Elizabeth Batten, a former finance director at McCreery Aviation in the Rio Grande Valley, in Texas, pled guilty to embezzling nearly $1.2 million from the company during her tenure from 2019 to 2023.
According to federal authorities, Batten exploited her position by using signed blank company checks - intended for legitimate business expenses - to pay off her personal credit card accounts. She reportedly mailed these fraudulent payments through the U.S. Postal Service to credit card companies across several states, a method that allowed her to conceal the theft for years. The scheme came to light in late 2023 after another employee noticed irregularities in the handling of company checks, prompting an internal investigation that uncovered the full extent of the financial misconduct.
Batten has admitted to the mail fraud charges as part of a plea agreement, agreeing to pay $1.191 million in restitution to McCreery Aviation.
The investigation was conducted by the FBI, with Assistant U.S. Attorney Jose A. Garcia prosecuting the case.
Source: https://www.valleycentral.com/news/local-news/former-mccreery-aviation-employee-admits-to-embezzling-nearly-1-2-million/ and https://www.justice.gov/usao-sdtx/pr/mccreery-aviation-finance-director-admits-12-million-mail-fraud-scheme
Commentary
In the above McCreery Aviation matter, the perpetrator used signed blank checks to commit her crime for several years.
Signing blank checks significantly increases an organization's risk of embezzlement for several reasons.
First, a signed blank check removes a critical internal control by separating the authorization of payment from the review of what is being paid, effectively delegating both functions to the same person. This creates a vulnerability because the person with access to the signed blank check can fill in the payee and amount without oversight, making it easier to divert funds for personal gain.
Second, blank checks are more susceptible to alteration; criminals can exploit the lack of pre-filled information to change payee names or amounts, a common method in check fraud schemes where details are erased or added to redirect payments.
Third, the use of blank checks complicates reconciliation and detection, since the organization may not immediately notice discrepancies between intended and actual payments, delaying the discovery of fraudulent activity.
To prevent similar losses, organizations should implement several key controls. Storing blank checks in a secure, limited-access location and maintaining strict custody over them is essential to reduce the risk of unauthorized use.
Prohibiting the signing of blank checks to make sure every payment is reviewed and authorized for a specific purpose before funds are disbursed.
Organizations should also mandate dual controls, requiring two authorized signatures for checks above a certain threshold, and regularly reconcile bank statements with internal records to quickly identify discrepancies.
Training employees on fraud risks and internal controls, as well as fostering a culture of accountability, further reduces the likelihood of embezzlement.
Additionally, defacing and retaining voided checks prevents their misuse, and prohibiting checks "payable to cash" limits opportunities for diversion.
Regular audits and surprise reviews of financial processes can also deter and detect fraudulent behavior.
Additional Sources: https://www.occ.gov/publications-and-resources/publications/banker-education/files/pub-check-fraud.pdf; https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2020/02/dont-bank-cleared-check; https://bipartisanpolicy.org/blog/peril-blank-checks/; https://omh.ny.gov/omhweb/resources/internal_control_top_ten.html
