Gary Foster surprised the fraud investigation community when it was revealed that he had stolen in excess of $19M over a seven year period in the Treasury Department of Citi Group. He held the post of Vice President and at 35 years old was seen as a good worker having already given 11 years of service to the Group. He has pleaded guilty in September 2011, is out on bail and faces a sentence up to 30 years.
Gary is legally blind and needed a chauffeur for him to drive it was explained. The money went on lavish mansions, cars and outlandish decoration of his apartment. His now ex-wife, Joan Foster said that she did not benefit from any of the money. They have two children of unknown age, who are now experiencing a family break up which in itself must be painful, let alone knowing that their Dad is going to jail.
There are several points that come to mind. Where was the bank in assisting this individual when he had an
internal or family crisis that must have precipitated in 2003 when the embezzlement started? The amounts grew significantly in the last 18 months and this would have been in parallel to the exacerbation life’s stress. How can I say this with confidence?
Gary Foster’s case is a classic Likeable Fraudster. He did not start embezzling until a few years into his job. He handed himself in returning from Thailand. He could have easily disappeared from Bangkok and live a life in tropical paradises around the world, but as most Likeable Fraudsters, when they realised they are caught they return for their punishment. He pleaded guilty to the offences. There was no plea bargaining to mitigate prison sentencing, and only leniency by the judge will lower his time in prison. Foster is likely to show considerable remorse at sentencing, if not already – however this has not been reported in the media.
Likeable Fraudsters are detectable using emotive profiling techniques and Citi Group could have used this to have prevented the fraud in the first place or stop it from escalating which happened in the last 18 months when a reported $14M was transferred into his accounts. Citi Group however relied upon internal controls and finally internal auditing. These tools are spruiked by accountants, and of course any company would be insane if these were not in place. However, they do not stop fraud from starting, especially frauds conducted by executives such as Foster. Once the embezzlement begins there is no stopping until the Likeable Fraudsters give themselves up. If an annual screening process had been in place the fraud would have most likely have been discovered when only a few thousand of dollars were missing.
Who is really the blind here? Gary Foster is legally so, Citi Group like many other corporates equally so.
They fail to understand that those key personnel with access to large sums of money are at risk. It takes great breadth and depth of character to resist the daily temptation of accessing the pool for their own gain. Of course it requires intelligence to pull off such a fraud over a long period of time, but that would be a common characteristic of these personnel to attain their executive roles.
The other warning that I would give Citi Group is that Foster’s fellow workers will feel a breakdown of trust and need – that is, should be compelled, to have counselling as a basis of continued employment as this fundamental aspect of the workplace will have repercussions far beyond the missing money. Citi Group has much more to lose than money – it will likely lose key staff with Foster’s imprisonment.