#233 - 3 Ways Youre Being Stolen From w/ Steven Carstens

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. Today. Luke, another awesome, awesome doom and gloom episode. One of my favorite. We brought in Steven Karsten here with SGC Accounting. He's going to tell us the top three ways that you are getting stolen from at your dealership right now.

Luke, Jeff, you. I don't know. I don't understand why you always worried about how you're being stolen from it. Do you have something to tell us all?

It sounds like it's maybe some sort of a self manifesting thing. Stephen, introduce yourself to everybody. Tell us who you are, where you're from, what do you do?

Hi. Thanks Jeff and Luke. I'm Stephen Kostins. I'm a partner with SGC Accounting. I head up the audit division. And so, yeah, when fraud is discovered, it's usually my problem to deal with it. That's awesome.

And so I got introduced to you through a mutual friend that's in my 20 group. And they related to an experience to me that when they got, they had kind of a wild ride to get into their dealership, right? And some death and some kind of takeovers and this, that and the other. And so I think they had a period of time in their dealership where no one was really watching. And they came to you guys and said, hey, we need to do some accountant work. Steven, pick it up from there. What happened in this dealership and what did you find?

Yeah, so unfortunately the principal had passed away and his wife took over the dealership. And they had a general manager who they paid a lot of money to to sort of run it because she wasn't experienced in dealership. And as is the case, unfortunately, most dealers don't get serious accounting work if they don't have to. And it was their bank who insisted that they be audited. And so on my first visit for the audit, I showed up there and I'd sent a list of stuff to prepare for the general manager to get ready for us. And we showed up. And one of the things that we do, and it's a very important step, is we recount the cash collected and we pick random days. We go run our own reports out of IDMs or automasters and we see how much cash was collected for the day. And then we get the deposit slips and the credit card reports and the bank statements and we trace that money, making it all the way to the bank account. Honestly, once money is in the bank, you have a much lower chance of being stolen from. It's always intercepted before it makes it to the bank. So we trace the money all the way through the bank account and see that it got there. And when I showed up, the general manager was like, oh, I've got those bank statements there, the deposit slips. Oh, I've all sorted it. You almost don't even have to do any work. And the way he said it, I was like, okay, I'm doing twice as much work now. The way he said it, I just. I was like, I'm doing twice as much work right now. And so we start looking at things and, you know, the report said they collected $10,000 and $10,000 was deposited into the bank account. Fine. But there was no real breakdown of cash and check and credit card and stuff like that. And so I reran some of my own reports to get the breakdown of cash and check and credit card. And then the deposit slips that they gave me were just a grand total with no details. So I then got the bank statement and I got that tiny little picture of the deposit slip that's on the back of the bank statement. I actually took a picture with my phone so I could zoom in on it. And on that is written the how much cash, how much check, how much money order. Well, FEA or IDMS was telling us they collected like $9,000 in cash. That deposit slip had $100 of cash deposited and it had a $9,000 check deposited, which made the totals the same. But, you know, somehow they had taken 9,000 in cash and turned it into, you know, $100 in cash and 8,900 in check.

So.

And as soon as I saw that, I mean, it shouldn't be substituted for cash. I mean, cash is cash, check is check, it shouldn't be substituted. That's when I told the owner right away. I didn't yet. I mean, I didn't know yet, but I knew something was not right. That's when I told the owner. And we actually contacted the banker and we actually got copies of the check that made up that that was substituted for the cash. It was a check from their own CPI company. And his scam was this. He could call in CPI claims on anybody he wanted. So. And nobody checks that stuff because it's your own money coming from your reinsurance back to your dealership. There's not too many safeguards. So he would just call in a CPI claim, get a check from the CPI company. No one at the dealership is really, besides him knows that that check is coming and it's not even necessarily a real cpi. And now he has a check made out to the dealership and he could then substitute it into the deposit, take up the same amount of cash.

Oh my God.

And deposit that deposit. And as long as all the totals match, no one was any the wiser for sure. And so he was just calling. And then it's so funny because that lady separately had previously, she said, man, I never make any money in my reinsurance company.

Well, that should be a red flag right there.

That's because he. Quarter of a million dollars in six months. Oh my gosh. He had pulled through that, through that scam.

So did it through the reinsurance company. That's how he stole it.

A lot of it. There was some other. He did similar things where like some old repos that everyone had forgotten about were sent to the auction and the check came in and no one was really expecting that check and he could substitute that check in as well. But the majority of it was him calling in fake reinsurance claims and then substituting them into the deposit and pocketing the cash.

Hey guys, real quick. Buckeye Dealership consulting. We talk about reinsurance companies and how every so often, if you have the wrong checks and balances, you could have a manager issuing a CPI check back to your dealership or a service note. Right. I mean, if you get a service check that comes in and you didn't expect it or you didn't account for it on your service income, they could swap it out for cash for sure.

You know, that's one of those things, you have to have checks and balances. And one other thing, if, if somebody tells you your reinsurance company is not making money, you need to check because, you know, Jeff and I, we've talked about the really way, great way to build wealth in this, in this industry is through reinsurance. And if your reinsurance isn't making money, probably somebody stealing from me, right?

Yep, yep. And call the guys at Buckeye, get it set up and then don't get stolen from.

So again, almost all the fraud is they intercept the cash before it makes it to the bank. Once it's in the bank, it's a heck of a lot harder to steal. They need accounting level access once it's in the bank. But almost all the frauds are intercepting the cash before it hits the bank.

So for owners out there who are somewhat financial savvy, I go back and do all my reconciliations, undeposited funds, things like this Should I also pick one random day and look at the deposit like you did? Is that the way to prevent this?

Yeah, I'd do a week because they may be a day on a day off. He might not have a stock, you might not have a CPI check to substitute every day. So I do it as a week, at least a week. But yes, it's incredibly important that you double check the breakdown of cash, check, credit card, money order. Those are because if they, if they get, if they find a way to substitute in a check.

Yeah.

The totals will match and too many owners just double check the totals. Yeah. And so focus on the breakdown of cash and check. So anyways, yeah, focus on the breakdown of cash and check. That's where they're going to intercept because they know you're going to look at the total. Yeah.

What I also found too is you need to go pull your own reports like you said.

Correct.

Because they could pull a report for the day, but it ended it, you know, five minutes before closing, everything balanced, it was fine. And then right at closing someone brings in a 3 or 4 or $500 payment or does some sort of cash transaction after the report was pulled and if they don't expect you to go back and repoll that report, it could just disappear and be gone.

That is correct. There was a slightly sillier fraud where a lady, her bonus was based on collections. She would run a bunch of fake credit card payments on the Friday, run the collections report, void them on the same day, but turn in her collections report for her commission. I mean that's silly because that's the kind of stuff that will get caught soon enough. I mean that's just, that's, that's just short term stupidity. But again, you are correct. Once a day closes, the DMS is pretty much locked those kind of reports for the day. So run them, always run them the day after because those reports are then effectively locked for the day. And you can't really make previous day changes and stuff like that in most dms.

So.

So you know, run them the morning after, not the evening of.

So, so that is, that is a very interesting tale of keeping your eye on your cpi, on your reinsurance company warranty, whatever, because those checks do come in and you know, you know, I see those checks coming in. Is there a way in with this same example we were talking about a guy stealing cash. Can it happen where possibly checks come in and the same thing happened here where they could steal the checks or.

They'Re not going to steal the checks, they Would have to endorse them over to themselves. Yeah.

And there's a paper trail.

Yes, thank you. And I mean, that's FBI territory when you start doing that kind of stuff. So. So they. They want the cash. They want that immediate gratification. They want the cash. They're not gonna. Now they need to go find a friendly banker that they can talk into cashing a bunch of checks that are all endorsed over to him. They're not gonna mess with the checks. They're going to find a way to substitute something into the deposit to take the cash. So there was another dealer also in Houston, and his owner, it was a JD By Rider, his owner was very active in the dealership and really had that place on lock. And he thought he had everything sorted out and the deposit had to. You had to bring the deposit slip to him after the bank ran and he hand checked it and he also got stolen from. But this was a similar scheme, but different. What their accountant figured out is he accidentally once overpaid the state in sales tax and then the state sent a refund check for the overpayment. Well, the owner has everything so locked down that the accountant can't write his own checks. So what he did is he just started intentionally overpaying the sales tax on every deal. And the state starts to send back $200, $300, $400 refund checks for the difference. Now he has all these checks he can substitute into the deposit, take the cash. And then he always turned in just the total deposit to the owner, and the owner always checked the total deposit again, not focusing on the breakdown. And so that was his loophole turf. They didn't have. I don't believe they ran reinsurance. So he had to find a way to get checked checks that he could substitute in. So he figured if he just. He accidentally figured out if you overpay the state, they're going to send you a refund check. So he's intentionally overpaid every sales tax, got all these refund checks and switched them into the deposit.

And honestly, that could happen with any vendor, Right? Yeah, even you could. If you're not the one writing the checks, this could go on. That's interesting. I'm sure that happened.

Well, the owner was the one who signed the checks, but he wasn't doing a good enough job checking the matching invoice or checking what the amounts were. And so we highly recommend owners sign their own checks and that the invoice be attached to the check at the time of signing. It's a little bit cumbersome. But if you, you know, as long as you aren't too big of a dealership, then, then that's the way to do it. That way, you know, what you're signing matches with the paperwork.

Let's talk about that real quick, because I used to do that. Stephen.

Yeah.

And what, what I found is vendors sometimes are so pushy to get checks, and I'm not always in the office. Yes, that, that created a problem. How do you recommend getting past that? And what are some recommendations on, on us being able to do that?

I mean, honestly, a lot of people complain about that, but it's one of those things. If your policy is we write checks on Friday, then you write checks on Friday and everybody knows on Friday they can get their check. I mean, if you don't set a policy, then they're going to, you know, these, these, the vendors will try and get their check early and try and, you know, but if you have a policy, if you're consistent with your policy, if they know they get their check Friday and they get the check every Friday, those are kind of things you can, you can, you can work through. And you know, sometimes some of the vendors are little mechanic shops and they're going to complain and they're not going to want their check on Friday. And hell, sometimes they want cash. But if you're a large enough dealer, if you're a sophisticated enough dealer, you just get to the point where checks are written on Friday. And it is what it is. When you're a small mom and pop, you're going to deal with a lot of other small mom and pops as well. And those kind of things happen and we discourage it, but they just come. You eventually you just become of a decent enough size. Where checks are written on Friday, we can't onesies and twosies a check every time someone walks into the office, you never get anything done.

Yeah, you're right in my life, unfortunately. But this sounds like the cash swap is kind of the number one thing you're seeing. Whether, do you see dealers that go cashless as a good solution, where they just say, hey, we don't accept cash for payments or down payments or, or maybe they go get one of those little kiosks that take the cash for them. Is that the way to go? Just stop dealing in cash?

So 10 years ago, many of the largest dealers around went cashless. Many of them have reverted back in some form.

Interesting.

You know, when you're, when the, when every customer now has to stop and get A money order and pay five bucks for a money order. And it's, it's hard. It's hard. It is hard. So many, many do. Many, many of those dealers have reverted back to the. They do have kiosks.

Well, what we saw is when we, you know, years ago that our amount of cash we took went way down, but now it has gone back up. And when we started charging convenience, well, when our processor started charging convenience fees, our cash payment started climbing again. And I guess that's kind of expected, huh?

Yeah, expected. So.

And I think, yeah, I mean that's a pushback, but I would rather have the cash because I can deposit the cash pretty easy.

And like Luke said, if he's got the processes in place, it's not something to be scared of. Right. You've got, you're doing it right to make sure that these things can't happen or to, to prevent against them. You don't need to be scared of it.

Yeah, but it's also one of those things, you know, in the fraud triangle, it's the tempting. You've left the temptation open regardless of how by having the cash floating around, that is, you know, you've left one of the, you know, one of the corners of the fraud triangle open. The temptation is right there. So kiosks are quite popular and they're great. And the nice thing about them is the second the money hits the bank, it's technically brinks legal responsibility. So if someone breaks into the office and drags that machine off, it is not your responsibility. Yeah, they legally, they take ownership the second the money hits the machine and they deposit the money to your account the same day even before they've counted the machine. So, so I mean it, you know, it's, it is two grand a month, but.

Might be worth it.

Yeah, it might be worth it. I mean, you know, just the amount of time spent, I mean I see people in their office counting cash for two, three hours a day with their door locked. You know, what is that time worth, you know, in salary? You know, and you know, so there definitely, there is a point where enough cash is handled, where that machine just simply is a no brainer. And again, do you really want your employees making that bank deposit and carrying.

The cash and always having to go.

Yeah, always having to go and build it in safe for multiple days. And at some point there is enough cash where simply. It's totally worth it, the liability.

Probably. Fifteen years ago we used to have a safe in the dealership. Fifteen years ago, one Friday night they broke in and stole the damn safe, took the whole thing out. And I mean, it's one of those things. What do you. And I don't even. At that point, our cash reconciliation wasn't very good. So I don't have a clue how much was stolen in that process. And yeah, I mean, that's, you know, that's another one of those. Yeah.

So, Stephen, tell us what's number two? Let's. We got a limited time with you. We don't want to take up your whole day. But tell us, what is the second way that dealers are getting stolen from.

Petty cash and reimbursements? And it's. There was a large fraud recently uncovered in a Texas dealer where. And he's been a dealer over 50 years between him and his dad. And they are one of the largest operators. We uncovered a scheme where unfortunately, storage lots pretty much always want cash to get your car out of storage. And so they maintain a petty cash, and then the collections manager turns in a petty cash request to get a car out of storage, and then the repo guy go, gets it's out of storage, and then they turn back in the invoice from the storage lot. My business partner. He's also an audit partner here at the firm. He was looking at some of the towing receipts and some of the impound receipts and notice the numbers didn't add up on the breakdown. And then really started looking at it hard. And then we started to realize it looked like the VIN had been photocopied over. You know, it's a copy of a scan of a. And we're looking hard enough, we started to realize the VIN had been looked like it had been pasted over something else. True as Bob, she was making storage lot invoices and turning them in for the petty cash, and that was her support for the petty cash that she was taking. And it, you know, in just a few months, it was $25,000. Oh, wow. So, yeah, I mean, they're a big dealer, so they, you know, it's $400 every time you do a storage. So, you know, so. So, yeah, yeah, she was pasting invoices together, and it's not sophisticated, but again, it's one of those things where you think you have all the good procedures, you know, you. You put in a request, you know, and then you bring back the invoice and it all matches up and the change and everything like that, and they just made up the paperwork. So. And she's the collections manager. So who's the one who then has to charge the customer's account for that repo. It's her. So she just doesn't, you know, there's no, you know, the paper. There's a kink in the paper trail. You really need also a final check. That charge actually was charged to the customer's account. Because if you start charging people's accounts, it'll come out in the wash. Yeah.

Inside of ibms is contract AR clearing. So you should be able to go to that on your balance sheet and see that.

Right.

And if it doesn't add up, it doesn't add up.

Many dealers have no form of integration between the dm. Most dealers do not have integration turned on. They do not. So IDMS is standalone from the QuickBooks, effectively.

So.

So that just comes down. And again, if you don't put it in IDMS in the first place, it's never going to hit the books in the second place.

So.

So, you know, she's the one, she just never charged those charges to any, any.

She was just charged them to repo expenses or whatever. And they were.

Yeah, yeah, it just. Exactly. It just disappears into the, into the minutia. Yeah, exactly. That's a good point. You put that to repo expense, no one's going to look at it twice.

How do we prevent something like that, Steven? Are we auditing random invoices? Are we?

Yes, but you just have to be aware. I mean, once you, you know, just getting a piece of paper is not enough. You gotta, you know, your people have to be. Have to look over those numbers. It's so easy to get into a routine and just blank over a piece of paper or just go straight to the total. You know, you just have to be.

Cognizant every so often, question the specific details.

This is what I do. And Steven, you might, this might be right or wrong, I'm not sure. But whenever I do my 20 group numbers every month, I look at every line of my expenses and I go, okay, well why is this there? And I'll dig into it. I'll go and ask comptroller, what is this about? And then she produces the bill, says, well, this is what it is. And I look at the bill and expect it. I guess that's the only way to prevent something like that. Not that that will prevent it 100% of the time either. Right.

That will help with some of the larger items. That is a good way to catch larger fluctuations. And that small stuff. You're never gonna, you know, 500 bucks here or there.

But is it the process of just asking, you know, is it the process of just knowing that they know you're looking and you're asking, hey, what is this? And I know what it is. I can tell. I figured it out. But they know that I'm asking.

Correct. So we actually wrote an article to our clients where we, we told them to implement a fraud system where I don't even care whether it's effective. Just the fact that you pretend like you have a fraud system and you, you question some of the bills and you audit some of the stuff, regardless of whether you're, you're doing it wholeheartedly or doing it right. Just the fact that you, it looks like you might be checking things and going through things and randomly checking things, that goes a long way. People's mentality, they have to think that they can get away with it before they will do something.

Yeah. It's like your kids. If you're not looking, they're going to friggin rob your pantry.

That's what it is. So, you know, so you know, just. Yeah, I agree. Absolutely. Checking random bills, comparing your expenses, randomly picking a week of deposit, rotating employees. That's a big one. Someone, when someone else rotates into a position for a week, when someone's on vacation or whatever and they look at and they're like, hey, what, what are you doing here? I mean, it's those kind of things.

That works so well. Steven, I'm glad you brought that up because what I find myself doing is whenever we have an employee that's on a week, on a vacation for a week, I usually work their job.

Yep.

And you find out all kind of stuff that goes on that you're like, well, why did that happen? You're not making those phone calls, you're not doing that. That's something I think that every owner should, should do if you are able to do that.

Agreed. Agreed. You know, a client of mine, when he was having problems in his, in his service center, he set up office in the service center for, for a month. And the quickest way to figure things out is to be on the ground and just listening to the conversations and overhearing people talk. You'll pick up a lot of what's going on just through just your conversation.

Hey, y' all real quick to interrupt pastime. Speaking of being stolen from, don't let your cars get stolen. Put a pastime GPS in them.

No matter if you're buy your pay here, your lease here, pay here, your retail dealer pastime has a solution for you. And we talked with marshall last week about what they do on the retail side and how they actually can sell the product on the retail side and make extra money. So passtime doesn't only protect your products, they also can make you money if you do it the right way.

Jeff. Yeah, yeah, you can sell the service off when you, you know, as a retail customer who doesn't want to have a GPS in the car that they just spent 50 or 60 grand on.

Or that one you bought for your son who's driving it around.

Yeah. Or your mistress, maybe you want to keep track of it. I don't know. I don't know what you guys do, but anyways, call the guys at pastime and get set up. Steven, I mentioned to you that I thought the third one for you was going to be the service center and parts walking out the back door. And you said, no, no, no, no, that's peanuts. That's peanuts. And I was like, I go through about 60, $70,000 in parts every month. Right. My. My bills, my invoices to my parts people. That seems like there's a lot of room in there. If someone could figure out some sort of a flim flam, some sort of a scheme, they could take a lot of money.

They can, but we kind of know what cars are being worked on. We kind of. A lot of that stuff gets charged back to IDMs. We kind of, you know, it's make model specific. We oftentimes get an order zone per bill, per vin number, or per ticket. Yes, they can do it. Yes, they can put an extra water pump on and take it out the back door. And is it going to be significant? It's not as much as you probably think. You know, I mean, most times the mechanic doesn't get to order whatever he wants. He. A lot of times he wants to fix certain things, Then the service manager says, nah, you can fix these things because we've got to control recon. And so there's, you know, there are already multiple eyes looking at what's about to be ordered for that vehicle. You know, mechanic wants to fix six things. The service manager says he can fix four things. And, you know, and then he orders those four things. You would have, you know, it would have to be a very small dealership where the mechanic is the guy ordering the parts and is the guy making the final decision? And if it is a really small dealership, how much can he really take off the top without. You know, they're only. If they're only fixing 10 cars a month, there's Only so much he could possibly take off the top. So, you know, the bigger you are and the more parts you order, the more probably sets of eyes you have looking at the car. And the mechanic doesn't get to make the final decision. The service manager does. And, and, and oftentimes then you have a parts guy doing the ordering. So, so, and it's make model specific, or the parts are made model specific, so that the mechanic would have to have a, you know, a 2010 Chrysler minivan at home that he's trying to fix, and he would have to get a 2010 Chrysler minivan over here to get the part he needs for his home car. It's not as bad as you think cash is. And, you know, and used parts are, you know, and used parts on Craigslist are worth, you know, they're probably worth 50 cents on the dollar. You know, cash is king. They're gonna. If there's an access to cash, cash is what they'll steal first.

I've heard, I've heard of, you know, that situation where, you know, technicians were working on cars at their house and ordering parts and doing it that way. But again, you know, what are you talking about? Couple hundred bucks a week, maybe at most. I mean, it does add up, but.

It does.

Yeah.

But, you know, at some point, you know, it's what. It's effectively almost a cost of doing business because how many layers of service managers on top of general managers on top are you going to have sign off on the same service ticket before you, you know, you're gonna. You're gonna spend 200 grand to save 20 grand, you know, at some, you know. No, I mean, in this business, you stop the easy stuff, and there's going to be a certain level of, you know, I mean, we have salesmen who get bigger commissions from the dealership next door than they do at their own place, and they intentionally send customers to the dealership next door because they make more money from the. There's lots of schemes and people selling out of lane, selling cars out of lane and getting kickbacks. You know, there's always a certain level of some form of fraud, but, you know, we want to make them work for it, don't make it easy and keep it, you know, relatively t minor, where it effectively becomes, you know, and I hate to say it effectively becomes just a cost of business in this industry. This industry has always been kind of backhand deals. And, you know, there's always been sort of a little bit of.

That's what drew Luke into it. In the beginning, actually, that's why I got into it is because he knew there was a lot of cash he could hide. So to wrap this up, Steven, does it come down to your people? I mean, is that any kind of like fail safe or thing? Like just hire people with integrity, vet them through integrity. I don't know, test them, check on them and just be quick to fire when you find someone who is okay with a white lie. Because if they're okay with a white lie to a customer or to you, they're okay doing a lot of other stuff.

It is. But. But honestly, at the end of the day, you're. It's all. Nine times out of ten, the person stealing is the person that you would have sworn is the, the, the most honest.

Yeah.

Church going, you know, community person in the whole dealership. Just, you know. But in hindsight, there's always warning signs, you know. You know, I remember the accountant had the nicest car on the whole, you know, the controller was driving the nicest car in the whole thing. How do you feel better than the dealership?

I know what you get paid.

Yeah, exactly. Exactly. And it's, you know, I swear to God, we do look. We do look at what the cars people drive when we walk in on an order.

That's funny.

Okay. Not joking. It is a sign of people maybe living beyond their means. People are having money problems or are living beyond their means, have family issues, those paycheck advances that contributes to potential for fraud. So keep an eye out on that. Another just the final item that we are fraud that very common is referrals. Multiple large frauds related to referrals. A quarter of a million dollars in one dealership purely through referral checks. Wow. Yep. Because their policy they would give out referrals in cash and then they would substitute a referral like a slip. While the slips were all. Were all fake, effectively.

Bob, Susan, John, Frank.

That's what it was. And eventually the owner just had. And they used to boast about how amazing their referrals were. It was crazy.

90% of our sales are referrals.

That's what it is. And then he just happened to be in the controller's office and saw some referral slips and was like, hang on, we're having a down week. We haven't even sold the car this week yet. He got three referral slips on her desk.

Oh, so these weren't even sales that were happening. These were just blatant.

That's right. That's right.

Referral sheets went back seven years wow.

You know, and again, it's 250 at a time, but it adds up, you know, and then another client, they used to, they would write their referral checks and send them to the dealership. The accounting office would write them and then send them to the dealership for the customers to pick up. Well, one of the smart accounting ladies noticed that all their referral checks were cashed on the same Saturday at the same bank, all at the same time.

Oh, my goodness.

Turned out that one of the salesmen, their wife worked at the bank and all those referral checks, he just took them all at the same time and she cashed them for him. And so now the customer actually has to go to the accounting office in person to pick up their, their referral checks. They can't just, they don't just send them off to the dealership.

So.

And again, you would never think that a referral check made out to the right person would. Yeah, you know, you just, you think that's pretty good. Controls. Well, you know, I mean, if you know the right people, if you have the right, you know, it happens. And then. So I think, I think I'll end with one more funny story.

Okay.

We had a client, a large client with. They have 70 dealerships in four or five states in the center of the United States. Their dealership started to get robbed at gunpoint. Always the morning that they would do bank deposits, like twice a week. Always the morning of the bank deposit, their dealership started to get robbed at gunpoint. And I mean, they had five or six dealerships robbed at gunpoint minutes before the bank deposit was to be taken to the bank. And they were suspicious, but had no idea what's going on. I mean, they have 70 dealerships, so they have a ton of employees and just didn't know what was going on. Accounting got one of the managers credit cards. When he turned in his credit cards, he works in a different state, he is assigned, he is a manager at a store in a different state. All his. He was always filling up with gas in this. What? He always happened to fill up with gas in the state and the town that was being robbed the day.

Oh my goodness, an accounting notice.

Like, why is this guy from Ohio filling up in Indiana, you know, on.

The same day we got robbed?

And then they realize it's the same day that they got robbed. And then they realized. And then they also got it. They actually got his phone records and they confirmed his phone was in the town being robbed. His company phone was in the town.

Company phone on company gas card. Robbing the company.

Robbing the company.

And it was, you know, and again.

It was the getaway car had a dealer plate on it.

Well, you know, he wasn't quite that bad. But again, accounting, not just blanket signing the credit card statement, looking at the credit card statement, realized, hey, why is this guy filling up in Indiana? He's assigned to O. And they put two and two together.

So sounds like an example of when a policy can actually backfire on you. Like, well, we make deposits every Friday morning at 9am and it's like, okay, now everybody knows that's when you're heavy.

And, you know, unfortunately, it's, it's, you know, and unfortunately, almost every story. Every story I told you, it's an employee. So. So, yeah, you know, and if, you know, I think.

I think to wrap this up and to talk about, you know, is trust but verify, right?

Every time.

Reagan.

Yeah. Yes. Reagan. Reagan. Trust but verify, Steven.

And remember that if I catch it, it's already 18 months too late, because by the time I audit, which might be the summer of the following year, you know, it's 18, they can get so much stolen in 18 months. And the other thing is, specifically on my audit engagement letter, it says the audit is not designed to detect fraud. You cannot rely on your accountant to detect fraud. We work with materiality limits that might be in the hundreds of thousands of dollars. And we're looking at the big picture, not the little detail. And so you have to look at it every day on the ground as it's happening. That's the way to catch it. Because if it gets. If I catch it, it's already in the hundreds of thousands of dollars at that point. And good luck.

Dealers have to be involved.

You can't every day.

You can't sit on the sideline. I think that's the moral of this story, is trust but verify. Dealers have to be on the ground and check. You know, have your own internal checklist.

And get it done.

Stephen, thank you for your time. How do people connect with you? If they want to learn more or talk to you or have one of those fun.

Yeah, they can go to our website, www.sgcaccounting.com, or they can email me at stevenc.

Thanks, Steven. Hey, next time we're going to talk about how dealers steal from themselves.

Oh, yeah, okay. Sure.

Okay. Talk to you later.

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