Reference no: EM131215732
A company, out of Florida, was run by two gentleman. One was the CEO, the other was the President. They both had a salary of $ 200K per year. However, they never took there full salary; in fact, it was only a small percentage that they drew upon every week. There was always a hefty wages payable account due, primarily, because of them. This was not necessarily done to help the company's cash flow. These two heads of the company were doing it for a different purpose. They were using the company (which was a start up operation with millions in cash from investors) as a front for their own personal investments. They would constantly be flying all over the states looking at potential acquisitions. If they found a company they wanted to purchase, they would use company funds. In a few months, if the purchased company was "a dog" it would of course be written off as a loss to the Florida company. Now here is the "kicker". If the purchased company was a real winner, the two heads of the Florida company would tell accounting --
You misunderstood us, this company was purchased for us personally, deduct the purchase amount from our personal wages that the company owes us". In other words, they could not lose in their personal investment scheme -- a win, win situation. If their investment turned out to be bad, it was a company loss.
If the company was a winner, they simply paid for it out of their wages that the company owed them.
Who was in control?
Were these events illegal or just unethical?
How would you prevent this out-of-control situation?
What checks and balances should have been in place?
Do you have any similar events that have happened in your places of employment?
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: A company, out of Florida, was run by two gentleman. One was the CEO, the other was the President. They both had a salary of $ 200K per year. However, they never took there full salary; in fact, it was only a small percentage that they drew upon ever..
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