Fleet Felonies! Speakers Offer Tips to Reduce Your Exposure to Fraud

A simple online search, using the keywords “fleet manager embezzlement,” results in thousands of cases where fleet managers have been indicted and convicted of serious criminal charges, including embezzlement, fraud, and money laundering. Some poor career-ending decisions include thefts of a few thousand dollars up to millions.

From a distance, the vignettes presented during the I&E education session, “Fleet Felonies! Reduce Your Exposure to Fraud,” are puzzling and hilarious, but quickly the fleet professionals attending this session recognized how unscrupulous figures might easily impact their work. Further, detecting their activities are not extremely difficult. It’s mostly a case of reading the clues the data is readily providing, and that task falls directly upon the fleet manager.

Presented by Janis Christensen, CAFM^®, Director, Corporate Fleet Consulting, Mercury Associates.; and Steve Saltzgiver, CAFS^®, Manager, Mercury Associates; the session toplined the "dirty deeds" that have tempted figures to criminal activity including fuel card abuses; fake fuel rebates, invoices, and leases; used vehicle disposals; debit card misuse; and procurement card mismanagement.

Tiregate - Christensen and Saltzgiver discussed "Tiregate" where, according to a report from ABC affiliate KTNV Television in Las Vegas, six former employees of the Nevada Department of Transportation were swept up in a tire theft ring sting operation. The charges against them included four counts of theft in the amount of $3,500 or more, three counts of theft in the amount of $650 or more, four counts of embezzlement in the amount of $3,500 or more, three counts of embezzlement in the amount of $650 or more, five counts of possession of stolen property, one count of burglary, and one count of multiple transactions involving fraud or deceit in the course of enterprise or occupation. The alleged frauds were committed between December 2014 and April 2015.

How might a fleet manager have determined these activities were going on? Measuring vehicle usage against what types of tires and how many of them are being purchased is a great clue. Broadly, if a fleet with a localized scope of work is experiencing a high turnover of tire stock, why should this be the case? Also, if your selection of vehicles only has a few pick-up trucks, yet you’re constantly in need of those tire sizes, you need to ask why this is happening. At the very least, it could be the misuse of the vehicles, necessitating driver retraining, but it could be that the tires are conveniently “disappearing.”

Access Device Fraud - Another standout anecdote highlighted a company director who made ATM withdrawals from fleet cards, uploading e-money onto debit cards, then taking money out of ATMs what was allocated to drivers. By following paper trails, internal audits caught onto a potential concern. ATM cams caught a director doing this, corroborating his part in "Access Device Fraud."

Not all such crimes are as grandiose. A more common issue comes when business fuel cards are used to fill personal vehicles. These activities are easily uncovered thanks to fuel card reporting which shows when fuel-ups take place. Why would a vehicle that only runs 9-to-5 fuel up at 11 p.m.? Moreover, why would a vehicle that only requires regular gas consistently top off with premium? In one instance, workers falsified paperwork and odometer readings to mask their crimes.

Christensen agreed with the idea that fleet managers should consistently share such anecdotes with their staff as a reinforcement: no one is a criminal mastermind, and thanks to so much collected data and better reporting, “cooking the books” is harder than it has ever been. The odds are against you, so don’t dare try it.

Sunlight is the Key - Saltzgiver was adamant on this point. Use that data to keep track of fuel use versus fuel spend. Leverage that information to protect your fleet from bad actors. Turn off gas cards when your employees are terminated, always. If not, your organization remains open to all manner of risk...and never fear an internal audit. The auditor is your friend and can see problems you might be too near to see.

Christensen and Saltzgiver added that it is imperative to ensure that sound policies and procedures exist, featuring clearly defined employee roles and responsibilities. Further, hierarchical thresholds and approvals by dollar amount should be commonplace. As a rule, the purchaser of collateral should never be the receiver of the goods. Someone else should be in the chain so that anything that’s not honestly acquired won’t dishonestly disappear without a trace. Commit to doing that regular review of transactions, and make sure your employees are all trained appropriately and held accountable for their actions.

In conclusion, “sunlight” is key. Share your results with the managers responsible for correcting problems. If your organizational culture values transparency, then anything attempted on the sly will draw attention to itself.