Moola Moola!

Embezzlers have long held a certain fascination for me. Maybe it's the sheer brazenness of thinking they'll get away with it forever. Maybe it's the banality of what the embezzlers spend their money one. Remember the hockey mom in Michigan who spent a lot of the money she skimmed from her kids' hockey league on Pandora jewelry. Then there was the woman who scarfed $6.9M out of the coffers of the Massachusetts construction company she worked for - money she spent on, among other things, a statue of Al Capone and an appearance by Burt Bachrach at a party for her brother. I've written about so many of them over the years, I should set up an "embezzlement" category. 

But I don't recall an embezzlement of the magnitude of the one that recently occurred at Yale University, where an employee of the School of Medicine ripped off $40M in computer and other electronic equipment.

Oh, Jamie Petrone didn't pocket the entire $40M. She probably only pocketed (and spent) a fraction, as her scam-scheme was such that she sold the equipment to a reseller, presumably at a steep discount. Still, over the years, she walked off with plenty. Enough to buy three properties in Connecticut, and another home in Georgia. Not to mention luxury travel, designer duds, and the requisite fleet of Cadillacs, Benzes, and Land Rovers. (Documented, of course, on social media. Insta Insta!)

My favorite purchase: this ghastly Louis Vuitton bag. Seriously, folks, if you were going to drop $5K on a pocketbook, would this be it???  Not me! I'd steal another $10K or $20K and get a more tasteful Hermes Birkin bag. Sheesh.

Here's how Petrone, over a nearly decade long period, ran her scam:

Officials said Petrone bought or ordered others to buy millions of dollars of electronics and computer equipment such as Apple iPads and MacBooks and cameras using Yale Med funds, splitting up the purchases to fall below the $10,000 threshold [this was her signing authority]. The goods were later shipped to an out-of-state business, which resold the equipment and wired money to Maziv Entertainment LLC, a company of which Petrone is a principal, according to federal officials. (Source: Washington Post)

I guess it goes without saying, that Petrone didn't pay taxes on any of this.  

She has now pleaded guilty to wire fraud and tax evasion. She's agreed to forfeit her properties, and pay Yale and the IRS back. Since what she directly pocketed was a lot less than the value of what she stole, I'm guessing that the restitution to Yale will be partial. 

Anyway, Petrone - who is in her early forties - will be sentenced in June, and could face over 20 years in the slammer. 

Her attorney, Frank J. Riccio II, said in an email that “Ms. Petrone has accepted responsibility for her actions and is remorseful. She now looks forward towards sentencing and repairing some of the damage that has been caused.”

I'll be she's looking forward to the sentencing...

Anyway, what's really shocking to me is that the internal controls at Yale were so lax that they never found her theft out. $40M translates into a ton of iPads, MacBooks, Surfaces, and cameras. No one noticed that the the med school was spending a lot for nonexistent programs with nonexistent needs?

It wasn't Yale auditors who discovered the scam, by the way. It was a colleague who saw her shoving equipment into her car and dimed her. 

Yale initially alerted authorities to suspected criminal behavior last year, said Karen N. Peart, a spokeswoman for the university. “The university thanks local law enforcement, the FBI, and the U.S. attorney’s office for their handling of the case,” she wrote in an email. “Since the incident, Yale has worked to identify and correct gaps in its internal financial controls.”

I'll bet they've worked "to identify and correct gaps in its internal financial controls." I wouldn't be surprised if a head or two in the Yale Med accounting department didn't end up rolling out the door on this one.

Yale is a super rich school. The overall university endowment is $31.1B (second only to that of Harvard, which is $42B). Yale's medical school alone has an endowment of $2.85B. So they can afford to take a $40M hit spread over a decade. Still, that's a ton of money to let slip through your fingers through sheer negligence.

Boola Boola! Moola Moola!