Raelise Ostrowski was a payroll administrator at Wellington Power Corporation. As the payroll administrator, Ostrowski was responsible for managing the payroll and employee per diem reimbursements. As a utility business, Wellington replaced between 8 and 10 million electric meters in California. Accordingly, Ostrowski reimbursed up to 20 employees monthly for their travel expenses.
Starting in 2008, Ostrowski began committing fraud. When Ostrowski found out an employee was leaving the company, she would continue issuing per diem checks in that employee’s name. She would then forge the endorsement signature on the checks and deposit them into her own account at Citizens Bank and PNC Bank via their respective ATMs. Ostrowski continued the forged check scheme for five years, depositing over 250 checks totaling $407,000. When Wellington discovered the embezzlement and fraud in 2013, it sued Citizens Bank and PNC for negligently accepting the forged checks.
1. Who do you think should bear the liability for the forged checks—Citizens Bank and PNC Bank, or Wellington?
2. Even though a business manager was supposed to verify Ostrowski’s work, the embezzlement scheme continued for five years. As a higherlevel manager, what kind of practices would you put in place to prevent embezzlement through fraudulent checks?