$400k of HR Fraud at Financial Magazines

We’ve seen plenty of fraud out of the accounting department. We’ve seen fraud out of purchasing and fraud out of IT. Today we’ve got fraud out of HR.

Mansueto Ventures is the publisher of Inc. Magazine and Fast Company so this one is a little embarrassing for them. This case is also unique in that it deviates from my theory that fraud is often caught near breakpoints of 10k, 100k, etc. We could catch fraud around these breakpoints because those thresholds trigger additional controls. It could also be because prosecutors like bigger numbers. Either way, that’s what I see in reported frauds. This one falls in the middle at $429k.

Nirvani Sabess was Mansueto’s director of people and culture since September 2018. It is alleged that Sabess “would have had the ability to obtain administrative privileges” over the company payroll system. Sabess is accused of keeping payroll active for employees on leave or who had left the company and redirecting their direct deposits to her account.She allegedly used her elevated access to change employees’ passwords and security questions, then reroute their direct deposits to her own account.

The indictment is sealed so we don’t get to see the juice specifics yet. Sabees is actively fighting the accusations. Many accused fraudsters quickly confess and take a deal, but not Sabess. $429k might not seem like a lot compared to some other frauds we’ve looked at, but this is a small magazine publisher running with lean staff and $429k is a lot.

I really have two takeaways here. First, if Sabess did this as described it shouldn’t be to hard to prove. I’m still trying to think of an innocent reason why departed employees would still be active with your bank account on their record. It’s pretty damning. Second, we are back to beating the same dead horses, namely lack of segregation of duties and excessive access.

The allegations don’t describe anything especially creative here. Make it hard to for people to commit fraud at your company. Make them decide to pick another company.

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