Susan Preston, former corporate controller for Clyde’s Restaurant Group, pleaded guilty before the U.S. District Court for the District of Columbia to a federal charge of mail fraud for her embezzlement of approximately $647,547 from the company. She faces maximum of 20 years in prison as well as fines and other penalties.
Preston worked for Clyde’s from 1982 until September 2011, where she oversaw the centralized accounting function, which included budget matters, accounts payable, accounts receivable, among other responsibilities. In November 2011, she started her own consulting firm, which specializes in restaurant operations, financial reporting, budgeting, inventory management, and employee benefits.
According to a press release from the United States Attorney’s Office for the District of Columbia, from 2001 to 2011, Preston embezzled approximately $647,547 from Clyde’s by diverting her former employer’s money to pay her personal credit card; charging the corporate credit cards in Clyde’s name (and paid by Clyde’s money) to pay for her unauthorized personal expenses, and using a Clyde’s vendor (paid by Clyde’s funds) to obtain goods for her personal use. Preston attempted to hide her embezzlement by asking a vendor to alter invoices, fabricating e-mail messages, and re-categorizing credit card expenses. When she learned of an audit on the corporate credit cards, she falsified her Clyde’s corporate credit card statement to delete those items which she knew were not authorized business expenses.
Preston’s sentencing date is set for December 20, 2012. As part of her plea agreement, she has agreed to sign over $258,000 worth of equity-based incentive stock awards and/or options to Clyde’s, and agreed to additional forfeiture of a money judgment of $389,069.
This prosecution serves as a reminder to all restaurant owners that they must be wary of employee theft. Restaurant owners need to know the warning signs of embezzlement. A person who embezzles money from the restaurant is usually in the position to manipulate documents or accounts when other employees are not around. Therefore, as an owner, one needs to be on the lookout for any profit declines, abnormal expenses, or unorganized financial records. Once a restaurant owner suspects an employee of embezzling money, a lawyer can help gather evidence for the investigation. A comprehensive audit of all financial accounts is usually necessary so in addition to hiring a lawyer, a restaurant owner would also need to hire a forensic accountant. Embezzlement cases can be handled internally within the company, or, as was done in Clyde’s case, the business owner can turn it over to the authorities so that it can be handled as a criminal matter. Business owners can also choose to file a civil lawsuit against the employee who embezzled to recover lost money.