This is a True Payroll Crime Story!
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[00:00:04] Welcome to our podcast, Its About Payroll.
[00:00:08] We're your hosts, Brian Escobar and Walter William Duncan III.
[00:00:13] Whether you're new to the payroll game or seasoned veteran, we have something for you.
[00:00:20] Welcome back folks.
[00:00:21] This is episode 121 as we keep moving through quickly through this year.
[00:00:27] Holy moly guacamole.
[00:00:31] We have a True Payroll Crime fun, always fun for us to talk about.
[00:00:36] Before we get into our pay news updates today, how are you doing sir?
[00:00:40] I'm good.
[00:00:41] I'm blessed with another day.
[00:00:44] I'm fortunate to be here to have my partner in crime on the other side of the state
[00:00:52] right now.
[00:00:53] Yeah literally across the state line.
[00:00:55] Georgia line.
[00:00:57] Yeah man Florida Georgia line.
[00:00:59] Wasn't that a music group's name?
[00:01:01] Yeah yeah right.
[00:01:02] Florida Georgia line right?
[00:01:03] Yeah they made pretty good music.
[00:01:05] Did they?
[00:01:06] I'm sure you have.
[00:01:07] It was popular like that.
[00:01:08] Yeah there were people.
[00:01:09] I think it was like country.
[00:01:10] Country pop?
[00:01:11] Yeah something like that.
[00:01:12] No no no doubt.
[00:01:13] So I was just watching the most recent bad boys movie.
[00:01:18] Did you see it?
[00:01:20] I want to see it.
[00:01:21] People said it's really good.
[00:01:22] Oh I think it's the best one yet and I'm not even finished with it and I think
[00:01:27] it's the best one yet.
[00:01:28] Yeah no I'm like I gotta watch them all over again to make sure I judge it right.
[00:01:32] But I'm like yo dope that was really I didn't expect might have low expectations
[00:01:38] because I was like ah hey these guys go with me.
[00:01:40] Here it is franchise stuff they keep making it.
[00:01:43] Fast and the furious 20.
[00:01:46] And I still watch them because they're entertaining but they do get a little oh
[00:01:52] boy okay.
[00:01:53] Yeah yeah.
[00:01:54] This one is good.
[00:01:55] What's your about?
[00:01:56] Yes next time you and Shorty are doing the wings and things at home.
[00:02:00] That's funny you said that just we just did a I got a new air fryer a ninja air
[00:02:04] fryer.
[00:02:05] Nice.
[00:02:06] And made some jerk wings in the air fryer.
[00:02:10] Oh how'd it come out?
[00:02:12] Perfect.
[00:02:13] Nice.
[00:02:14] So good.
[00:02:15] Nice that's what's up alright cool.
[00:02:18] We got a good show lined up for you tonight folks.
[00:02:21] We are we talk about changing the format right.
[00:02:24] A change in the format.
[00:02:25] We were doing two shows now we're bringing it into one.
[00:02:29] I got my social media manager over here listening hopefully so you can hear what
[00:02:33] we're doing.
[00:02:34] It's gonna be one show now because really every payroll topic that we talk about
[00:02:39] has the two sides of the coin right.
[00:02:41] It has the payroll pro and it has the employee like whatever payroll people do
[00:02:45] it we are literally impacting the employee.
[00:02:48] That's why we do payroll right.
[00:02:49] That's why we do payroll.
[00:02:50] We exist to pay people.
[00:02:52] So we figured for a number of reasons it just made sense to merge the effort.
[00:02:57] We're gonna start the show with one news current events news update all that good
[00:03:02] stuff and we're gonna talk about the paycheck part first employee piece first and then
[00:03:08] we'll end the show with the payroll pro impact and piece and today is true crime
[00:03:14] so it's a little different.
[00:03:15] We need a little time to reorganize when 120 shows doing it one way.
[00:03:20] No more right.
[00:03:21] 120 shows on the payroll side one way 30 some odd shows doing it each individually.
[00:03:27] That's 150 some odd shows 160 some odd shows 77.
[00:03:32] There's 175 shows and we just did it in one way when we started the website we
[00:03:38] did like a bunch of different shows we were recording four different shows at one
[00:03:41] point then we consolidated all that into segments.
[00:03:45] It's an evolution of it folks but it's gonna stay consistently that way so if
[00:03:49] you're an employee and you want to jump on just listen to the first half and then
[00:03:54] look if you want to jump off go for it but if you want to you have the choice
[00:03:58] and then for the payroll pro it's really both sides that you should listen
[00:04:02] to because you need to understand how the pay what the employee impact is
[00:04:07] right and technically we are employees and we are employees.
[00:04:11] Right.
[00:04:12] It's like for payroll pros it's comprehensive understanding of both things
[00:04:17] that you may not even think of and for the employee look if it's if you're not
[00:04:21] it would give you that option so that you're gonna jump on first hear what you
[00:04:25] need to hear and then you could tune out if you need to.
[00:04:28] If you want to learn some more stuff you want curious about how your
[00:04:31] payroll pros process and then get savvy then you can stay on.
[00:04:34] So look with that being said let's get into our pay news updates and what's
[00:04:39] going to kick it off and I got a cool article to share with you about the
[00:04:43] Olympics as well.
[00:04:45] All right.
[00:04:46] So I wanted to shout out I do there was a great race that just occurred like
[00:04:51] them one year for the mid nor miles one gold.
[00:04:56] It's been 20 years since the US man has won gold.
[00:05:00] No way.
[00:05:01] His name 2004.
[00:05:04] So it's been a nor allows he won by 500 of a second or something like
[00:05:09] that. Hey W is a W.
[00:05:11] Yeah.
[00:05:12] Oh just want to shout out man.
[00:05:14] Congrats.
[00:05:15] Yo shout out to the rest of the team.
[00:05:17] Lee all the other ladies the young men on the gymnastics they won a medal to
[00:05:22] always count been catching little clips here and there.
[00:05:24] So yeah definitely.
[00:05:26] So my article is from NL IHC dot org and it's talking about a new law that
[00:05:32] Georgia passed and it's talking about new tenant protection laws for renters.
[00:05:38] So it establishes a minimum habitability for those people and it's effective
[00:05:44] July 1st and in March 2024 Georgia lawmakers passed HB 404 also known as
[00:05:52] the safe safe at home act establishing minimum habitability standards for
[00:05:59] rental properties to ensure they are safe and livable.
[00:06:03] So it was signed into law by Governor Brian Kemp in April and it makes a
[00:06:09] marked significant step as Georgia was the one of the last states to adopt
[00:06:13] such protections.
[00:06:15] So some of those provisions that are included are number one duty of
[00:06:20] habitability so that landlords must maintain rental properties and good
[00:06:24] repair and address all maintenance issues.
[00:06:27] Number two is legal recourse.
[00:06:30] So it says that tenants can sue landlords for failing to keep properties
[00:06:34] habitable. Number three security deposit limits were set so that they could
[00:06:40] not be more there could be no more than a maximum of two months rent
[00:06:45] and it's there right.
[00:06:47] And then also the last thing was the eviction notice.
[00:06:50] Landlords must give tenants at least three days notice before filing for
[00:06:54] eviction.
[00:06:56] Oh wow.
[00:06:58] Yeah.
[00:06:59] So that's good.
[00:07:01] So this law aims to improve housing conditions and provide better legal
[00:07:04] protection for renters particularly benefiting marginalized and low income
[00:07:09] households.
[00:07:10] And again as I said it became effective July 1st of 2024 for new or
[00:07:17] renewed leases.
[00:07:19] That's what I had. What about you?
[00:07:20] Oh OK.
[00:07:21] So if you're actively in a lease right now this won't go into effect until
[00:07:25] your lease ends and then you renew it.
[00:07:27] The glaring thing for me is like how is this not already law in every
[00:07:32] state? This is basic.
[00:07:34] Yeah as I said earlier that Georgia was one of the last states to adopt.
[00:07:39] I'm sorry I missed that part.
[00:07:40] Georgia was one of the last yes I see but dang damn Georgia.
[00:07:44] So how many people know about this stuff occurring in their state.
[00:07:48] I just happened to look this up while I was doing research for this.
[00:07:51] So I was like oh this is interesting.
[00:07:53] Mine is regarding the Olympics shared to us by friend of the show
[00:07:59] Melissa Vicio so let's say yes or yes or shout out to Melissa.
[00:08:05] Thank you so much for this.
[00:08:06] It's a long article.
[00:08:07] So if it piques your curiosity the link will be in the show notes but it
[00:08:12] talks about how the payroll taxes as it pertains to Olympic athletes.
[00:08:20] OK.
[00:08:21] Yeah it's very it's crazy.
[00:08:24] This is a longer article goes into a little bit more stuff but I think
[00:08:27] this is the glaring paragraph that makes the most sense to share and
[00:08:32] the first is Thomas Reuters and payroll specialist sheds light on
[00:08:36] Olympic athletes tax withholding challenges in Paris 2024.
[00:08:42] And this the heading for this paragraph is taxation is not all the same.
[00:08:47] So I'm just going to read it verbatim because it puts a longer article but
[00:08:51] this is the one that you're like what.
[00:08:53] So although there's a federal income tax exemption for Olympic medal
[00:08:57] winners earning under a certain threshold state local and international
[00:09:02] laws may require withholding state and local income tax regulations differ.
[00:09:08] Volter said the expert that's in the article for example Colorado specifically
[00:09:14] excludes income earned as a direct result of winning a gold medal while
[00:09:21] competing for the United States of America at the Olympic Games from
[00:09:26] steamy taxable income law.
[00:09:30] However California does not conform to that federal law exemption and
[00:09:38] athletes in California who bring home a medal from Paris must report that
[00:09:43] income for state tax purposes.
[00:09:47] Give me my money.
[00:09:47] Was that was that so on Tick Tock give me my money.
[00:09:50] Oh is it.
[00:09:51] It's on trend I might not be doing it justice but all of us
[00:09:54] will just give me my money.
[00:09:55] See this is where it's good to be like cut clips into the show.
[00:10:00] I haven't seen that yet so then in addition athletes may be subject to a
[00:10:08] tax in France as the country appears to retain the right to tax all athlete
[00:10:14] income directly related to the games.
[00:10:17] Wow.
[00:10:18] Like yo it's crazy.
[00:10:20] It's crazy.
[00:10:22] Just yet though if your family members over there competing just depending on
[00:10:27] where you are they may get tax man in France at home.
[00:10:31] Gosh man this is this is why you really have to win so that you can
[00:10:36] get some more sponsorship money and all kind of stuff.
[00:10:40] You know article does talk about sponsorship money as well talks about
[00:10:44] how if you're if you make over or under a million there's a difference.
[00:10:48] Again the link will be shared and look before we get into our main topics.
[00:10:53] Let's pay the bills.
[00:10:55] All right.
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[00:11:53] All right.
[00:11:55] So again as we journey into this new format for our show our first
[00:12:01] segment is going to be about the employee it's about your paycheck and
[00:12:08] we're talking today about housing.
[00:12:11] Walt's going to start us off and talk about some housing topics.
[00:12:15] Look while a lot of us are living paycheck to paycheck as we've said on
[00:12:20] it's about your paycheck show many times a good majority of Americans live
[00:12:24] paycheck to paycheck includes some includes some of us or some of you
[00:12:28] that are listening now so I just thought about it so what the topic is
[00:12:34] for the employee part what can I do if I'm struggling to pay my rent.
[00:12:38] Yeah.
[00:12:39] So if someone is struggling to pay their rent in 2024 there are several
[00:12:44] resources out there and here are some steps that might be helpful to you.
[00:12:48] So what's the first thing you could do?
[00:12:50] You can contact your landlord and negotiate but you want to communicate
[00:12:54] with your landlord as soon as possible to explain your situation and
[00:12:58] negotiate maybe a payment plan or a temporary rent reduction you'd be
[00:13:03] surprised that there are some good landlords out there who might be
[00:13:06] willing to work with you you never know if you don't say.
[00:13:08] Yeah.
[00:13:09] And I think this is going to depend on your track record too right.
[00:13:11] If you're calling if you call a lot then maybe isn't they going to get
[00:13:15] frustrated but if it's few and far apart if you have a good landlord they
[00:13:20] want to keep you in it cost them more to like having to fire an
[00:13:24] employee and hire a new employee it's a cost it costs money to lose
[00:13:29] a tenant and then going without a tenant.
[00:13:33] Yeah.
[00:13:34] If I own a apartment building and I rented it out and I don't own it I'm
[00:13:39] still paying a mortgage on that entire building and so I'm charging by per
[00:13:42] unit so if this unit is vacated I still have to pay that so if I don't
[00:13:47] have anybody there I'm potentially going to lose money.
[00:13:51] Yeah.
[00:13:52] You lose money and depending on your margins that one apartment could be
[00:13:56] your profit you know what I mean?
[00:13:57] Depending on where you are on your mortgage and where everything if
[00:14:00] you're a new landlord for the building.
[00:14:02] Yeah.
[00:14:03] So definitely that's a good one.
[00:14:06] Great call outs.
[00:14:07] If you do contact your landlord and that agreement is made you want to
[00:14:10] document all communications and agreements right there are some local
[00:14:16] estate resources out there there's an emergency rental assisted programs
[00:14:20] that many states and local governments offer out there for those that are
[00:14:24] experiencing that financial hardship so for instance you can go to the
[00:14:28] U.S. Department of Housing and Urban Development HUD and they have
[00:14:32] rental assistance right there so you can reach out to them and they may be
[00:14:35] able to help you like shore up some of those funds that you need for rent.
[00:14:38] There's some nonprofit organizations out there that may offer help on
[00:14:42] the Salvation Army or United Way.
[00:14:45] A lot of these links that we'll have we'll put out there they can
[00:14:47] help you with your rent utility bills.
[00:14:50] There's been decisions especially earlier in my career there's been
[00:14:52] times I had to rob Peter to pay a toll.
[00:14:55] Yeah.
[00:14:55] I had to forego paying this bill so I can have groceries or so I can keep
[00:15:00] my lights on or whatever it may be.
[00:15:02] So I understand what the struggle is like.
[00:15:04] And I'll go ahead.
[00:15:06] I've been there too when me and wifey were new parents we when we hit
[00:15:11] man we cut cable there's times that we just had to cut things out.
[00:15:15] Cable was the first thing to go.
[00:15:16] We will be watching DVDs and this is at the time where streaming
[00:15:20] hadn't really come out yet.
[00:15:22] Maybe Netflix was out but it definitely was streaming definitely wasn't
[00:15:26] where it is.
[00:15:27] So there was a lot of Redbox had come out toward the end.
[00:15:31] But it was definitely Hustleman on the block with the five for 40
[00:15:36] five for 20 three for 20 DVDs.
[00:15:40] Yep.
[00:15:41] So we were on the bootleg DVDs.
[00:15:43] We stood on that.
[00:15:44] You wanted to be legal maybe blockbuster.
[00:15:47] Redbox came out toward the end of that.
[00:15:49] Redbox was cheaper.
[00:15:50] Blockbuster.
[00:15:51] We did we did do blockbuster as well.
[00:15:53] We saw that the demise of blockbuster but even blockbuster got expensive.
[00:15:57] My daughter my oldest is 20 now so it's been a while since we've been at
[00:16:01] that point.
[00:16:02] But what I can tell you is if you're diligent and you want to come out of
[00:16:06] that place you can write you and you can definitely come out of that
[00:16:11] place.
[00:16:11] You got to sacrifice.
[00:16:12] You got to do your thing and you'll get there but you've got to be
[00:16:15] diligent about it.
[00:16:16] And look I wish I knew some of these programs existed because it's
[00:16:19] true.
[00:16:20] And we were proud of what we didn't want to ask family for nine.
[00:16:23] We were very independent minded.
[00:16:24] We didn't want to ask nobody for nothing.
[00:16:26] We were like no if we can do it on our own we can't be doing this.
[00:16:29] Let's get that course.
[00:16:31] And look there's number three there's some legal aid services out there.
[00:16:34] So say you're a low income individual or family there are some legal
[00:16:39] assistance out there that case you're facing eviction they might be
[00:16:43] able to help you and prolong that or whatever to help keep a roof for
[00:16:46] your head.
[00:16:46] There's government assistant programs and a snap supplemental nutrition
[00:16:50] assistance program that can free up free up funds by providing food
[00:16:53] assistance.
[00:16:54] There is a temporary assistance for needy families T.A.
[00:16:58] T.A.
[00:16:58] And now they provide financial assistance for low income families.
[00:17:02] There is budgeting the financial counseling services that are out
[00:17:05] there so credit counseling services that can offer financial advice
[00:17:09] and help you create a budget to manage your expenses to see what you
[00:17:12] can cut out.
[00:17:13] See what you can but you may not necessarily need.
[00:17:16] When's the last time you turned on Discovery Plus.
[00:17:19] Oh I already got it.
[00:17:22] You need to cut it.
[00:17:26] Your price is way too high.
[00:17:29] Eviction prevention tips.
[00:17:31] So you need to know your rights right.
[00:17:34] You need to understand your local adventure laws and your tenant
[00:17:37] rights to ensure that you're getting treated fair.
[00:17:39] Say you are struggling but for instance in Georgia if you don't have a formal
[00:17:45] rental agreement but you live somewhere with someone you're a tenant and they
[00:17:50] try to kick you out they had to give you a certain amount of time before
[00:17:54] they can kick you out and they legally cannot raise your rent.
[00:17:57] The landlord cannot raise your rent.
[00:17:58] So that's in the state of Georgia.
[00:18:01] So you want to protect yourself and have that knowledge right.
[00:18:04] It's corny to say it's easy to say but knowledge is power.
[00:18:07] Yeah I didn't know any of this man.
[00:18:10] This is.
[00:18:11] With that being said we segue into our main topic our true payroll crime story.
[00:18:17] Go ahead.
[00:18:19] We getting used to it folks.
[00:18:20] We got to switch.
[00:18:21] Wait Siri over here.
[00:18:23] Whoa Siri what you.
[00:18:25] Whoa.
[00:18:28] AI.
[00:18:28] Yes as we segue keeping the housing theme going.
[00:18:33] Yeah.
[00:18:34] We got a true payroll crime story.
[00:18:38] About someone in payroll.
[00:18:40] Unfortunately.
[00:18:42] And this is one of the rest stories I've seen an actual payroll clerk do
[00:18:46] something.
[00:18:46] Yeah because the last one we did that I can remember.
[00:18:50] No it was another money Mike that first one we did.
[00:18:54] But he was like a VP or something like that right.
[00:18:55] No he was.
[00:18:57] OK if he was a standalone VP of payroll.
[00:19:01] He was and then there was another one.
[00:19:04] Company.
[00:19:05] You're right.
[00:19:05] Yes you're right.
[00:19:06] You're right.
[00:19:06] We have done a few.
[00:19:09] Yeah not many though but it's because to your point.
[00:19:12] Yeah.
[00:19:12] Most of these payroll true crimes are business owners or higher ups.
[00:19:16] Yeah.
[00:19:17] Are playing with payroll tax.
[00:19:19] CFO CEO.
[00:19:20] Yeah yeah.
[00:19:21] Out there who are wondering what we talking about is for payroll taxes.
[00:19:26] The employer has to match what they withdraw from us for Social Security and Medicare.
[00:19:33] Right.
[00:19:34] Six point two percent for Social Security one point four or five percent for Medicare
[00:19:38] that the employer has to withhold from our checks right.
[00:19:42] But the employer your company has to match that and send it to the government.
[00:19:47] So a lot of these payroll tax.
[00:19:49] Now don't forget food or soda too.
[00:19:51] But there's no match there though.
[00:19:53] You know they keep money.
[00:19:54] Oh it doesn't come out.
[00:19:55] Yeah I get what you're saying.
[00:19:56] It's an employer tax.
[00:19:58] That's right.
[00:19:58] So they take all this money that they're like oh wait no I'm not sending this
[00:20:03] They keep millions millions.
[00:20:05] Look back at our true payroll crimes it's millions these folks have embezzled steal
[00:20:10] or whatever.
[00:20:11] So that's why we're like man this is a kind of a few and far apart where it's an
[00:20:15] actual payroll person that's getting caught for the crime.
[00:20:19] Yeah.
[00:20:21] Could have had a nice little clip of little Wayne Amelie.
[00:20:25] Amelie yeah no doubt.
[00:20:27] All right so this.
[00:20:28] Go ahead.
[00:20:28] Quick sidebar because I've been thinking about that.
[00:20:31] How what I think one of us or both of us have or you know we could do we could
[00:20:36] do it right in the notes in the show notes.
[00:20:38] OK then because of minutes so we got to do at 26 whatever ad clip little Wayne
[00:20:44] Amelie and that'll make it really easy for us and we'll remember.
[00:20:48] So I was thinking about I'll cut this out but I'm just saying I was not
[00:20:51] about that.
[00:20:52] Yeah all right.
[00:20:53] Take us through this true crime bro.
[00:20:55] All right so we have six main takeaways here.
[00:20:59] This article was on justice dot gov and it's about a former housing authority
[00:21:05] payroll clerk who admitted to stealing over half a million dollars.
[00:21:11] So number one the key the key takeaway is that the person put in a guilty
[00:21:17] plea Jennifer K Smith who was a former payroll clerk at milled village
[00:21:23] Ville housing authority image MHA who admitted to stealing five hundred
[00:21:29] seventy five thousand dollars by falsifying her payroll records.
[00:21:34] So the charges were and said it seemed Smith pleaded guilty to the federal
[00:21:39] program that death and faces up to 10 years in prison three years of
[00:21:45] supervised relief release and a two hundred and fifty thousand dollar
[00:21:49] fine.
[00:21:50] She is not eligible for parole.
[00:21:53] Smith overpaid herself by recording additional vacation and sick leave on a
[00:21:59] payroll which led to substantial overpayments between January 2021 and
[00:22:06] August 2022.
[00:22:08] 18 months.
[00:22:10] Yeah.
[00:22:11] Months we.
[00:22:12] Yep.
[00:22:12] 18 months is what has found has found a stat that most of these frauds
[00:22:18] run at least 18 months.
[00:22:20] Yep.
[00:22:21] And then the investigation and prosecution of this.
[00:22:24] The case was investigated by the village Ville police department the HUD office
[00:22:29] of the inspector general and the US secret service with assistant US attorney
[00:22:37] Sean Dietrich.
[00:22:39] So great call out to payroll professionals if you find something that
[00:22:43] is fraudulent like this you need to look back a few years because it
[00:22:47] runs at least 18 months.
[00:22:49] Runs deep.
[00:22:50] Yep.
[00:22:50] Yep.
[00:22:51] So don't go back just three months or six months or whatnot.
[00:22:55] Right.
[00:22:55] Go back because two years because think about it because think about it during
[00:23:00] this time between January 2021 and August 2022 when she was doing this
[00:23:05] maybe she didn't do it every payroll maybe she did once or twice a
[00:23:09] quarter or however much it was you know the same.
[00:23:11] So somebody did look back and oh we look back three months if I do it at
[00:23:15] the beginning of a quarter or in the end of a quarter like right.
[00:23:19] How are you going to tell like it's gonna be spaced out right.
[00:23:22] No you think about and honestly I would keep going back until you don't
[00:23:27] find it no more.
[00:23:29] Yep.
[00:23:29] You know what I mean.
[00:23:30] So just keep that in mind it runs at least 18 months and it's gone and
[00:23:35] we found cases that has gone longer than that it was we found one it was
[00:23:38] like six years or something like that.
[00:23:41] Remember that one.
[00:23:42] It was far back as a payroll pro.
[00:23:45] Look your leaders may not want to they may not want to unearth but if you
[00:23:49] know who did it then that's going to lead to their prosecution.
[00:23:54] This lady got 10 years up to 10 years.
[00:23:57] Yep.
[00:23:58] Oh faces up to 10 years three years of supervised release.
[00:24:01] OK up to 10 years.
[00:24:03] OK she hasn't been convicted yet then and a quarter no yet.
[00:24:06] OK.
[00:24:08] So look I'll cover the prevention methods.
[00:24:11] Yep.
[00:24:11] Sounds good.
[00:24:11] Number one prevention method is regular audits.
[00:24:15] Like we say all the time most of these folks especially if you're if
[00:24:19] the if it's the payroll person they it's oversight somebody's not paying
[00:24:24] attention and looking at what this person is doing trust but verify OK.
[00:24:30] So that's number one and conduct a frequent and random internal audits to
[00:24:36] review payroll records identify discrepancies early.
[00:24:39] What we've learned in this show is you could actually have a third party come
[00:24:45] in right and if you're a company look you're making big money things like
[00:24:49] that your company's running good right.
[00:24:52] Hey I think either or even if you're if your margins are tight and you're
[00:24:57] like why am I not making more bring in a third bring an outside eyes.
[00:25:02] This could be somebody doing something crazy in your company and they just
[00:25:06] hiding it.
[00:25:07] I remember one of my controllers.
[00:25:09] I'm not an accounting expert but he was like look a penny one way could be a
[00:25:13] million dollars the other way.
[00:25:14] I don't know exactly what that means but right.
[00:25:18] You need to you can bring in outside eyes especially if you're good or bad
[00:25:23] you may.
[00:25:24] If you're doing really good then hey maybe you don't bring in the outside
[00:25:27] eyes often you bring it every now and then.
[00:25:29] But if you're doing bad and you need to find look you need some
[00:25:31] auditors to come through and start turning over stones going through your
[00:25:35] processes checks and balances audits all these reconciliations that
[00:25:40] describe all that right.
[00:25:42] Schedule quarterly semi annual audits by independent or external auditors
[00:25:46] as I say I was going to add this in the start up and ensure accurate
[00:25:50] payroll processing.
[00:25:51] Number two.
[00:25:52] Second segregation of duties this is some of this stuff is it should be
[00:25:57] obvious but we're payroll pros so that's why to us is like what so
[00:26:02] often we talk about how how like the payroll person the person cutting the
[00:26:08] check should not be the person updating the employee records.
[00:26:12] Agreeing definitely not be the same person creating new employees.
[00:26:16] Yes.
[00:26:17] Honest.
[00:26:18] Honest if you're at a shop where you have to do everything that that is
[00:26:21] a recipe that's a recipe for a bad outcome you know fraud.
[00:26:28] The recipe for fraud.
[00:26:29] If I'm responsible for entering new hires and I'm responsible for cutting
[00:26:33] checks if I'm responsible for all that and I and I and like even banking
[00:26:39] information updating banking information all that stuff.
[00:26:41] Oh heck no.
[00:26:42] But like.
[00:26:43] Heck no because look let me tell you so it's a few things right one
[00:26:47] call out ghost employees right.
[00:26:49] I'm so proud or yeah proud of ourselves because we've had payroll pros
[00:26:55] our colleagues tell us that they learned about ghost employees on this show.
[00:26:59] Yep.
[00:26:59] Okay.
[00:27:01] Oh my gosh I thought that was common right but so each one teach one we
[00:27:05] learn something and then oh man I missed it what was the other thing.
[00:27:12] The ghost employees and oh the system allows for duplicate bank account
[00:27:24] numbers.
[00:27:25] Yes that's a good call out.
[00:27:26] Okay it's not a bad thing because think about it how many husband wife
[00:27:32] mother daughter father son parents child combinations work at the same
[00:27:40] place husband wife or let me let me be more partners work at the same
[00:27:46] place they can have the same account getting deposits in the same account.
[00:27:51] So the system actually has to allow for duplicates and I have not run by a
[00:27:58] system yet that alerts you that it's a duplicate because at the very least
[00:28:03] they should say hey this is a duplicate direct deposit and maybe folks if you
[00:28:06] listen in some of any systems people out there are listening that should be
[00:28:12] a call out but the work around is as a payroll pro you need to run those
[00:28:17] just do an audit see how many direct deposit accounts duplicate like how easy
[00:28:22] put in a spreadsheet show duplicates.
[00:28:25] Here's another point to think about right like the SSA which is the social
[00:28:29] security admin that require employees to have a social security number before
[00:28:34] they start working it's the IRS that requires employees to have a social
[00:28:39] to report wages.
[00:28:40] Oh my you can walk we can granular up in this piece with the stuff.
[00:28:46] Heck yeah you're absolutely right.
[00:28:47] So you both yes that's right so you can go a certain amount of time without
[00:28:54] that really because if you at the end of the year depending on your job they
[00:28:58] really only need it at the end of the year so if you start in January
[00:29:02] and depending on how you how come how what's the word I like to use
[00:29:07] sophisticated and procedures are you could go a whole year look at your
[00:29:11] Chipotle got burnt years ago for search they had illegals with social security
[00:29:18] numbers that people were dead they were babies all kind of stuff.
[00:29:22] I remember back in the day New York the hustle was folks like getting other
[00:29:26] kid getting kids socials and all that.
[00:29:30] You can't you can't get on my taxes.
[00:29:32] Yes how crazy is this folks but payroll pros they they're all kind of
[00:29:37] little things there that you got to check.
[00:29:39] But here's the thing though the system does alert you for duplicates social
[00:29:44] that I can see that I've seen.
[00:29:46] I don't know if there are systems that don't alert you but the system that I
[00:29:49] use most recently absolutely alert you right there.
[00:29:53] Boom this is a duplicate so.
[00:29:55] So most payroll systems should do that.
[00:29:59] Should they all do is a thousand payroll systems out there that I'm
[00:30:03] sure not all of them are sophisticated and saying and then look some places
[00:30:09] don't even use a payroll system.
[00:30:10] You could just have a process in place and use a combination of spreadsheets
[00:30:15] and a low tech way to cut checks and easy.
[00:30:19] You got a nice spreadsheet but you don't even need a payroll system.
[00:30:22] If you like the right let's say you're a mom and pop you got 20
[00:30:25] employees you could do payroll on the spreadsheet.
[00:30:29] So just and that's where these things run amok is like these one off mom
[00:30:34] and pop places not a lot of employees they fly under the radar things like
[00:30:38] that back to the list.
[00:30:40] That's why they need the segregated segregation of duties.
[00:30:44] So if you are a payroll HR professional doing both I would suggest to you if
[00:30:51] you really want to be if this you want to make this your career you
[00:30:54] make sure that you have oversight that you go to say hey I need somebody
[00:30:59] to sign off and order my stuff.
[00:31:01] You guys need look I can do it all but you got you all need to bring an
[00:31:05] auditor in at least quarterly to make sure everything is good.
[00:31:09] Right.
[00:31:09] I mean you all feel good.
[00:31:11] It's transparency right.
[00:31:13] What else it says separate the payroll functions to prevent a single
[00:31:16] employee from having control over the payroll process assign different
[00:31:20] employees to handle payroll processing approval record keeping implement dual
[00:31:25] control systems where one person enters data thing and another person
[00:31:30] refuse and approves it.
[00:31:31] Yeah.
[00:31:32] So number three automate payroll systems automated payroll systems
[00:31:39] basically a more sophisticated system utilize automated payroll systems with
[00:31:44] built in checks and balances to reduce the risk of manual errors and
[00:31:48] fraud implementation invest in a payroll software that flags unusual
[00:31:53] entries allows for automated calculations and includes robust access
[00:31:57] controls.
[00:31:59] One of the things that we teach in the court and the payroll course is what
[00:32:02] is it.
[00:32:03] I forget the terminology it is but invest in good payroll systems or
[00:32:07] forget the word and but I've had folks ask what does that mean good
[00:32:11] payroll system and this is what it means is have the automation and the
[00:32:15] built in checks and balances the robust access controls the security
[00:32:19] controls meaning I can set up somebody that only has access to employee
[00:32:24] profiles but not payroll and I can set up somebody that's only has access to
[00:32:29] payroll and not employee profiles.
[00:32:32] Ball I do both as a super admin you can do both but guess what would I do
[00:32:37] when I'm super admin I make sure that I don't have access to payroll
[00:32:42] because I don't need the access to pay I should not be processing payroll
[00:32:45] as a super admin.
[00:32:46] You know what I mean.
[00:32:47] So I can be a super admin without access to every single module I can
[00:32:51] see and view all but it doesn't mean I need to edit and have process all
[00:32:56] right.
[00:32:57] That's true.
[00:32:57] That's what access control yeah that's what access controls means you can
[00:33:02] maybe see everything but like when my leaders oh I want access to
[00:33:05] everything I'm like look I'm gonna give you view you can see everything
[00:33:08] but you can't be in there touching everything you don't know what you're
[00:33:11] touching and clicking I don't need you messing something up that we
[00:33:14] spent months building.
[00:33:15] You can have view access but you're not editing everything I'm sorry
[00:33:19] that's the whole purpose of having the super admin right.
[00:33:22] So number four is regular training and awareness.
[00:33:26] Yep.
[00:33:27] Provide ongoing training for employees on fraud prevention ethics and
[00:33:31] reporting procedures like we've seen.
[00:33:34] We've this kind of gets into like to the hacking right.
[00:33:37] This brings about cyber security.
[00:33:39] It just rings cyber security where me and what I have seen
[00:33:42] successfully hackers go into our system reroute employees paychecks
[00:33:47] to another account and it still hasn't been solved right.
[00:33:51] All they can chalk it up is to they were hacked and we can't prove any
[00:33:54] different so that the company's lost money at that point.
[00:33:58] But what do we do in that situation.
[00:34:00] We reached out to the payroll provider to look at the IP address of
[00:34:04] where the change occurred and we found out that the change.
[00:34:08] So one of the employees lived in another state and the change happened
[00:34:13] on an IP address that was in another state right.
[00:34:17] Like thousands of miles away.
[00:34:20] So the person's that I was here I never visited that state.
[00:34:23] I wasn't there.
[00:34:24] I don't know how that happened.
[00:34:26] I need my money.
[00:34:26] I'm skeptical right away.
[00:34:27] I'm like but if they can't prove it.
[00:34:29] Yeah no if they can prove it you need to get your employee whole and
[00:34:33] then you can still do the investigation.
[00:34:35] Look if you find out it was them that's a whole nother case.
[00:34:38] That's a whole nother story.
[00:34:39] You deal with that accordingly.
[00:34:40] So back to the training piece provide the training host annual training
[00:34:45] sessions or I would even say more frequent depending on the how stable
[00:34:52] your processes are and distribute materials that emphasize an important
[00:34:56] importance of honesty and process for reporting suspected fraud.
[00:35:01] Look yes that's the right thing to do put the put that communication out
[00:35:05] there let people know look fraud you want to keep a job fraud.
[00:35:10] Hurts the business fraud puts people out of business companies out of
[00:35:14] business you know what I mean.
[00:35:16] You want your share that because more often than not if your employees
[00:35:20] happy then they're like no I don't want the business to share any job.
[00:35:24] You know what I mean.
[00:35:25] Yeah.
[00:35:26] Number five is whistleblower protections.
[00:35:28] That's a good one as well.
[00:35:30] Establish and clear channels for employees to report suspicious
[00:35:34] activity anonymously and without fear of retaliation.
[00:35:39] That's perfect because it says the manager that is doing something shady
[00:35:44] and one of the subordinates or one of the employees finds out hey
[00:35:50] something is going on I don't agree with it.
[00:35:52] I found out that Walt was doing this I found out what that John was
[00:35:56] doing that I want to tell somebody John.
[00:36:01] This is interesting though because I wonder if there are third parties
[00:36:04] that do it because it says create a confidential reporting system and
[00:36:07] ensure employees are aware of the procedure and protections in place.
[00:36:10] But when they say oh we're doing an anonymous survey employees don't believe
[00:36:15] that by the end of the year I mean they never believe it if your HR
[00:36:20] department is good or your company is good they do they're not they are
[00:36:24] anonymous and but you should try to get because there are third party
[00:36:28] places that you can do that will keep it anonymous and I wonder if it's
[00:36:32] the same thing like if folks because that would be good make sure you get
[00:36:35] a third party that does it if they're doing it in house then no it's probably
[00:36:39] not going to be anonymous they just say it is and they won't hopefully don't
[00:36:43] do anything but but no but still if your company has a whistleblower
[00:36:48] protection policy practice in place then you can probably sue them if they
[00:36:53] violate it.
[00:36:54] If it's in writing right then you can probably sue them if they
[00:36:58] violate it so keep that in mind if your company has things written down
[00:37:03] that's legal stuff.
[00:37:05] And how many times if you catch somebody doing something maybe your manager
[00:37:09] isn't the only one in on it but maybe maybe the company is committing fraud
[00:37:14] like we were just talking about not paying the employer portion of those
[00:37:17] taxes you find out about that and you go tell the CFO the CFOs don't worry
[00:37:22] about that or whatever and everybody's in on the shadiness at that place.
[00:37:27] I know it's far-fetched in our profession and stuff like that but hey
[00:37:30] it might happen there might be a situation where it's not just one bad
[00:37:35] apple it's a barrel of rotten apples you know what I'm saying.
[00:37:39] So if you do go tell somebody and you find out that you're the one who
[00:37:44] comes about that you're the one who's getting fired or laid off
[00:37:47] because you tried to do the right thing maybe there might be like Brian
[00:37:51] was saying maybe there's a third party protection out there that you
[00:37:54] can reach out to and be like hey I found this out and look at what happened
[00:37:59] to me I was retaliated against I got fired or threatened or whatever it may be.
[00:38:04] Yep absolutely and the last one is like we say all the time with these
[00:38:08] things manager oversight okay implement strong oversight by senior management
[00:38:13] to review and approve payroll and financial transactions regularly.
[00:38:18] I'm glad they said financial transactions because you know the other
[00:38:20] side of payroll is AP accounts payable right so there's another
[00:38:25] person paying your vendors and payroll org actually includes accounts
[00:38:31] payable into their mix like there's a section in the magazine about them
[00:38:36] and all that stuff so accounting account payable professionals are part
[00:38:40] of this right and that'll be a good call out we should get like an
[00:38:43] account payable professional to come on every now and then talk about
[00:38:46] some things because like the other side right there are there are
[00:38:49] colleagues for sure I'm glad financial transactions because not just
[00:38:53] payroll and then require periodic reviews of payroll reports by senior
[00:38:56] managers dedicated oversight committee to catch irregularities early.
[00:39:01] Yes.
[00:39:03] Yep yeah look by integrating these preventative measures organizations can
[00:39:07] significantly reduce the risk of payroll fraud and improve overall
[00:39:12] financial integrity.
[00:39:14] One thing that really wasn't touched even though we said the
[00:39:18] automated payroll yeah there might be some tools out there that may
[00:39:24] help you catch those anomalies those things that may call it out.
[00:39:28] Celery our friends of the show at celery dot com like the
[00:39:33] vegetable celery dot com they have a tool that will look at the
[00:39:37] history of your payroll and call out an anomaly anomalies.
[00:39:41] Anomalies.
[00:39:42] So that's a sort that's but yeah I think it's too early.
[00:39:47] We're still so early in the A.I.
[00:39:48] game and this is still an area that is how can you say I don't
[00:39:55] sensitive but they're not going to rush into payroll financial with
[00:39:59] A.I. so hard right now.
[00:40:02] Tiffany Gray shared with us she's building A.I.
[00:40:06] out but on the customer service part like commonly asked questions
[00:40:11] things like that where it could help employees pay my check is
[00:40:15] wrong.
[00:40:16] What is it you can teach A.I.
[00:40:17] to walk through those things with our employees paycheck so that's
[00:40:21] where they're starting with it.
[00:40:22] I think it's going to get there.
[00:40:23] You know me like I said with A.I.
[00:40:25] I want to be able to talk to the system and say hey show me all
[00:40:30] these things we can do it all with a spreadsheet running reports
[00:40:33] and doing our magic with Excel gymnastics and but I want to talk
[00:40:37] to the system and say hey show me all checks kind of you just tell
[00:40:43] it what to look for and that'll be training it too.
[00:40:46] Right.
[00:40:47] And because if your company has anyway you can do it right because
[00:40:51] you can build it you're going to have normal trending things and
[00:40:56] then you want to know what's outside those trends.
[00:40:58] So anywho great great conversation I love it man I love it.
[00:41:03] This was a good one.
[00:41:04] I'm feeling it.
[00:41:05] I'm excited about the new segment or new format of the show right.
[00:41:10] Yep.
[00:41:11] And then to close it all out we got a safe talk question.
[00:41:15] Considering Smith's case the case study that we did up there about
[00:41:20] Jennifer K Smith are the current legal consequences for such
[00:41:24] fraud adequate to deter any future crimes like this or should
[00:41:31] there be changes in how fraud cases are prosecuted and
[00:41:35] penalized.
[00:41:37] So what do you think.
[00:41:38] Was it harsh enough.
[00:41:40] I look I think that did you see if she was sentenced yet because
[00:41:44] I saw you highlight the name.
[00:41:45] I know it's still pending because as a January 24 all they
[00:41:51] ordered her so far was to pay back five hundred and forty eight
[00:41:55] thousand of that money so far I haven't seen any sentencing yet.
[00:42:00] OK so my opinion is because we've now done a good amount of
[00:42:06] these shows what I've noticed is and I don't know if you notice
[00:42:11] the same thing.
[00:42:12] The sentencing is looks like it's getting more severe.
[00:42:15] I've seen folks steal the same amount of money and get three
[00:42:19] years.
[00:42:21] She's facing up to 10 with a three year supervised parole or
[00:42:26] something like that.
[00:42:27] Yeah at least supervised release.
[00:42:29] I think it's getting more severe.
[00:42:32] I have been hesitant to say in prior shows that it wasn't
[00:42:36] severe enough.
[00:42:38] So I don't know what drives it because honestly I was scared
[00:42:42] to say it like if somebody I don't know I don't want to do
[00:42:48] one day in jail.
[00:42:50] I mean it's definitely enough for me.
[00:42:53] Yeah you know I mean.
[00:42:54] Yeah unfortunately I have an idea of what it looks like in
[00:42:58] there.
[00:42:59] You know what I mean.
[00:43:00] And I don't want to go anywhere near it.
[00:43:03] You know I mean no desire.
[00:43:05] No desire man didn't like visiting them don't ever want to
[00:43:09] be on the other side of one.
[00:43:10] Yeah and look it might be the state that she's in right
[00:43:13] because this woman lives in Georgia.
[00:43:15] Yeah and she had like see but I did know I do notice that
[00:43:20] the federal government or some federal agency always gets
[00:43:24] involved in these things.
[00:43:26] FBI like forget about Homeland Security in one of the cases
[00:43:30] we were looking at.
[00:43:31] There's a special agencies and task force within the
[00:43:35] government.
[00:43:35] I get all the news feeds and there's all kind of stuff I
[00:43:38] do.
[00:43:39] But I guess it's all relative right.
[00:43:41] I do think they are severe enough.
[00:43:43] What do you think.
[00:43:45] No I think so.
[00:43:46] I think look she stole that money.
[00:43:48] They could have just said hey pay it back or whatever.
[00:43:51] Look there's not only the sentencing from a legal
[00:43:54] standpoint it's the credibility loss of credibility to your
[00:43:57] name.
[00:43:58] Oh heck.
[00:43:59] The reputation that you have.
[00:44:00] Hey you'll never you'll never probably be able to work in
[00:44:02] payroll ever again let alone any financial situation.
[00:44:07] So like I don't know where who would like I don't know
[00:44:10] what I would trust her with this type of person with
[00:44:13] look.
[00:44:14] I understand.
[00:44:15] Look she said in the article she was like I know I
[00:44:17] messed up I messed up and oh really.
[00:44:19] Yeah she said that.
[00:44:21] Look at the end.
[00:44:23] That does everybody deserve a remorse or whatever.
[00:44:26] Yeah.
[00:44:27] Does everybody deserve a second chance.
[00:44:29] Sure.
[00:44:29] But I don't know if she did.
[00:44:30] I don't know she's going to get a second chance in
[00:44:32] the payroll world.
[00:44:34] Well heck no.
[00:44:35] She definitely doesn't deserve any other chance and any
[00:44:38] financial anything.
[00:44:40] Respond I immediately think I'm trusting you I don't
[00:44:43] want you around my children.
[00:44:45] I don't want you around.
[00:44:46] You know what I mean.
[00:44:47] I'm not sure what she would be.
[00:44:50] I would able to be trust with.
[00:44:52] That's true.
[00:44:53] Because if you know if you if you're a thief you're
[00:44:55] going to find a way to steal.
[00:44:57] Yeah.
[00:44:58] Bottom line or you're going to always have somebody
[00:45:00] looking over your shoulder and like what you're
[00:45:02] doing and I've always been.
[00:45:06] Even if she's able to.
[00:45:09] What's that.
[00:45:11] What was that.
[00:45:12] No I've always been a thief right.
[00:45:14] Like you were saying if I've always been a
[00:45:16] thief yeah and I've always stolen from you
[00:45:19] even if you forgive me you're going to be
[00:45:21] like hey you're going to see me with a long
[00:45:23] handle spool or not even let me in this
[00:45:25] neighborhood same as you are if you do it
[00:45:27] you're going to be like stuck in my side.
[00:45:29] Hey what you doing.
[00:45:30] Yeah yes.
[00:45:32] Well I say even if she pays it back I
[00:45:35] think she should do some time or do that
[00:45:37] three years supervised release type of deal.
[00:45:40] I mean even if you think about it even if
[00:45:41] she's able to pay it back as damn you
[00:45:43] had it doesn't add it like that.
[00:45:46] Yeah because no if you can't pay it back
[00:45:47] immediately you need to go you need to
[00:45:49] you need to get more harsh time if you
[00:45:51] can pay it back immediately then OK great
[00:45:54] money's back but then it's what harm have
[00:45:57] you done.
[00:45:57] Did you do any harm because you know how
[00:45:58] they say oh it's what do they say on
[00:46:02] when the crimes don't impact anybody or
[00:46:04] something like that I forget the phrase
[00:46:06] but that's not true all the time like
[00:46:08] is usually a victimless crime that's
[00:46:12] what they say is crime yeah if you
[00:46:15] prove it and look and look who knows
[00:46:19] how this is going to impact that
[00:46:20] company right.
[00:46:21] That's what I'm saying.
[00:46:22] You stole that much in 18 months maybe
[00:46:26] in the future we saw what we did one
[00:46:27] true payroll crime where the person
[00:46:29] stole from a company and it caused
[00:46:31] businesses to shut down because of
[00:46:34] how they were still in.
[00:46:35] They were for a PEO type of set up
[00:46:37] and they were still in all this
[00:46:38] stuff and multiple businesses had to
[00:46:40] shut down.
[00:46:42] Yep.
[00:46:44] Exactly right.
[00:46:45] Good one man.
[00:46:46] Good stuff today.
[00:46:48] Thank you all for joining us as we
[00:46:52] embark on our new format.
[00:46:55] I like it.
[00:46:56] I'm feeling it and check out next time
[00:46:58] we're going to start hitting the
[00:46:59] states we're going to start talking
[00:47:01] about what you need to know in in
[00:47:03] each state as an employee right.
[00:47:06] And as a payroll person like again
[00:47:09] everything we do impacts the pay the
[00:47:12] employee so payroll pros get to now
[00:47:15] see it from both sides.
[00:47:17] Oh man maybe maybe they'll be like
[00:47:19] oh wow I didn't think about it like
[00:47:20] that.
[00:47:21] Yeah.
[00:47:21] What else before we go.
[00:47:22] Now good man.
[00:47:24] Well the good show.
[00:47:24] Looking forward to this and to each
[00:47:27] of you that are listening.
[00:47:28] We appreciate you.
[00:47:28] We love you.
[00:47:30] Until next time.
[00:47:32] Peace.
[00:47:41] Before we sign off here are a
[00:47:43] couple quick things.
[00:47:44] Don't forget to follow it's about
[00:47:46] payroll LinkedIn and it's about
[00:47:48] your paycheck on Facebook and Tiktok.
[00:47:51] Thank you for being part of our
[00:47:53] payroll community and thank you
[00:47:55] for being a part of this journey
[00:47:57] with us until the next time.
[00:47:59] Keep learning keep growing and
[00:48:00] most importantly keep going.
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