Once a Fraudster, Always a Fraudster | Nonprofit Fraud Blog

Reposted from the This Week in Nonprofit Fraud Blog – May 19, 2014

Once a Fraudster, Always a Fraudster
Marina

Photo courtesy of Udo Schroter

May 16, 2014: John Thomas, a Chicago-area real estate developer with a previous fraud conviction on his record, pleaded guilty to stealing upwards of $375,000 in taxpayer money meant to redevelop a marina property in Riverdale, IL, a Chicago suburb.

Thomas was previously convicted of fraud for renting out billboard space he didn’t actually own in New York in the late 1990s, and had served as an FBI informant to help take down corrupt Chicago political fundraiser Tony Rezko. A decade later, Thomas was back at it again, this time convincing Riverdale officials to back him with $900,000 to manage the redevelopment of a rundown marina. Thomas took this opportunity to use the funds awarded to his company to pay personal loans and debts, legal fees and other various personal expenses. He submitted fake invoices for bogus companies that never worked on the project, to Riverdale for reimbursement. Thomas faces up to more than 3 years in prison, and will be ordered to pay restitution, which Riverdale Mayor Lawrence Jackson notes will not cover the large amount of money the village spent on cleaning up after the fraud was discovered.

See more on this case at The Chicago Tribune

Lesson Learned

  • Organizations and local governments must do their due diligence before hiring an employee or contractor in order to safeguard themselves.
  • In this case, the due diligence is complicated by the fact that Thomas had actually legally changed his name after his fraud conviction. However, since Thomas’s history was publicized in conjunction with his undercover work for the FBI, a well-designed background check should have still raised red flags.

Raffa Forensic Practice Tips:

  • Know your business partners! Fraud is committed by people, so your fraud prevention controls have to focus on the human element.
  • Does your organization have a thorough due diligence process to vet potential business partners?

DON’T BE THE NEXT VICTIM OF FRAUD!

The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.

For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.

You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention:

Lawrence J. Hoffman, CPA/CFF, CVA, CFE, Senior Partner: Lhoffman@raffa.com
Leslie C. Kirsch, CFE, Manager: Lkirsch@raffa.com

 

This entry was posted in Forensic Accounting and tagged , , , . Bookmark the permalink.

One Response to Once a Fraudster, Always a Fraudster | Nonprofit Fraud Blog

  1. Rey Henz says:

    Private investigators can be hired for any assitance you need while dealing with fraudsters. Fraudsters need not steal money but just like the one mentioned in the article there are people who deceive the government without paying tax services due to them. This article will help people to stay conscious and the importance of paying tax on time.

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