True Payroll Crime Stories

It’s About Payroll

TALK ABOUT PAYROLL CONGRESS !

Pay News Updates!
In a 2020 LinkedIn article, Rene Brofft, Owner of Paytech, discusses red flags in payroll processes that could indicate potential fraud. Brofft emphasizes the importance of recognizing these signs to prevent financial losses and reputational damage for businesses. By identifying suspicious activities early, companies can take proactive measures to investigate and mitigate potential risks.Key Points:Unusual Overtime Patterns: Significant fluctuations in overtime hours or sudden spikes in overtime expenses can signal fraudulent activities, such as falsified time records or unauthorized work.Frequent Manual Adjustments: Excessive manual adjustments to employee records, especially without proper documentation or approval, may indicate attempts to manipulate payroll data for fraudulent purposes.High Employee Turnover Rates: Rapid turnover rates or a disproportionate number of terminated employees in a short period could suggest payroll fraud, such as fictitious employees being added or terminated to divert funds.Unexplained Payroll Discrepancies: Discrepancies between expected and actual payroll expenses, including discrepancies in tax withholdings or benefit contributions, should be investigated promptly to identify potential fraud or errors.Employee Complaints or Whistleblower Reports: Complaints from employees regarding payroll inaccuracies or suspicions of fraudulent activities should not be dismissed and should prompt further investigation to address underlying issues.Prevention Measures:Implement robust internal controls and segregation of duties within the payroll process to prevent unauthorized access and manipulation of payroll data.Conduct regular audits and reviews of payroll records to detect anomalies and ensure compliance with company policies and regulatory requirements.Provide training and awareness programs for employees to recognize and report potential payroll fraud or irregularities.Establish channels for anonymous reporting of suspected fraudulent activities, encouraging whistleblowers to come forward without fear of retaliation.Utilize technology solutions, such as payroll software with built-in fraud detection features, to automate processes and enhance accuracy while reducing the risk of human error and manipulation.https://www.businesswire.com/news/home/20240529393008/en/Payroll-Sector-Benefiting-from-Technology-Led-Progression-Reveals-Annual-CloudPay-Payroll-Efficient-Index-Report
READ FROM Top half of article.
Effective July 1, 2024 a final rule that expands overtime protections for millions of the nation’s lower-paid salaried workers by increasing the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements. The salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025.This means that millions of additional workers will be required to track time and attendance. Whether they are new to time tracking or looking to make a change, TimeTrakGO provides a simply better solution that can have you up and running in a matter of minutes. If you follow the link in our episode notes, you also get your first month free.Don't miss out! To take advantage of this special offer, use the link in the show notes to start your 14-day trial in the month of June to qualify for your first month free.Link: https://www.timetrakgo.com/signmeup?utm_source=SMB24&utm_medium=IAP&utm_id=SBM24

https://constructioncitizen.com/blog/shell-company-operators-sentenced-multi-million-dollar-wire-and-payroll-fraud-scheme/2311091
Chief United States District Court Judge Timothy J. Corrigan sentenced two Honduran nationals, Omar Wilkin Santos-Calix and Oscar Rene Santos-Santos, to 24 months in federal prison for wire and tax fraud conspiracies. Santos-Calix must pay $3,245,161 in IRS restitution and $897,870 in a money judgment, while Santos-Santos owes $1,773,429 in IRS restitution and $490,634 in a money judgment.
**Key Points:**- Santos-Calix and Santos-Santos established a fake construction company to perpetrate their scheme.- They acquired minimal workers' compensation insurance and "rented" it to work crews.- The duo cashed payroll checks issued by contractors, deducting a 6% fee before distributing cash to the crews, totaling approximately $19 million.- Neither the shell companies nor contractors reported wages to authorities or paid payroll taxes, resulting in a $5,018,590 tax liability.- The scheme evaded higher insurance costs by purchasing policies for $21,000 instead of the required $2.5 million.- Investigation and prosecution were conducted by Homeland Security Investigations (HSI), IRS-CI, and the Florida Department of Financial Services.

**Prevention Measures:**- Implement thorough background checks on individuals involved in establishing businesses and issuing workers' compensation insurance.- Conduct regular audits and inspections of businesses' financial records and tax filings to identify fraudulent activities.- Enforce tax laws and regulations more strictly, with collaboration between government agencies and law enforcement to deter similar fraudulent activities in the future.