Through 2018, Mark Esposito was the COO of Fenton Motors Group, a Texas-based auto dealer with 20 dealerships across multiple states. He is accused of stealing $8 million dollars to facilitate his lavish lifestyle. He is also accused of working with a co-defendant, William Lavin, the firm’s CFO.
If the COO and CFO are colluding to steal from an organization, that company is in real trouble. Fenton Motors was in real trouble. The company ended up selling off dealerships and going out of business. To add insult to injury, the two co-conspirators blamed cash shortages on the owner, Fenton, accusing him of stealing from the dealership. That was a bold move.
It is alleged that Esposito made transfers to his personal account, paid personal credit cards with company funds, and set up an unauthorized bonus plan for himself. For example, he opened a personal American Express Card with the name “Fenton Motors” to make it easier to hide improper payments to that card.
Lavin was key to this scheme. As CFO he was the only person with access to Quickbooks and actively worked to hide Esposito’s scheme. It’s unclear if or how Lavin benefited. When confronted, Lavin grabbed his laptop and ran out of the building. He later committed suicide so we may never know his full involvement.
As straightforward as this case seems, there are plenty of twists still to come. First, Fenton Motors should have seen this coming. In 1987 Esposito was convicted in California of passing fake checks/forgery with a sentence of four years probation and 180 days in jail. In 1998 Esposito was convicted of theft. He stole approximately $50k from a Toyota dealership that he used for vehicle repairs, to pay a cell phone bill, and to pay himself via a false commission. That false commission looks a lot like foreshadowing. Background checks are important.
Second, Esposito is the stepson of former Senator Claire McCaskill. Based on recorded calls it is alleged that Esposito tried to get McCaskill to use her influence to help him get out of this mess. She declined.
Third, as if $8 million wasn’t enough, Esposito is also accused of improperly collecting $2.5 million in PPP loans from an unrelated business. Esposito had a web of quasi and pseudo-businesses with ties to Dubai. This web led to Esposito initially being denied bail.
There’s a lot in here including collusion at the top and a lack of segregation of duties. I mean, the CFO was the only person with access to Quickbooks and he ran out with his laptop that had the only copy of Quickbooks on it. That is a concentration of duties. Ultimately Esposito had a history of financial fraud and really shouldn’t have been hired into a COO position. He certainly shouldn’t have been left without adult supervision. Lavin’s willingness to participate in this scheme raises additional questions about Fenton’s hiring processes.