Revolving Deposits – Uncovering the Grandfather of Cash Fraud

The Shift Manager of the fast food restaurant was sitting in his car under the shade of a tree in a parking lot. On the floorboard are unused disposable deposit bags and a destroyed deposit bag that had been sealed with last night’s closing deposit. The manager had cut the tank bag and read the passenger seat with the contents: units, five, ten, twenty and change. He will use one of the unused bags to make a new deposit. The manager counted the funds several times, his stress level rising. The amount is not enough to match a deposit slip for a deposit dated two days ago. Two days ago? What’s going on here? Why did you open a deposit bag today to match the funds to a deposit slip that is two days old? Did you know?

This is a theft scheme called “continuous deposits” and unfortunately it is not uncommon when store and restaurant managers set up deposits and make bank deposits. The clerk steals all or part of the day’s deposit and offsets the stolen cash against the contents of future deposits to cover the thefts. The scheme continues as long as the administrator has access to the repositories.

The telltale sign of the “mobile deposit” theft scam is that deposits brought to the bank by a particular servicer are systematically validated by the bank several days after they are due. The deposits taken to the bank by the other administrators are validated on time. The stress level of the scheming manager increases as the need to match deposit funds with non-validated deposit slips becomes more and more complicated. As in the example above, the deposit opened by the admin is not enough to cover the previous deposit ticket. The manager will now have to wait to add funds from tomorrow’s deposit to hide the theft from him.

If the business is using disposable deposit bags and the deposit was prepared by another manager, our shift manager involved in the theft scheme makes the bank run with the deposit. As in the previous scenario, the manager on duty, in order to continue with his robberies, must open the sealed deposit bag and withdraw the cash and accompanying deposit slip.

Without intervention, these theft schemes can go unnoticed for a long time and the cash losses can be staggering. Experienced security and loss prevention professionals can easily uncover fraud with a little investigation. In my experience, the manager carrying out mobile deposit fraud will readily confess when properly interviewed. They’re so stressed out trying to keep the scheme afloat that they’re usually relieved it’s over.

There are tried and true protocols for establishing strong loss control practices to prevent this type of scheme and ways to easily spot it. If you suspect that one of your employees has mobile deposits:

1. Develop a chart: At the top of the chart, list these columns: Date, Shift (deposit), Deposit Amount, Bag Number, Depositor Name, Bank Verification Date. Make a separate line for each deposit. On the left side of the chart, list the sequential days of the month. Complete the corresponding information from the first day of the month.

2. Analyze the chart – Look for patterns and discrepancies, such as missing disposable bag numbers in sequence, bag number “jumps,” and bank deposit validations. Look for a pattern where the same manager takes deposits to the bank when discrepancies occur.

3. Action – Prohibit suspect’s access to repositories. If a rotating deposit scheme is in place, a deposit will soon show excessive scarcity or be missing altogether. Track deposit activity over the past few months to get a better indication of when discrepancies first appeared.

4. Prevention

* Require all reservoirs to be sealed in disposable reservoir bags

*Eliminate vinyl/canvas/zipper bags

* Register deposit bag number with the corresponding deposit

* Require depositors to sign the deposits they take to the bank

* Verify all bank deposit validation dates against business dates

* Develop robust cash and deposit audit programs for bags of deposit and out-of-sequence validations.

* Have a bank representative notify you of “late” deposits (> 3 days late)

* Consider SMART safes or armored car service

Taking deposits in the bank is a common practice for the management of restaurants and fast food stores (QSR). It’s plagued with issues like time away from administrative responsibilities at the restaurant or store, exposure to traffic accidents and crime, and this “mobile deposit” theft scheme. Although it appears to be the cheapest way to send funds to the bank, it can be more expensive if the manager is seriously injured or killed in a car accident or armed robbery during transportation. Stealing tens of thousands of dollars from deposits may pale in comparison. As new technology develops, armored car service becomes more competitive, and forms of banking become more progressive, it may be time to rethink how we get our money into the bank and remove the exposures to our people and our profits. So what is going on here? Why do certain deposits arrive at the bank several days late?

Now you know, and now you can do something about it.