Alert bank employees were among the first to see signs of possible irregularities in transactions for the East Texas Peace Officers Association. Their notification prompted an investigation into possible theft or fraud and led to the paid administrative leave of a Nacogdoches County Sheriff's secretary who had been appointed by the board as secretary treasurer.
According to bankers they routinely see signs of possible fraudulent activity. The first alerts are usually discovered in bookkeeping, an area of the bank few of us see, but it's where your banking transactions and thousands of others are run through systems designed to detect fraud.
Commercial Bank President Tommy Ellison showed off a sorting machine that can sort 500 checks a minute. It can also give operators information that may indicate a person is abusing their cash writing privileges.
"We analyze accounts for a particular type of activity that will print out a daily report that gives us any kiting suspect reports or potential fraudulent activity reports that are statistical measures that we use," said Ellison.
Red flags can also show up on the teller line, but sophisticated software almost always catches irregularities. Incomplete endorsements, deposits of money in rounded off amounts , frequent deposits and withdrawals and deposits into other accounts are some of the warning signs.
When warranted a review by a trained auditor can confirm suspicions. Ellison said it's for the benefit of the customer. "We hope we're not perceived as meddling. It's our intent to try to make sure it's proper authority transaction."
Attorney Tim James, a former member of a state organized crime unit on white collar crime unit knows how fraud generally gets starts. "A lot of times it's a mistake made in the spur of the moment. It's someone who will think that I can borrow this particular amount from this account and I'll pay it back next week or next month." Usually it's not.
If you trust someone with an account you should have these safeguards in place according to James. "There needs to be an individual viewing the financial transaction. That can be done by an assistant treasurer, an auditing committee or a monthly review of the books."