Manager and Board on the Hook for Poor Hiring Decision Leading to Embezzlement

A civil grand jury has concluded that the poor management and lack of oversight displayed by leaders of the San Mateo County Mosquito and Vector Control District enabled two employees to steal nearly $800,000 from the county by embezzlement.

The employees in question, Jo Ann Dearman and Vika Sinipata, embezzled the funds between 2009 and 2011. Dearman, who was also known as Joanne Sweeney, served as the district's finance director and Sinipata assisted her as a bookkeeper. Together the two women used their positions to give themselves extra pay, take extra paid vacation, and make personal purchases using district credit cards. Both women pled no contest to felony embezzlement and other charges earlier this year.

The grand jury report concludes that the district's manager, Robert Gay, and its 21-member board should have discovered the fraudulent transactions much sooner and points to several flaws in their management and oversight processes that effectively gave their employees the opportunity to steal.

First of all, members of the board finance committee failed to detect discrepancies and red flags that should have alerted them to the possibility that embezzlement was occurring. Secondly, the board failed to heed the warnings of various senior district employees who attempted to bring financial irregularities to their attention. The embezzlement was not uncovered until a trustee finally began questioning the expenses that the district had been reporting during Dearman's tenure as finance director.

To make matters worse, an investigation by the insurance company covering the district revealed that Dearborn was hired without a background check, a fact which the insurance company used as proof that district officials had engaged in negligent hiring and should not be reimbursed for the embezzled funds.

Had the district run a background check on Dearman at the time she was hired, they would have learned that she was currently facing charges for allegedly embezzling funds from a previous employer. Dearman was ultimately convicted and actually used family medical leave to serve her jail time for this crime while working for the district.

This case clearly demonstrates the risks posed by failing to run background checks on prospective employees, especially when those employees will have access to company funds. The district could have implementeed a structured employee screening program for all new hire, combining a database driven national background check tool like US OneSEARCH from backgroundchecks.com with function appropriate traditional on-premise criminal searches in county and federal courts. Federal violations like embezzlement generally will not appear in either a county or statewide criminal check and need to be searched seperately from a database or traditional criminal county search.

Jo Ann Dearman is known to have used the alias Joanne Sweeney, but that wouldn't have posed a problem for the district had they used a background check tool that includes a Social Security number trace to reveal known aliases like the US AliasSEARCH from backgroundchecks.com.

In response to the grand jury's report and the insurance company's claim denial, the district has begun implementing new steps to improve oversight of financial activities. It has also made background checks mandatory for all new hires.

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Founded during the Internet boom in 1999 by an executive in both the staffing and information industry, backgroundchecks.com – a founding member of the National Association of Professional Background Screeners (NAPBS®) – has been able to create a service that provides a blend of flexible screening programs that included instant, cost effective and comprehensive solutions. Our experience in database modeling of public records information has led backgroundchecks.com to become the leader in the acquisition and delivery of public records information by harnessing the power and technology of the Internet. To learn more visit www.backgroundchecks.com.

Source: http://www.mercurynews.com/peninsula/ci_23697553/grand-jury-mosquito-district-manager-and-board-enabled

Author: Michael Klazema