Cargill Accountant Pleads Guilty to Embezzling $3.1 mn

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An Upstate New York woman has pleaded guilty to embezzling at least $3.1 million from agriculture giant Cargill Inc., the Justice Department announced. 

Diane Backis, 50, of Athens, N.Y, was an accounting manager at Cargill, and conducted her embezzlement over a 10-year span, causing at least $25 million in losses. She pleaded guilty to mail fraud and filing a false income tax return.

Backis was in charge of the accounting functions in Albany relating to Cargill’s grain operations, responsible for creating customer contracts, creating and sending invoices, and processing customer payments. In her plea, Backis admitted to defrauding Cargill while working in its Port of Albany facility.

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“She stole money by diverting customer payments to her personal bank accounts and sold grain products for millions less than her employer paid, causing enormous financial losses,” stated U.S. Attorney Richard Hartunian. “Her guilty plea sends a strong message that crime does not pay.”

 

INSIDE THE SCAM

As part of her plea, Backis admitted to stealing customer payments sent to Cargill totaling at least $3,115,610 and depositing them into her personal bank accounts. Backis also created fraudulent invoices and mailed them to Cargill’s customers, charging them significantly less than what Cargill paid to acquire products, causing the corporation major financial losses.

Backis’ invoices also told Cargill customers to send payments directly to her, bypassing the corporation. Backis made false entries into Cargill’s accounting software to hide her actions and make it appear to the corporation that customers were paying higher prices than those in her sent invoices. The entries falsely showed that the customers owed Cargill millions of dollars for delivered products, only to reverse the false entries. Cargill’s losses are estimated to be at least $25 million, according to the Justice Department.

Additionally, Backis admitted to filing a false 2015 individual income tax return, declaring only $61,208 in total income at the time and omitting over $450,000 in additional taxable income she received in her stolen customer payments.

Backis faces up to 20 years in prison, a three-year term of supervised release, and a fine of up to $250,000 when she is sentenced on March 28, 2017, in Albany. As part of her guilty plea, Backis will pay Cargill at least $3.5 million in restitution, as well as forfeiting her house in Athens, an investment brokerage account, and her Cargill pension benefits.

The case was investigated by the FBI and IRS-Criminal Investigation, and is being prosecuted by Assistant U.S. Attorney Wayne Myers in the Northern District of New York.

Comments (4)
Plus the angle that she undercharged customers (which I guess was to keep them buying from her office) - you'd think someone on their end realized the deal they were getting and didn't ask questions, which should raise some culpability on their part
Posted by CliffCherry | Friday, December 02 2016 at 6:03PM ET
To be fair, Cargill's overall revenue last year was 107 billion dollars, resulting in a materiality level of 480 million (tolerable misstatement of 360 million). Given the 25 million loss was over 10 years, it's not like the auditors totally blew it and she took the whole company down with her misdeeds.

Not saying she doesn't deserve punishment, just that comparing this with Enron and such is a bit harsh.
Posted by CliffCherry | Friday, December 02 2016 at 6:01PM ET
Accounting profession is just getting more dangerous. With so much financial exposure we'd get, chance for doing fraud is getting higher. Or is it just the weakness of internal control of the company?
Anw, well done, FBI and IRS.
Posted by muthiaulfam | Friday, December 02 2016 at 1:11PM ET
Another name to add to the list of "the big guys" that fail at the very basic levels. Seriously, Enron, Ernst & Young, Wells Fargo, Chase, mortgage companies, and now Cargill. (just to name a few) Basic internal controls and following the rules. Apparently that's too much to ask.
Shame on them all and their arrogance.
Posted by lplummer | Friday, December 02 2016 at 10:59AM ET
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