Scary “Tricks” Played on Companies
In honor of Halloween, I’d like to share some of the scariest situations I’ve encountered at companies. Unlike Halloween, no one asked whether these companies would like a “Trick or Treat.” They just got tricked.
Here are just a few of the situations I’ve encountered:
• A son who was stealing from his father’s business because he thought his salary was too low. After dad died and mom was made CEO, instead of him, he was so angry he confronted his mom with a knife. Talk about “A Nightmare on Elm Street.” Wonder if he ever got invited to Thanksgiving dinner again. I bet he doesn’t get to carve the turkey.
• A CFO who was been stealing a business blind but the CEO wouldn’t believe it. (He did once we presented him with the folder from the CFO’s computer desktop with a list of all the money he stole and how he spent it. How I love an organized thief.) His father-in-law paid it off so he wouldn’t go to jail!
• A business owner who lost his boat building company because he proudly appeared on the cover of a magazine with his bikini-clad girlfriend in the background. His wife was not amused. She filed for divorce and got control of the company, which was started with her daddy’s money.
• A Texas-based company that overstated its inventory and received a larger loan that it should have qualified for and defaulted on the interest payments. . When I took over as CEO, I discovered that we were $75 million short in inventory. That’s a number that will keep you up at night. The bankers were stunned and prosecuted the CEO and CFO!
• A company president who owed the mob several hundred thousand dollars for gambling debts was stealing and giving the merchandise to the mob right from the plant loading dock at night. The mob then applied the value of the items to his debt. These guys didn’t even have to wait for merchandise to “fall off a truck.”
• A refrigerator warehouse company forced into bankruptcy because the CEO was paying more attention to his hobby of breeding the perfect bull and less on keeping frozen things frozen. Which is kind of crucial to a refrigeration company. I had to liquidate both the company’s and his hobby’s assets, so I held an auction to sell the bull sperm. It went for the discount rate of $75,000 a gallon. So somebody got a treat that day — a deal on bull sperm. And that’s no bull!
• A production manager at a designer haute couture manufacturer was selling the overrun of $5,000 dresses to discount retailers. That worked so well, he eventually escalated his scheme and bought excess material that he wrote off as scrap and then had it made into dresses to also sell out the back door.
• A bookstore where the controller diverted the Discover merchant account for his own use. The stores kept routinely depositing into it and ended up paying off the guy’s entire mortgage. A federal judge sentenced him to five years!
The lessons learned from these types of occurrences are that you have to keep your eye on every aspect of your company and trust your gut when things don’t seem to add up.
The scariest part? These things could happen to your company. And there’s definitely no treat involved.