How $16 Million was Stolen from a Bakery

Day 24 of 30 Days of Fraud

The Theft

Is it possible to steal over $16 million from a bakery?

Well, yes. Sandy Jenkins, controller of Collin Street Bakery in Corsicana, Texas, did just that, making off with more than just the fruitcakes.

$16 million stolen from a bakery

The picture is courtesy of AdobeStock.com

How was the money used?

  • $11 million on a Black American Express card
  • $1.2 million at Neiman Marcus in Dallas
  • 532 luxury items, including 41 bracelets, 15 pairs of cufflinks, 21 pairs of earrings, 16 furs, 61 handbags, 45 necklaces, 9 sets of pearls, 55 rings, and 98 watches (having an approximate value of $3.5 million)
  • Wine collection (having an approximate value of $50,000)
  • Steinway electronic piano (having a value of $58,500)
  • 223 trips on private jets (primarily Santa Fe, New Mexico; Aspen, Colorado; and Napa, California, among other places), with a total cost that exceeded $3.3 million
  • 38 vehicles, including many Lexus automobiles, a Mercedes Benz, a Bentley, and a Porsche
  • And more…

How the money was stolen

Jenkins would print a check to his personal credit card company, for example, but would void the check in the accounting system. Then, he would generate a second check for the same amount to a legitimate vendor, but he would not mail the second check. Jenkins would mail the first check to his credit card company. The result: Jenkins’ personal credit card was paid, but the general ledger reflected a payment to an appropriate vendor.

The Weakness

No one was comparing the cleared check payees to the accounting system.

The Fix

Someone other than those who create checks should reconcile the bank statements to the general ledger. As they do so, they should compare the cleared check payees to the vendor name in the accounting system.

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6 thoughts on “How $16 Million was Stolen from a Bakery

  1. Who was reconciling the checking account? Did they not notice (foolish me) that voided checks were clearing and outstanding checks for the same amount were still outstanding? Or was Jenkins also reconciling the bank accounts.

    • David, good question. The articles I read about this theft did not disclose who was reconciling the account, but I got the impression Jenkins was reconciling. Otherwise, someone would have (should have) noticed the scheme earlier.

  2. What about check 21? As an auditor, we are lucky if there is even a blurry, tiny copy of a check to look at. Only the front, no back of the check for signature comparison or account numbers. You can’t rely solely on the bank reconciliation process to catch this kind of thing. Someone who knows the business should be looking at vendors, and wondering why they are getting paid so much. Bank Recs are always an easy recommendation, but there are other indicators to look at.

    • Betty, I so examined cleared checks, but, yes, I can’t see the back of the checks, though, on occasion, I have requested the backs of checks. Without seeing the payee on the cleared check, this type of fraud is always a possibility. I agree that “looking at vendors, and wondering why they are getting paid so much” is a good step.