped would kneecap the women's efforts, including a policy banning read receipts and eventually a policy that banned retaining emails and inboxes altogether. Soon, vicious rumors and theories began to spread about Sarah and Jennifer around how they got their information. The phrase planting a bug was tossed around more than once to the point that Sarah was barred from stepping foot into their supervisor's office unless they had a pre-agreed appointment, a notetaker was present, and the door was never allowed to be closed. In reality, good old-fashioned stupidity was what was helping them lay the groundwork for their case.

Speaker 1

But in reality, all that we were doing was running the reports that were available to us in the system. We didn't do anything that they couldn't do. Okay, then they would have a nasty habit of printing to the wrong printer. So sometimes they print their print jobs into one of our printers and we just grab them up and walk off with them. And the funniest thing was they had shred bins that they would just put the stuff in the shred bin.

So we could just go by and just grab it. But then when they figured out we were doing that, then they bought locked shred bins.

Speaker 2

Oh, if you're wondering, yes, they did use those shredders to dispose of documents when they were raided by the Department of Justice. But we're getting ahead of ourselves. Now, it's 2011, Jennifer has since left the office, but Sarah is still fighting the good fight from within, despite being near constantly investigated for made-up charges. Her work product constantly being called into question. She was even disciplined for rushing to her daughter's aid after a severe car accident event. Even after letting her supervisor know that she would be absent. Yet she continued to gather evidence until one day, a Wall Street Journal reporter began to catch wind of a possible story.

Speaker 1

I was contacted in April 2011 about a Wall Street Journal reporter who had done a story on another Social Security office, a different type of fraud, and he had reviewed some online statistics and thought that their numbers were really funny in our office, and he contacted a former judge, and that former judge put him in contact with with me. He came in and sat down and talked to us and that began kind of like a relationship with him as far as a lot of communication, a lot of visits to Huntington.

And he interviewed some other people, other judges in our office too. And he started working on a big investigative story.

Speaker 2

Interestingly, the same day The Wall Street Journal reporter contacted Jennifer, an officer from the office of the inspector general also reached out looking to discuss an anonymous complaint she had filed months earlier. He waited for her outside her place of work and when she agreed to talk, she recorded the conversation knowing he was only there and ready to investigate because they knew The Wall Street Journal was going to break something. And that something was big enough to make significant waves. But the social security office was woefully unprepared to deal with internal fraud. They only watched for those who tried to defraud them on claims from the outside, never thinking to look at the judges on the inside.

Suddenly, it became Sarah and Jennifer's jobs to both educate a massive government body in order to prove their case.

Speaker 3

We came prepared, we had because social security can be a very complex, difficult system to explain. Yeah, and there's procedures and we just brought, we made a notebook and we tabbed it like a binder and we gave each one of them and we explained to them, okay, your first tab, this is the social security appeal process.

This is you know, this is how the case is done. Okay, now, if you look at this exhibit, you're going to see a normal hearing log, like a normal schedule for a normal judge, then you're going to look and you're going to see this is a schedule for judge Daugherty. And you know what? They understood it. They grasped it enough to where they knew what reports and what to ask for, you know, from the Social Security to do their investigation.

We did the same thing for the office of inspector general, and they still said there was no smoking gun. They didn't understand the significance of what we were telling them.

Speaker 1

The same evidence that we gave to the congressional committee is the same evidence we gave to the office of the inspector general. One could figure it out, one couldn't.

And that's a problem because that's literally their job. And I remember we were in that meeting and they kept calling more people to come into this meeting like, you're not going to believe this.

Speaker 3

What was supposed to be a thirty minute meeting with the oversight committee ended up being an eight hour. I mean, it was the first day, eight hour.

Speaker 2

From there, Sarah and Jennifer were scheduled for meetings with other senators not a part of that committee, each of those lasting for hours as well. The lead investigators filled up notebook after notebook with the information the women shared, all new facts to them, despite it being their job to investigate the very loopholes that were being brought to light in a conference room in Washington DC. So with the investigation well underway, and seemingly no light at the end of the tunnel, would the men of the Social Security office give up their campaign of abuse against Sarah? The answer is sadly no.

Speaker 3

Their investigations were targeted in such a way that it was harassment.

They came after us rather hard. That was a privilege at that time that we got to work from home one day a week. And so what they set out and tried to do, judge Andrus, which was the chief ALJ, had contacted Eric Conn and said, hey, I think I know a way we can get her. If I can show that she's leaving her house at any point during the day and not requesting leave, then we can fire her.

So Eric's like, okay. You know, I have a guy that can do the job.

And it ended up being Curtis Wyatt.

And Curtis Wyatt was known he was a local guy. He was really kind of one of these guys that kind of just did a little bit of everything for Eric. It was whether it be mowing grass or errands or delivering something, he was just his go-to, you know, guy, maintenance worker, you name it. But they referred to him as a private investigator, but I don't think he was ever professionally trained.

And but he did have a bag of very large guns, assault rifles, very many of them. And that was his Facebook profile.

And apparently that's the guy who which I didn't know at the time, was hired to follow me and try to discredit me and ultimately get me fired.

Speaker 2

But considering Sarah was an upstanding employee and single mother just trying to keep a hold on her job, it's unsurprising Mr. Wyatt could not catch her in the act. There was simply no act to catch. So he started getting more aggressive with his tactics.

Speaker 3

Little did I know that this man was sitting on a hillside overlooking my home, videotaping me and my children on days that I wasn't working at home because he couldn't get footage.

He couldn't get me leaving my home. So he had to falsify the footage.

Speaker 2

So what did all this anguish get Sarah and Jennifer? Certainly not the vindication they had hoped for.

While Eric Conn and judge Dougherty did end up going to jail for their crimes, and judge Andrus was convicted for his part in harassing Sarah in an attempt to get her fired, many feel their punishment should have been worse. Mainly in that, while both judges were convicted, they got to retain their valuable government pensions, despite the harm they did to the government itself. Meanwhile, Jennifer and Sarah, despite working to help the government, had to quit over the course of the investigation, forgoing their pensions. But perhaps the worst injustice of it all? Instead of the government cracking down on opportunities for fraud within the social security system, they punished claimants, making the task of applying for benefits even more arduous.

Speaker 1

And so now the burden of proof is much more stringent on disability applicants and the hurdles that they have to jump through are so much more significant.

And a lot of that, I'd say better than 90% of that is our fault.

And instead of dealing with the problem and dealing with the people that created this situation, they have then in turn blocked everybody from seeing what they're doing and taken it out on the claimants.

Speaker 2

Additionally, Jennifer and Sarah were denied the funds owed to them for being government whistleblowers. Funds that would have helped make up for lost job opportunities, forfeited pensions, and the overall mental anguish that comes with being a whistleblower. Why? Well, they believe it's because of the second time they chose to make a report for the greater good.

Speaker 1

We made another disclosure.

Speaker 3

Which made the Department of Justice look bad.

Speaker 1

And that was that when Eric Conn left his office, he left all his claimant files in there. And he left it, I mean, he just walked away.

And there are people that killed themselves because they could not get their files. They are being redetermined because of this case, having their benefits taken away, being told they owe millions, thousands of dollars back and they need their file that Eric Conn had and they were told it was destroyed. But it wasn't destroyed, it was sitting in his office. And we went would let into that office, we found it, we disclosed it again, and the Department of Justice told us to keep our mouth shut.

Speaker 2

Now, years later, neither holds out a lot of hope they'll ever see that money nor feel real closure from a case that dominated so many years of their lives. The one small glimmer of hope at the end of this long and complicated tale is the work Jennifer and Sarah have dedicated themselves to helping social security claimants navigate the process and the unexpected remorse they've received from Mr. Conn behind bars. But given they were at the heart of uncovering one of the largest fraud cases in US history, don't you think they deserved more?

For more chilling stories from victims and fraudsters alike, check out the Accounts Deceivable podcast on Apple, Spotify, or wherever else you get your audio fix.

Speaker 1

It's a David and Goliath situation where they get squashed and are caught blindsided by all the different tactics that exist to silence the whistleblower. And it's not just being fired. It's being really blackballed from your industry, retaliated against, your credibility, your sanity attacked, just all kinds of tools that go against the whistleblower.

Speaker 2

Welcome to season three of Accounts Deceivable, a podcast about white collar crime and the devastating impact it has on people, companies, and communities. This season is about the moment of discovery. What happens to the people who uncover criminal activity in their own companies? We'll help you see fraud through the eyes of three infamous whistleblowers. From the biggest corporate invoice fraud in history to small town criminal masterminds, Accounts Deceivable will explore how fraudsters game the system and hear the stories of the incredibly strong employees who expose them. In episode three, we speak with three prominent whistleblowers to explore the impact of whistleblowing on their lives.

How often do you ask someone to trust you? For most of us, maybe a handful of times in our whole lives. If you have to ask for someone's trust, that normally means it's serious.

Whistleblower Sherron Watkins, who famously uncovered the Enron fraud, had spent months meticulously collecting evidence. When the moment came, the very least she expected was a fair hearing.

Speaker 1

I really felt like I was providing him with evidence, and the evidence would stand on its own.

I also thought I had the backing of all these colleagues.

And what ended up happening is shoot the messenger stuff. I was ignored. He tried to fire me, and my colleagues backed away. When they saw that I had delivered bad news to the top and that I was being shot, you know, they just clammed up.

So I experienced all the normal things that a whistleblower experiences, but Enron imploded too fast to make all their plans, you know, come to fruition. But it cemented for me how isolating blowing the whistle can be, the lack of support once you have taken that action.

Speaker 2

For Sherron, it was a betrayal of her belief in human decency that surprised and disappointed her the most. Seeing colleagues who became confidants turn their backs in the blink of an eye.

Speaker 1

It's a lot of shock because you do feel like there are people that feel just as concerned as you. You know, they're encouraging you to step up and say something and report the wrongdoing. And then when that support falls away and there's the pariah treatment, it's a double whammy because first off, you thought leadership was going to do the right thing, look at the evidence and try to right the ship, and instead they're shooting the messenger. So there's a deep disappointment in not only leadership, but colleagues that back away and take sort of a safe road. And that is one of the core things that you hear from whistleblowers, that in the end, you walk away realizing that you overestimated human nature.

Speaker 2

As you can imagine, there is a close tie between the quality of a whistleblower's mental health and the reactions of those around them. And some of those cases can be truly traumatic, as it was for Jennifer Griffith, one of the two women to uncover one of the largest social security frauds in US history.

Speaker 3

The toll of it is not just like we're talking about the mental health toll.

Like if you are forced from your job via one method or another, however they've gotten you to leave, whether it's just by berating you to the point you leave. Like for me, it was health. Like my health suffered and I had a lifetime of health problems because of it.

PTSD is a real thing, but whistleblowers don't go into this situation to be whistleblowers. We're not looking to cause trouble. It's just doing what we're trained to do, and that is looked on negatively instead of positively.

And if people would oversight these government for us, government agency oversight is critical because one of the things that they don't look at and they don't care about is the mental health of whistleblowers.

Speaker 2

How could so much mental trauma possibly be worth it? Many whistleblowers are simply driven by a fire to do their job and set things right. Sarah Carver, Jennifer's partner whistleblower, says that the strength to keep going, it comes from within.

Speaker 4

It's hard. It's not easy. And you have to be a strong person and you have to take that anger and turn it over into, you know, into strength, you know, into to power because that's where they get you is at your weakest weakest point. You get to that point where you're like, I'm going to stop. This is not even worth it. I just want to do my job. I just want to, you know, I just don't want to deal with this, but that'll haunt you.

Speaker 2

Sadly, once a whistleblower reports the situation, how it is resolved, and whether or not the perpetrators are brought to justice is largely out of their control. While Sherron saw a tidy ending to her story, she wants to remind listeners that her case is not the normal one.

Speaker 1

I saw vindication. I saw accountability. I saw justice. So I can leave it behind me, so to speak.

And many, many whistleblowers, the oppressor, the manipulator of truth is powerful and keeps going. And even the people within the organization that had read that had led the organization astray stay in positions of power. So that sense of injustice that a wrong has not been righted, that the good people got squashed and the bad people are still in power. That is the primary story of whistleblowers.

Speaker 2

That primary story Sherron refers to is one painfully reflected in Jennifer and Sarah's experiences. But before we hear from Jennifer on that experience, a word from our sponsor, Medius.

Speaker 5

Not only does invoice fraud cost businesses billions of dollars every year, but it's increasingly difficult to prove as technology has advanced. Whistleblowers put their professional and often personal lives on the line to do the right thing and ensure fraudsters don't succeed. They shouldn't also have to worry about the quality of the proof they bring to the table. Medius is an accounts payable software platform that enables finance professionals to combat scams by protecting the integrity of supplier data, auditing the invoice process in real time, and monitoring for insider fraud. For more information or a demo, visit www.medius.com.

Speaker 2

Now, back to Jennifer and Sarah, who are about to recall just how much choosing the path of whistleblowing changed their lives. Instead of being able to retire with pensions, they were forced out of their jobs while they watched those who perpetrated fraud, not only get to keep their government careers, but all the benefits that came along with it.

Speaker 3

We would both be able to retire, but instead we lost years of federal government pension and benefits. And that's the other thing that's a real sore spot for both of us is that when these people committed these crimes against us while we were their employees, they often are promoted or relocated, even if they're removed from their government pension and benefits.

And me walking away from it had to leave all of that behind.

Speaker 2

But it wasn't just Sarah and Jennifer who were punished for speaking out. The ripple effect of their case spread to the claimants themselves.

While the government was swift to react by closing the loopholes in the social security system that were used to perpetrate fraud, they also changed processes in a way that now makes it 10 times harder for claimants to file and receive Social Security claims.

Speaker 3

So now the burden of proof is much more stringent on disability applicants, and the hurdles that they have to jump through are so much more significant. And a lot of that, I'd say better than 90% of that is our fault. And instead of dealing with the problem and dealing with the people that created this situation, they have then in turn blocked everybody from seeing what they're doing and taken it out on the claimants.

Speaker 2

So what can be done in the wake of these seemingly insurmountable obstacles that whistleblowers face?

How can we learn from these stories and course correct moving forward? Sherron sees hope in a future where more advanced tools are readily available. Unlike her days where colleagues would print out reports and secretly leave them on her desk chair.

Speaker 1

The tools to be able to analyze where problems might happen are just growing at a rapid fire rate so that outside people can smell a problem easier now. I actually think AI will revolutionize both auditing and oversight on publicly traded companies.

Speaker 2

Don Holm of Medius explains the role that more advanced technology can play in helping whistleblowers report potential instances of fraud.

Speaker 5

It's critical for employees who spot potential fraud to feel comfortable, confident, and prepared in reporting it. One of the ways we can better equip employees to do so is by providing them with the tools that will support and empower them in spotting fraud. One form of this is AI anomaly detection technology, which can identify unusual patterns in standard transactions, such as supplier payments, that may indicate potential fraud if there's a deviation from the typical invoice.

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Sarah's advice on ways potential whistleblowers can protect themselves also revolves around documentation, like Don mentioned, namely secure as much of it as possible, as access to this evidence could be closed off or restricted at any time.

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I would advise any whistleblower or anybody who is getting ready to disclose information that would be considered whistleblowing is I would document everything. I would start a journal, a calendar, a timeline. This is going to be very, very important. I would print emails and secure those because, like in our case, the hard drive was completely erased.

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AI-based anomaly detection ensures that everyone operates with the same accurate information. This technology is particularly empowering for potential whistleblowers as it provides them with concrete, verifiable evidence that can be reviewed by multiple stakeholders.

This shared visibility reduces the risk of isolation for the whistleblowers and prevents leaders from ignoring critical reports. Considering the cases of Sherron, Jennifer, and Sarah, this technology could have made a substantial difference in those situations.

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It's clear that technology, documentation, even lawyers are all key to the success of whistleblowers and bringing the fraud they spot to justice. But an often forgotten aspect is mental health support. Sarah and Jennifer often talk about how much harder their experience would have been without each other's support and how it would have been easy to succumb to the pressures of isolation.

In Sherron's case, she did experience that isolation and the mental toll that came with it, and understands firsthand that whistleblowers need a support system. Today, Sherron, Jennifer, and Sarah all spend their time advocating for whistleblowers and telling their stories in hopes of making a difference in the lives of future whistleblowers.

For more chilling stories from victims and fraudsters alike, check out the Accounts Deceivable podcast on Apple, Spotify, or wherever you get your audio fix.