Kevin Durken had owned and run The Boot Shack in St. Cloud, Minnesota for more than two decades when his new wife Deb began working at “the only store in the country that measures feet like they did in the old days.” It didn’t take long for her to sense something was wrong with the books. But it took the Durkens years to realize their longtime bookkeeper was slowly looting the business — a betrayal of trust suffered by thousands of small businesses every year. Here, Deb recounts how the embezzlement scheme came to light, and the steps they’ve taken to make sure it never happens again.

Kevin always has the help wanted sign in the window — just in case some special person shows up and he wants to hire them. Vicky* was just one of those people who responded to the sign.

She started in sales. Then the person who had been doing the books had a baby, and decided to leave when her husband got a job in another town. Kevin thought he could just groom Vicky for the role. So the departing bookkeeper trained her and left Vicky in charge.

That's how it all began.

That was before I started filling in at the store. The payroll tax was due in January, and Vicky didn't do it in a timely manner, so the business ended up having to pay a late fee. And I'm sure she didn't want Kevin to find out. That's when she forged his signature on the very first check. To the state of Minnesota!

My guess is, this moment really opened up the door to seeing what else she could get away with when she realized how easy it was — and how Kevin didn't have a clue.
 

In my first few years working at the Shack, I was only here part-time and Vicky was still doing all the books. She always seemed to have so much in her mail tray, and was usually behind on everything. I told Kevin I could do more to help her, so I stopped volunteering at the Red Cross and was here almost full-time. Vicky would start work on payables, let's say, and I would finish them.

That’s when I noticed things weren’t quite fitting together. We didn't have a computerized system — just handwritten receipts. I was going through them every night trying to match up credit cards, cash and checks. But the money wasn't matching up with the day’s receipts.

Meanwhile, according to the paperwork we had, invoices I was seeing were being paid. So I kept wondering: Why does our statement always show, let's say, 30 invoices open, when they're all crossed off every time I look at them every month? The number of invoices should be going down.

I would ask Kevin questions, and he would say, “I don't know, ask Vicky.”

And Vicky would say, “Well, they're always behind; their paperwork never matches ours.” Some of the things she told me made sense — until I got all the paperwork in my hands.

Then she would tell me one thing about a particular invoice, but tell Kevin something else. More and more of these things were building up. I almost hate to say I never totally trusted her, but there was never a true sense of trust in our relationship. I also thought she might worry I was planning to take her job. The new wife coming in and taking over — that kind of deal. 

I think Kevin trusted her because she was doing a job he didn't want to do, and as far as he could tell things were fine. If he had paid attention, though, he would have seen they weren't. Often, boot companies were calling to ask him when they’d be receiving a check. Kevin would say to me, “It seems so busy, why aren’t we ahead of the game on bills?,” or “Why don’t we have extra money? I'm working so dang hard, we're doing so well, and we’re barely keeping our head above water.” He felt that way for a long time.

Vicky and Kevin only met with our accountant two times a year. The first couple of years we were married, I didn’t go to these meetings because I was working at my old paralegal job.

But after a friend helped us set up an Excel program and I started reconciling the bank statements, I began meeting with the accountant myself every other month or so. Everything seemed to add up — but it still didn’t make sense.

I was making the deposits, I was reconciling the bank statements, and we couldn’t figure out how money could be disappearing. It was so frustrating! All the checks that were written were cashed within a month or so. But I was just looking at the amounts on the statements — not who the checks were issued to. This is why we couldn’t figure out what the heck was going on.

I knew Vicky was a problem, I just didn’t understand why. There were many discussions and arguments with Kevin when I said, “I can’t make this work.” This went on for years — arguing about what was going on.

I finally told Kevin, “Either you switch our duties, or you find something else for her to do. I'm not doing any of this. I'm not going through this frustration anymore.”

That was maybe a week before the bank called. It turned out they should have called 10 years earlier.

It was a Friday morning. Vicky was always off on Fridays, because she had her own business she ran on weekends. She always told us that's where she made all her really good money.

A bank teller called and asked, “Can you tell me who this check is made payable to?” I flipped open the checkbook, and it was a check for $1,599.22 to one of our boot suppliers. I remember I had this quizzical look on my face and asked, “Why are you calling me?” And she said, “Well, we have a check here with no payee listed.” I said, “How can it have no payee listed, I'm looking at it right here in the checkbook.” She said, “Well, I'm looking at the check and there's no payee.”

I don't know if it was my heart or my stomach churning. I said, “Okay, so if there’s no payee how did you get it?” She said, “All I can tell you is I would do an internal audit. Now.”

Well, the hair stood up on the back of my neck. The call seemed to confirm everything I had thought — for how long?

Back then the bank would send us pages with photocopies of all the checks we wrote along with copies of bank deposits. And the photocopies would always show the vendor’s name. I went to the bank with many months of statements. When we looked at their microfiche copies, some of the checks had no payee listed. I went back to the store and thought, “How in the world are we going to figure out what is really going on here?”

That’s when I saw it.

I was holding up the photocopied check from the bank. The light just happened to be shining at the desk just right, and I could see the payee’s name was written in a different kind of ink than the rest of the writing on the check. I decided to go through 10 years of checks. I’m sure there were thousands of them. I held the checks up to the window both at The Boot Shack and at home, and when it got dark I would sit by a lamp and look at checks.

Once I knew what to look for — all I did was hold them up to the light — I could spot instantly which ones they were.

All of those checks. All of those years. She would go back and take a light black pen and write in the name of whichever company it was supposed to have been written to. None of them had payees listed until after they came back from the bank. She deposited the checks into her own account with no payee listed along with checks from all of the people who paid her for her own business. She just slipped them in with her customer checks.

I used to be in banking. An ATM deposit is supposed to be scrutinized more than an at-the-window deposit because you have no clue what's really going on; all you have is paperwork in front of you. The bank teller who called me happened to be filling in at the bank that day. She did what the other people were supposed to have done. That's what got the whole thing going.

We happened to have a policy with our insurance where we had coverage for employee theft. We ended up having a stacking policy — we must have done something right way back when — so instead of one $25,000 policy, we had two. Which gave us 50 grand. That’s all we ever saw, and we knew that’s all we would ever see out of the $225,000 she stole. We added up all of those checks and that’s what the actual loss amounted to. Just imagine how many pairs of boots that is.

It wasn't as big a shock to me as it was to Kevin. I was angry. For me it was more of a reaffirmation of why I had felt things just weren't quite right for a long time. I could never put my finger on it, but I didn't trust her.

But for him, I'm sure it was like a baseball bat to the gut. The first bookkeeper treated this business like it was her own and he assumed that's what the next one would do, too. Because that's the way we treated everybody.

But you need checks and balances, even if it’s family. I learned in my 10th-grade business class that nothing should begin and end in one person's mail tray — that's the scenario they had given us and that's exactly what happened here. Everything revolved around her mail tray. That should never, ever happen.

Our accountant died a couple of years after this whole ordeal. We now have a point-of-sale system so everything goes through the computer and can be tracked. I run reports that Kevin looks at on a regular basis. Since we have a new accountant, Kevin asks more and different questions because he wants to know how the accountant thinks the business is doing. Thankfully we are doing very well.

After Vicky was totally out of the picture, I was doing everything on this side of the desk. And I told Kevin, “If we toe the line here, in three months everything will be caught up.” And in less than three months everyone was paid, and we had a decent cash flow coming in.

That’s when he said, “This is how things should have been like for the last 10 years.” But until you know where the leak is…it’s always easier to look back. Hindsight’s always 20-20.

We’ve had a couple of people apply since Vicky. We do a criminal background check, and Kevin calls references. Our business is so busy we can’t find enough help — this is our biggest problem now. When the day comes that I don’t do the books anymore, I believe we’ll have to pay an accounting firm to take care of this.

But both Kevin and I will still be looking at the financials monthly. I don’t believe either of us will ever really trust anyone totally again.

According to a 2018 study by the Association of Certified Fraud Examiners: & The ACFE identified six behavioral “red flags” displayed by fraud perpetrators:

• Small businesses (with under 100 employees) are the biggest victims of internal fraud.
• Median losses to small businesses are $200,000, nearly twice the damage to larger companies.
• More than 40 percent of fraud is traced to a lack of internal controls.
• Check/payment tampering was the third most common method of employee fraud at small businesses, accounting for 22 percent of all cases.

The ACFE identified six behavioral “red flags” displayed by fraud perpetrators:

• Living beyond their means
• Financial difficulties
• Unusually close association with a vendor or customer
• Control issues, unwillingness to share duties
• Divorce/family problems
• “Wheeler-dealer” attitude

Written by

Deb Durken, as told to Barry Bergman

*Name has been changed

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