From payroll to accounts payable (AP), B2B payments fraud continues to threaten organizations of all sizes, industries and geographies.
It’s a risk to which no one is immune, even billionaire investor Mark Cuban, who recently spoke with reporters at CNBC about his own experience dealing with a nasty case of AP fraud.
In this week’s B2B Data Digest, PYMNTS uncovers the latest stories in B2B payments fraud from Cuban and others, including a busted invoice fraud ring in India, plus the latest on the ongoing MyPayrollHR fraud saga.
Nearly $13 million was defrauded out of two finance companies over nearly six years by MyPayrollHR, admitted the payroll company’s CEO, Michael Mann, who pleaded guilty to a charge of conspiracy to commit wire fraud, reports in the Times Union said. Mann admitted to conspiring to fraudulently secure loans worth millions of dollars for Mann’s own companies. To do so, he reportedly represented false invoices allegedly owed to those companies in the form of accounts receivable. Reports noted, however, he has not entered a plea in response to charges of bank fraud.
$82,000 was stolen from Cuban’s first company via AP fraud, the entrepreneur told CNBC. He reflected on the experience that occurred at his first company, MicroSolutions, when he was only 24 years old. “I’m like, ‘OK, for our accounts payable, we print out the checks to the vendor,’” he recalled, adding that those checks were then given to a receptionist to pay suppliers. Yet that receptionist forged those checks to pay herself, leaving just $2,000 left in the company’s bank account — a scenario Cuban ultimately said helped him get more serious about his business ventures.
More than $300,000 was embezzled from a California company through its corporate card, reports in VC Star said. An internal audit of the Simi Valley business found one employee recently promoted had been misusing the company’s commercial card to make unauthorized purchases, while that individual is also accused of manipulating the firm’s payroll system to overpay herself. That employee has been arrested, reports said.
$740,000 was stolen from a Washington county via phishing attack, local Tri-City Herald reports said. An email posing as a legitimate construction vendor for Benton County requested an invoice payment, and a government employee fell for the scam that had convinced the employee to change the payment details for that particular vendor. Authorities were able to recover a majority of the funds. The case coincided with separate reports in The Durango Herald of a similar scam targeting county officials in New Mexico, which led to $447,000 stolen from Bernalillo County.
$4.5 million was embezzled from an Oregon company over a decade by a woman accused of submitting fraudulent invoices for a fake vendor. According to KEZI reports, that employee would then generate checks in AP to pay that false vendor, wielding her position in the company’s accounting and finance departments to then direct those payments to her personal account. The employee reportedly admitted to mail fraud, aggravated identity theft and tax evasion.
A $168.7 million invoice fraud ring was busted by Indian officials, the Hindustan Times reported recently. Three men were arrested under new Goods and Services Tax (GST) regulations following an investigation, which reportedly discovered the men allegedly falsifying invoices and companies in order to steal funds from iron and steel manufacturers.