Errol Andam, a former Nike marketing employee, was charged with embezzling $1.5 million from Nike over a two-year period before Nike’s internal investigators caught on to his scheme. Andam managed the operations and design of pop-up retail venues, which were located at sports competitions and many other events across the United States. Mr. Andam enlisted a friend to start a company, so that Andam could hire that company as an independent contractor to build out the pop-up venues. Andam then used that same friend’s credit card reader when making sales at pop-up events. The proceeds from those sales went to his friends’ company and eventually, back into Andam’s personal bank account. He now faces 30 years in prison and fines up to $4.5 million dollars.
According to the Association of Certified Fraud Examiners, 69% of embezzlement schemes last up to one year and many last three years or more before they are discovered. Just as the study finds, the Nike case lasted two years and resulted in a $1.5 million loss.
In the aftermath of an embezzlement case, businesses often scramble to reinforce internal controls to avoid repeating the same problems which is good, but businesses really need to make a long-term commitment to staying vigilant to protect assets and employing a robust system of checks and balances.
Remember, every company is different and protecting it is not a one size-fits-all proposition and even a sophisticated company like Nike can fall victim to internal fraud. Staying vigilant with effective internal controls that grow and evolve as the business does is one of the best ways to reduce fraud risk.
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