Justin R. Marquardt, from Nevada, Missouri, pled guilty in federal court to charges related to a fraud scheme in which he embezzled approximately $1.5 million from his employer and failed to disclose this stolen income on his federal income tax returns.
Marquardt, who served as the executive director of his company, had access to all company financial accounts from 1994 to 2023. He admitted to unlawfully transferring funds from the employer's accounts to his personal accounts and writing unauthorized checks to himself.
The majority of the stolen funds were used for personal expenses, including travel and gambling both online and at casinos. To conceal these illegal activities, Marquardt omitted these unauthorized transactions from the company's QuickBooks records submitted to the accountant and tax preparer and falsely recorded payments as business expenses to disguise the embezzlement.
Marquardt further admitted that for the tax years 2017 through 2020, and again in 2023, he willfully failed to report the embezzled funds on the federal income tax returns he filed. He pled guilty to one count of wire fraud and one count of filing a false tax return. Under federal law, he faces potential penalties of up to 20 years in prison without parole for the wire fraud charge and up to three years for the tax violation.
The case was prosecuted by an Assistant U.S. Attorney and investigated by the IRS Criminal Investigation unit in conjunction with the FBI.
Source: https://www.irs.gov/compliance/criminal-investigation/nevada-missouri-man-pleads-guilty-to-embezzling-approximately-1-point-5-million-from-employer-and-filing-a-false-tax-return
Commentary
The perpetrator of the fraud in the above matter was the executive director. Employers can prevent executive-level embezzlement by implementing several key steps focused on internal controls, employee vetting, and ongoing oversight.
The hiring process should be thorough, including detailed reference checks, verification of employment history, and background screenings that assess criminal records and financial reliability.
Segregating financial duties among multiple employees is critical to prevent one person from having complete control over accounting transactions, such as separating those who authorize payments from those who handle deposits. Regular monitoring and independent audits of financial records help detect discrepancies early.
Employers should encourage open communication and maintain transparency about policies, ensuring employees understand that workplace communications and financial activities may be monitored.
Establishing clear, written policies about fraud and theft with zero tolerance sends a strong deterrent message.
Additionally, organizations can limit access to financial resources, lock up check stock, require dual signatures on checks, and mandate vacation periods for employees handling finances, which can help expose irregularities.
Offering confidential ways for employees to report suspicious behavior can further help identify early signs of embezzlement.
The final takeaway is that a combination of careful hiring, robust internal controls, constant vigilance, and a workplace culture of integrity are vital to preventing employee embezzlement.
