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DOJ Announces 16-Year Prison Sentence for $10 Million Warehouse Fraud

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The United States Department of Justice (DOJ) has announced a 16-year prison sentence for Kayricka Wortham, the “mastermind” behind a fraud spanning nearly two years. During her time as Operations Manager for the Smyrna, Georgia-based Amazon warehouse, Wortham stole $9.4 million from her employer. Her scheme involved the creation of fake vendors and invoices to conceal her activities. After Kayricka pled guilty to fraud charges, she was convicted in November 2022.

Six of her accomplices currently have multiple charges pending. They include wire fraud, money laundering, and conspiracy.

Red Flags: Conflicting Duties and Money Laundering

As a supervisor with broad approval responsibilities, Wortham could conduct her activity with reduced accountability. According to the DOJ, between August 2020 and March 2022, Wortham “acted with the authority to approve both new vendors and the payment of vendor invoices for Amazon.” After approving the invoices, she transferred millions to accounts she and her accomplices controlled. The funds were used for luxury purchases, including:

  • Several vehicles by Porsche, Lamborghini, Dodge, and Tesla. 
  • A nearly $1 million home.
  • A Kawasaki ZX636 motorcycle.

The illicit nature of the funds may not have been immediately apparent, as they came from Amazon.

After her indictment, Kayrick allegedly forged court documents while on bond – telling a franchising company that the Amazon fraud charges had been dismissed. According to the DOJ, the documents “contained forged signatures of Chief U.S. District Judge Timothy C. Batten, Sr. and forged seals and signatures of the Clerk of the Court.” These charges are still pending.

The case highlights several key fraud and money laundering red flags::

  • Unexplained, sudden wealth (even from a known entity) – In this instance, compliance staff should ensure uncharacteristically large deposits are investigated and documented, rather than assuming the source is legitimate.
  • The expenditure of unexplained funds on luxury goods – When assessing if high-dollar purchases could indicate potential layering activity, context is key. If paired with other red flags, such as uncharacteristically large deposits or rapid spending after deposit, the activity may warrant further investigation.
  • Forged documents – Since these can be difficult to identify, firms should ensure they have a process in place to verify official documentation, including checking for signs of alteration – such as inconsistent fonts and inaccurate or inconsistent names, titles, dates, photographs, or seals.

The Importance of Due Diligence: Vendor and Internal Risks

When firms consider their vendor risk management, they should also evaluate related internal risks. While know your business (KYB) due diligence is key, internal controls can prevent employee fraud using vendor information or other sensitive data.

Because the risk a firm faces depends on its unique activities and structure, it is impossible to give a universally exhaustive list of necessary controls and policies. Firms must ultimately determine this as appropriate to their own operations and obligations.

That said, most risk-based controls and policies will share several features in common. They include:

  • Thorough documentation of processes and roles.
  • Segregation of duties – In dealing with sensitive financial information, firms should ensure they understand which duties are incompatible, meaning different people should hold them and have strictly controlled access to relevant information. This is a basic necessity for the prevention of internal fraud. According to New England accounting firm Alexander Aronson Finning CPAs , four categories should never be held by the same personnel:
    • Authorization or approval. 
    • Custody of assets. 
    • Recording transactions. 
    • Reconciliation/control activity.

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Originally published 14 July 2023, updated 14 July 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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