Bank Executive Pleads Guilty to Stealing Nearly $2 Million

Thursday, December 01, 2011

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Underscoring the fact that successfully combating the insider threat is one of the most difficult tasks for an enterprise, the FBI has announced that a former bank executive has pleaded guilty to charges of stealing from a client account.

The theft occurred over a period of nearly a year and a half with misappropriated funds totaling almost two million dollars.

From the FBI:

An Orange County man who served as a vice president of Farmers and Merchants Bank and was the manager of the institution’s Laguna Hills branch pleaded guilty today to stealing nearly $2 million from a customer’s account.

Matthew J. Walker, 34, of Orange, pleaded guilty this afternoon to one count of theft of bank funds. During this afternoon’s hearing before United States District Judge Andrew J. Guilford, Walker specifically admitted that he stole $1,973,000 over a 16-month period that ended in July 2010.

By pleading guilty, Walker acknowledged that he withdrew money from a line of credit in the name of a trust that held an account at Farmers and Merchants. To cover up the scheme, Walker made interest payments on the money supposedly loaned to the trust.

When he is sentenced on May 21, 2012, Walker will face a statutory maximum sentence of 30 years in federal prison. A plea agreement in the case contemplates a sentence of approximately four years, but Judge Guilford will determine the appropriate sentence in this case.

The case against Walker was investigated by the FBI.

This case, and many others, demonstrate the importance of internal controls and security audits in combating the insider threat.

PricewaterhouseCoopers (PwC) recently released their 2011 Global Economic Crime Survey which revealed that only fifteen percent of C-level executives review risks presented by cybercrime once per year, and as many as one-third do not review cybercrime risks or only do so after a breach event has been reported.

The report found that of the seventy percent of U.S. organizations that reported they perform fraud risk assessments, nearly two-thirds only do so once per year. Worldwide, less than sixty percent of organizations regularly perform fraud risk assessments.

The report also revealed some interesting characteristics of the average insider threat, stating that "the typical fraudster is between 31 and 40 years old, has been employed between three and five years and has a college degree."

“Fraud remains an often unmeasured and unseen siphon on organizational resources. Without the proper controls to prevent, detect, and investigate it, fraud – and the losses it incurs – will persist,” said Erik Skramstad, PwC’s U.S. forensic services practice leader.

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