Article

Suspicious Behavior Warrants a Closer Look: Guard Your Dealership Assets

March 2008, Auto Dealer Today - WebXclusive

by David Keller, CPA, CFE - Also by this author


One day this past June while traveling in Florida up I-75, my wife, who was driving, suddenly announced that we were being followed rather closely by a police car. Then, his lights and siren went on. I told her to pull over and let him pass. Much to her dismay, he didn’t pass but continued to follow us. She repeatedly told me she had not been speeding, and I told her to just pull over and find out what he wanted.

As she was pulling onto the shoulder, I noticed two police cars just ahead of us in the median. As soon as we passed them, they immediately turned on their lights and sirens and began pursuing us too. I thought this was some great speed trap the police were having fun with that day. My wife quickly informed me there were now two police cars following us, then three, then four! They had setup a rolling roadblock side by side behind our car. I told my wife to stop the car as soon as possible, which she did. The police roadblock also stopped behind us.

I started to put my computer in the back seat and hang up the phone with the person I was talking to at the time. As I did, my wife informed me that the police were getting out of their cars with guns drawn! My immediate thought was, yeah right! I looked out the back window and all I saw were policemen crouched behind their open car doors with pistols and shotguns pointed at us. I  looked in front of the car and saw two police cars come speeding up the interstate towards the front of our car. Then they parked sideways on the road and blocked the interstate lanes in front of us, got out of their cars and crouched behind their cars, also with pistols and shotguns pointed at our car! My wife then asked me to get her driver’s license from her purse in the back seat. I told her to put her hands on the top of the steering wheel, and I put my hands on top of the dash. I decided we would wait to see what they wanted. The last thing we needed was for the police to think we were reaching into the backseat for a weapon and open fire on us.

After a few tense moments, a police officer approached the driver’s door, gun pointed at my wife. He yelled at her to roll down her window, stick her hands out the window, open the car door, exit the vehicle and walk backwards toward him with her hands in the air. I stayed in the car with my hands frozen on the dash wondering what was going on. I couldn’t see her as she walked back to the police officers, who surrounded her asking questions. Who else is in the car? Who is in the back seat? Who is in the trunk? Do you have any armed weapons in the car?

After she answered these questions, a police officer approached the open driver’s door with his gun pointed at me. He ordered me out of the car, with my hands up, and told me to walk backwards towards them. I was afraid if I tripped they would think I was trying to escape and start shooting. I just shuffled very slowly back to them and was immediately handcuffed and held by two policemen. Then, three policemen rushed our car with their guns and started throwing open the rear doors and trunk searching the car for other possible occupants.

I kept repeatedly asking the police who held me what was going on. I did not get an answer until they were done searching our car. I could see my wife about 20 feet away surrounded by police officers. The officers finally told me that four armed, hooded persons robbed a jewelry sales person in Venice. They had fled in a late model, dark blue, four-door Chrysler or similar vehicle. Guess what we were driving—a dark blue, four-door Dodge Charger!

The police car that had followed my wife for 10 miles had been sitting on an overpass watching for that type of vehicle, started following us, found out we were in a rental car (which most criminals use we found out), and called ahead to the state patrol and other deputies for assistance with a felony stop. This means the occupants are considered armed and dangerous! It didn’t help that the robbery had been committed about 30 minutes earlier and we were 30 minutes north of Venice. Perfect timing!

The story ends well, as they finally realized we were not the people they wanted. All the time I was handcuffed I was thinking of what client I could call to vouch for us and how to get an attorney if we needed one. They finally took the handcuffs off and apologized, saying they had to be very careful so they could go home at night in one piece. I told them they had done a very good job, but had scared us to no end. All this activity took about 30 minutes while that entire section of interstate was shut down.

We finally started down the highway in a daze, my wife driving very tentatively and both of us wondering if what had just happened had really happened. I told her we had not taken any pictures of the police cars and no one was going to believe us! Every time we saw a police car the rest of our trip, we looked over our shoulders to see if they were following us. When we turned the car in at the rental car center a few days later, I told the attendant they might want not to rent the car out for a week or so.

Now, how does it relate to car dealers? If you are suspicious about something, check it out thoroughly. Many times, we are called by clients that are worried things don’t look right on their financial statements, in their cash account or accounting procedures, so we send someone from our firm to review and appraise the situation. Sometimes we find the accounting staff is understaffed and doesn’t have time to keep up with the amount of business being generated. Other times we find they haven’t been trained in the correct procedures and transactions. Both are “false alarms”, but nevertheless, something that needs to be corrected immediately.

However, sometimes we find discrepancies in the accounting records. Some discrepancies look very suspicious, but need nothing more than a good cleanup. Other times the person who created the transactions requires the proper training. Other items, such as unreconciled bank statements and unusual journal entries in schedules may point to potential fraud situations.

Remember to always check out what seems suspicious. You may not find any fraudulent activity. However, if you seem short of cash (even though you are making money) and a few of your staff members have changed their lifestyles noticeably, you may have potential fraud in progress. I have a saying I have repeated many times to my clients: “It’s not that I don’t trust you; I just don’t trust you.” I have learned to always be somewhat skeptical of anything I review. Most fraud is uncovered because the person committing the fraud made a simple mistake or forgot to do something that day to cover it up. Most fraud, if committed by an office manager or controller, is normally difficult to discover. I am not saying I suspect everyone all the time, but it always helps to check things yourself from time to time.

Try to separate the cash duties between different people. Review the bank statement yourself for any unusual checks. You, the dealer, should receive all your bank statements at home. Check your electronic fund transfers from your cash accounts on your bank statement. Make sure there is a log of what the transfers were for, so you can review and complete sample reviews of the transactions. Also check your credit card bills and payments on them.

Vol 5, Issue 2

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