Would You Hire a Fraud?

We’ve seen plenty of cases of good people gone bad. Not all fraud at the top starts that way. Carlos Ghosn was by all accounts a great CEO. Tom Girardi was a great lawyer. Temptation can happen to anyone, but if you start by hiring people more likely to commit crimes, you’ll get more crimes. As a suggestion, maybe do a background check for people with financial access.

Prior to starting this series, we talked about Bonnie Sweeten. Bonnie claimed that she and her daughter had been kidnapped. In fact, Bonnie was at Disney World living it up with her daughter using cash and identity stolen from a co-worker. Bonnie got jail time. After getting out of jail, Bonnie got a job at a law firm and was convicted of stealing more than $600k from her employer and family members. Unsurprisingly this led to more jail time. After 8 years, she was released and a friend gave her another opportunity, this time as a bookkeeper of all things. Sweeten promptly forged checks and made fraudulent purchases on the company credit card.

We talked about Angela Phan who was hired as an accountant off of Craig’s list, worked one day, and stole $15k over 18 months using her 1 paycheck. There’s no indication of previous fraud in the news story, but maybe hiring accountants off of Craig’s list isn’t ideal.

Finally, we have today’s story, Business Rapper, Crypto Rapper, alias Razzlekhan, and self-described Crocodile of Wall Street, Heather Morgan. Heather and her husband Ilya Lichtenstein have been accused of trying to launder $4.6 billion in Bitcoin stolen via a 2016 hack of Bitfinex. Note that the pair is not accused of committing the hack, just trying to launder the money. They also weren’t very good at it.

In 2016 119,754 bitcoins were stolen from Bitfinex. At the time they were valued at $71 million. Bitcoin has gone up since then, hence the $4.6 billion valuation now. 94,636 of those Bitcoins have been recovered from the original wallet they were moved to after the heist. Morgan and Lichtenstein are accused of using fictitious identities, multiple accounts, chain hopping, and other techniques to hide the source of the bitcoin, with withdrawals made via Bitcoin ATM. Lichtenstein’s cloud storage account was found to have decryption keys to virtual currency addresses directly tied to the attack.

Lichtenstein is being held without bail while Morgan is free on a $1 million bond and confined to house arrest. But this isn’t a story about crypto laundering. The story is that Heather Morgan now has a new job, while under house arrest, working for an unnamed New York tech firm “in the role of growth marketing and business development specialist.”

Yes, she made a bit of a name for herself with some cringe-worthy rap, but hiring someone on house arrest gives new meaning to working from home. I know it’s a weird job market out there, but you would think with the great resignation and mass tech layoffs, surely there are better options.

If you’re hiring folks into financial roles, do a background check. Actually, do a background check anyway. Lots of non-financial roles carry a risk of fraud or loss including jobs like warehouse work. Plus today’s marketing intern could become tomorrow’s event planner overseeing hundreds of thousands of dollars of marketing spend. Apply due diligence in hiring and don’t buy trouble.

Update 7/10/23: There are a couple of good podcasts on the Crocodile of Wall Street case. The Hacked episode was fun and raised some interesting questions on how the stolen bitcoin would be returned and whether it belongs to Bitfinex or its users. Additionally they mentioned that at the max valuation of $4.6 billion this would have been the largest heist in history surpassing all bank robberies combined in the history of the US.

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