To avoid embarrassment to a particular bank, I am using a pseudonym for this particular bank. What is important is not the actual identity of the bank involved but rather what the bean counter how went beyond the call of the duty in the area that the Accountant usually handles to benefit the client.
In this case, while I was assigned to this particular firm, I was selected to be the in-charge Senior Auditor. With the Partner in charge, we met with the President, or the CEO, and the Chief Operating Officer who were all new in this bank. These gentlemen were very firm and very clear to me as to what they expected of me as the Auditor-in-charge.
“Mr. Plunkett, after you have finished auditing our bank, we are going to ask you one question, and one question only: is this a well-run bank? That’s all we are going to ask you, and we expect a truthful answer from you.”
I have been involved in many auditing engagements, but this was the first time I was ever asked whereby the President and the Chief Operating Officer said to me that they wanted me to tell them if their bank was well-run. Now, in fairness to them, they were new to the bank. And it was obvious that if they were new to the bank, the board of directors were probably dissatisfied with the previous President and the Chief Operating Officer.
I went to the Partner-in-charge of this engagement. “They want me to give them—let’s say—a snapshot of all of you if their bank was a good bank or a bad bank or the bank was well-run or poorly run.”
“Ed, you have a lot of talents. Do the best you can, and let’s see where it takes us.”
So, I started the engagement with about twenty other auditors. One day, as I was taking my lunch across the street from the main entrance to the bank. I saw the senior vice president of the real estate department sitting in a booth with his secretary—who was totally a beautiful girl—and a fellow who looked like he was right out of the Mafia. Painted nails. He looked like a real Mafioso, to tell the truth. There was the Senior Executive Vice President, with his secretary cuddling up to him, drinking martinis. I could see that. All of a sudden my mind said: I wonder what the hell is going on over there? The bank exec is getting loaded up on martinis, the secretary is kind of cuddling up to him—like, “I love you”—and the Mafioso was taking it all in. I just had the impression that there was something odd going on here. Boy was I right!
I went back to my Partner-in-charge of the engagement and told him what I had witnessed.
“What do you think?
I said: “Well, seeing the Senior Executive Vice President of real estate getting loaded up on martinis, his secretary all cuddling up into him, and this Mafioso kind of guy taking it all in—I later found out that this Mafioso guy was a real estate broker—and that was another flag that went up to alert me that something was going on wrong here.”
So, we went to the new President and the Chief Operating Officer and told them of my observations. I’m not afraid to speak my mind. I felt certain of the facts.
“What do you want to do?”
“I want have independent appraisals done on the loans in the past six months that were approved by the Senior Executive Vice President.”
Now, after he approves the loans, he submits them for recommendation to the Board of Directors. The Board is usually merely a rubber-stamp the recommendations of the department heads. I got the approval from the President and the Chief Operating Officer to have independent appraisals done unbeknownst to the Senior Vice President who was in charge of the real estate department. We had the files. After seven appraisals were done, we found out that the appraisals he had done the values that came in were far less than the loans that were granted on these projects previously.
So, with this information in hand, we were back to the President and the Chief Operating Officer.
“We have a serious problem here. We can’t accuse anyone of kickbacks. But the appraisals we did independently the values are less than the appraisals done previously, which were the basis of making these loans. The way this thing operates is that when the loans are made at the inflated appraisals usually there are kickbacks involved to somebody for getting the phony appraisals approved, and that person was the Senior lender in the real estate department. He was called in by the President and confronted with the situation. He admitted that he had a serious drinking problem as well as a serious gambling problem. He was in cahoots with the real estate broker to inflate these properties to get a bigger loan on these properties. A lot of the loan proceeds were kickbacks to both the Senior Vice President lender and also to his secretary and the Mafioso guy who was a real estate broker.
There were other areas of this bank where there were serious problems in repossessed automobiles. They were not getting bids before they disposed of a repossessed bank. They were being sold to friends of the bank. The same thing happened here. Without getting at least three appraisals, the chances are the money they were getting from the repossessed cars that were sold was far less than one would get from a fair bidding process. We went back over some of the sales of the repossessed cars. We had independent appraisals done and proved that fact that they were being sold for far less than what they were worth. Again, there were kickbacks among certain people in the Installment Loan Department.
I reported this to the Partner-in-charge of the engagement, and again we went to the President.
“Mr. Plunkett, I want to thank you very much. You are confirming to us why we were hired. The Directors felt there was something very irregular going on at this particular bank. You have proved beyond a doubt that there were manipulations taking place in the real estate department and in the installment loan department. As to that, we are very grateful. I will ask you again. In your opinion, is this a well-run bank?”
“It is not a well-run bank. The managers you have in place here merely rubber-stamp the things they are told to do without doing a prudent job of safeguarding the bank’s assets.”
At the conclusion, the President was very thankful to me and my firm. We finished the engagement without any more difficulty.
This next episode is one of the more unusual ones I encountered in my business career. This happened to me in the late 1970s. This particular bank, a very large bank, hired me—I don’t want to mention the bank’s name, even though it has already merged with another bank, but I fear I might embarrass any principal players that might still be alive—to be the chief auditor. When I started, I knew very little about the bank except that they wanted a new chief auditor because they were not pleased with the previous person. Usually, this is a tip-off to me that something was amiss. There could been a complaint by the Board of Directors or by some of their customers or by Federal regulators. You never know what causes a change something like a chief auditor.
In any case, I was hired. A funny thing happened the very first day I was there. Late in the afternoon, I was taken down to the Human Relations (HR) Department to meet some of the principal players. When I got there, the HR Director, a woman, had been drinking rather heavily and was then dancing on a table. Some of her associates were applauding her on, but after I introduced myself, the party came to an abrupt end. The HR Director got off the table and introduced herself. I, in turn, introduced myself to them. I was told that they were celebrating someone’s birthday, but I didn’t really care. What they were doing was their business.
I was in for a real surprise as chief auditor for this organization. I was only there for a very short time when I noticed that one of the taxes they were paying to the city seemed too high in accordance with the size of the organization: $200,000 that were being paid in annual taxes to this city organization. I didn’t ask any questions. I just noticed it was very high. But then, I said to myself: Is it possible that whoever is doing these tax returns doesn’t quite understand tax law for this municipality? So, I got a copy of the tax law, read it, and—lo and behold—realized that this bank was overpaying their city taxes substantially because they misinterpreted how the tax law read. I kept checking myself over and over to make sure I was correct in my own interpretation.
After I was satisfied that I was correct, I went to the bank’s president and told him what I discovered. He was quite taken aback by this and called up the controller who was responsible for the preparation of this tax return. The controller came to the president’s office. I read out the whole regulation to him and pointed out he mistakes he made in preparing the return. He had made a mistake in computing the tax. He had not taken the appropriate deductions that drastically lowered their tax liability.
The president thanked me very much, but the controller was very upset. He knew that this could cost him his job. I thought it might cost him his job, too, but the longer I stayed in the bank, I found out that there were a lot of people who should have been dismissed but they weren’t. I’ll get to that in a bit.
So, after I pointed out this incorrect tax calculation, I asked the question: “Can we file amended returns.” I was told that we could not. The bank was out $200,000 dollars a year for many years by paying these tax amounts.
A short time after this happened, I got an invite to the COO’s office. He said: “Edward, we want to thank you for very much what you did, and we want to reward you.”
That was nice. It was not unusual for me to receive company bonuses when I found something unusual or found a way to save company money.
He said: “We’re going to give you a new car.”
This set me back.
“In fact, we’re going to give you a new car every three years.”
Now, I’m not stupid. I said to myself: I have a funny feeling here. When I found out about the overpayment in taxes, there may be other things going on here, and they might be afraid I might be too inquisitive and investigate. They might be trying to buy me off and keep me quiet by giving me a new car. I mean, I was there only for a short time. I was thrilled with that car: it was a Pontiac. Nevertheless, I was alerted to the possibility that there were certain things wrong with this bank that they hoped I wouldn’t find.
I kept to my normal routine at work. I had a staff of five people. One of the things I decided to do was to study the electric bills, because they seemed exceedingly high. I knew how many branches there were. I knew that the bank was housed in an old building. Maybe they were not really concerned about their heating and air conditioning costs.
I went back to the president and asked him if I could get the authority to approach the local utilities company to come in and do a feasibility study to see if we were in any way wasting electricity. The president agreed, and the utilities company did a thorough job in surveying the bank. There were so many errors found in turning lights on, turning lights off, leaky doors where air conditioning was lost, leaking ceilings where heat was lost, and so much more. Following their final report, we managed to save approximately $100,000 a year in electric bills.
As I was helping the bank in saving money, you would think that I was doing a good job and being appreciated. Well, I was, but, in fact, in the process I was making enemies. Others were feeling that I was showing the incumbents up. They weren’t doing their job in watching out how money was spent.
My next big item I looked at was insurance. I don’t know why I get so suspicious when it comes to insurance. Something would be amiss or even look amiss, and I would then investigate. In this particular case, I found out that one of the directors was the insurance broker. He handled all the insurance needs for the bank. That alone raised my concerns. I went back again to the president and I said: “I’m not saying I’m accusing anyone of doing a poor job or not getting the best deal for the bank regarding insurance rates, but I would like to hire a consulting firm who will not charge us unless they can save us money. I used this firm before, an international firm who has been doing insurance. The president gave me the okay. I was well aware that if these consultants found out that the insurance was inadequate or that too much money was being spent on insurance, it would reflect upon the director who was also the insurance broker.
Again, the president said: “Ed, you’re job here is to save us money. One of your functions.”
I called up the consulting firm that I had used and worked with before at a different bank. They came in and did a study. They found out that the insurance coverage in force for the size of the bank was inaccurate and also there was a lack in bids for the contracts for the insurance. I went back to the president and suggested that we let this consulting firm to market our insurance program. They would contact insurance underwriters throughout the country to study their report and a risk analysis (another issue) and come back with recommendations on the size of premiums and kind of coverage we needed to be adequately insured.
I got the approval again. I got the same results again. I got bids from reputable insurance companies, and the insurance costs were driven down dramatically. In a short time, this bean counter already was able to find ways to save close to $400,000 annually for this organization.
That might sound wonderful to the reader, but I was making enemies, especially in the financial division. Most of the workers in this division came from the southern states, and I’m a New Yorker. I stated in my book Miracles, Luck, or What? that I did not get along with folks from the southern states while I was in the Navy. Same here. The arguments began. It was like the Civil War all over again. I tried to explain how things should be done differently. One of the managers in the finance department threw a punch at me. I ducked, and instead of hitting him back, I merely threw him up against the wall.
Some of the workers—not all—would take liquid lunches and come back to work smelling of alcohol. I warned all of them that this had to stop. We are a financial institution, and we don’t want any of our employees smelling of alcohol, especially around our customers. Well, a few decided to test me. One day, an employee came back from lunch very late and was obviously inebriated. I called him into my office.
“I warned you what would happen if you didn’t stop what you were doing.”
“F-U, you Motherf—er New Yorker! I hate you!”
“Well, I’ll tell you what. You go home and tell your wife you got fired, why you got fired, because you are a drunk, and the language you used to me.”
He walked out of my office, slammed the door, and never came back again.
You would think I was over the hurdle with these various problems? They were just beginning.
I found out that in the repossessed car area, which I encountered before, the cars that were being repossessed and not getting bids before they were disposed of. The cars were being sold at discount rates to employees, directors, or even friends of employees. I had an independent appraisal done on the repossessed cars and had proof that the cars were being disposed of at phenomenally discounted rates. I put a stop to that, but unfortunately the lady who was involved in part of this scam was Black. I was accused of being a racist for going after her. I tried to explain to her boss that I was not racist or that racism was a part of my decision. but that she was inept at handing the bidding process in reselling these cars. She was just selling the cars to anybody. Then I had to defend my position that I was not a racist, and fortunately the President backed me up and cleared me of the charges.
Another Black lady was stealing cash from a teller function. We caught her at it. I had a long talk with her, and so did the President. Again, I was accused of being a racist. I had been down this road before in my career. There are certain people—Blacks and gays and short people—if you catch them doing some wrong, their defense is always the same: I am prejudiced against these people. It just isn’t true. I have hired many Blacks, gays, and short people. I have only fired these people for violating the law or the rules of the organization.
I even talked with a Black minister and explained my position why I have to fire people. He called me a racist! I told him: “Don’t blame me if the girl is stealing from the bank. I’m not doing it. We caught her red-handed”
He argued: “You’re not paying her enough money anyway. That’s why she has to steal.”
And then I heard this argument before: you don’t pay us enough money, and that’s why we steal. The President backed me up again, and we dismissed the girl.
While this was going on, I enjoyed working there, but the problems were getting a little too big for me. Constant fighting. I was looking for a more peaceful environment than what I was getting involved with.
One day, I was called into the President’s office, and he announced: “We are promoting you. You are not Controller.”
I said: “Oh, my God. I just want to stay Chief Auditor and not become Controller. Because if I become Controller, I’ll just make more enemies.”
The incumbent Controller was well liked by the staff, and now I am going to be the boss. I accepted the job. I had to deal with these people—these southern people and I being a New Yorker—who didn’t like New Yorkers. I kept telling them that if they just do their job and I do my job, we’ll get along fine. But they had this bias against New Yorkers.
“You have to realize that I can let you people go if you don’t stop.” But I had this one male employee who tested me and wouldn’t stop, and I had let him go. Throughout the organization, the employee feelings about me were along the lines of “being a son of a bitch, but I had the backing of the President and the Board of Directors.
There were some dubious loans made by this bank. One in particular was a $300,000 loan to a race track. I couldn’t find any collateral declared to substantiate this loan. I couldn’t find anything that stated the loan was studied before being finalized. No due diligence was done. The loan wasn’t paid via a check but via cash, and I could only assume that the money went to the race track.
While this is going on, the Chairman of the Board died mysteriously. Unbeknownst to me, the FBI became involved in the investigation of his death. The FBI had been watching this bank for quite some time, because they felt that there was collusion going one between directors and major shareholders in the siphoning off money through loans. The investigation started, and all of a sudden I am called into the President’s office.
“The FBI wants you to be a part of this investigation team.”
You might say isn’t that wonderful, but again I said: “You know what’s going to happen. I am going to be a part of this team, and more people are going to hate me. I will know what is going on inside this organization, because I’ll be sitting at this table with the FBI agents and IRS agents and hear all these accusations that will be made against key bank employees and also shareholders and even some borrowers.”
After these hearings were done, for a few days, I was treated as if I were cancer, no one wanted to talk to me. I guess they all wanted to know what was going on. The papers were reporting about the investigation. The bank stock was starting to take a nose dive. People were concerned wanted to know how bad it was going to get. People were looking to me to tell them what was going on, but I was sworn to secrecy by the FBI to now divulge anything that was discovered in the investigation. To make a long story short, the there was a great deal of corruption going on between senior management, some union people, and directors and major shareholders. The end result was that many senior people and shareholders were forced to resign their jobs and go elsewhere. The president also lost his job. To my chagrin, I thought he was a wonderful guy, but when the results and findings of this investigation came out, he was involved in them.
I then learned why they gave me a new car. This cabal figured out that I was a smart guy after I found out that the bank was overpaying their city taxes. They thought they could buy me off with the car, but they didn’t buy me off.
The President called me into the office. He was a wonderful guy, in my opinion. But he told me: “If you had the chance to become a millionaire, you might do the same thing. So, don’t be too critical of me.” We shook hands, and I never saw him again. But I never forgot what he said. I also never was in a position to where I was tempted to become that corrupt and make a million dollars.
The bank received a new Board of Directors and a new President and new COO. These guys were really sharp individuals. I knew where they worked before. They were firmly grounded in super banking backgrounds. I got along very well with them, and they were very impressed with me.
One day they called me in.
“Ed, you are a brilliant guy. You are an exceptional guy. But we have to polish you up. You are a little too aggressive, and you tend to turn people off with your aggressive ways. We’re contemplating sending you to Harvard Business School and hopefully change some of your mannerism in approaching people.”
I have to admit it: I am very aggressive. It’s my New Yorker way of doing things. One and one is two, and if you are a crook, I’m going to tell you that you are a crook.
So they wanted me to go to Harvard for two years, get a polishing job, and become more sophisticated. I decided that it was time to leave this bank. I resigned and went on to Las Vegas to get a job out there. I thought by leaving Washington, D.C. I was going to a better place. Unfortunately, I walked into a hornet’s nest out there. These troubles seem to follow me. When I say “Hooray for the Bean Counter,” you have to realize this is a very unusual bean counter.
I was thrilled to leave this bank. I did a hell of a job in the face of corruption. I brought in a new management team who were very complimentary of me, but I am very happy that left that particular job because of many of the directors who fought me tooth and nail on a daily basis.
After discovering some oddities with another bank in Las Vegas, I left that bank and started up my own accounting practice. It was doing quite well, but my fourth marriage was coming apart at the seams. In a short time, I made a lot of money. One of my clients gave me a 325 BMW for doing him a good job. I withdrew all my money from the bank, took my brand new BMW, leave my wife, and drive to Florida.
I’m just not the marrying type: I get married for all of the wrong reasons. The divorces were my own fault.
After six days of driving, I arrived in south Florida. I am a very confident person, and I knew I would find something soon. Although I had left my job in Las Vegas, which was a good job, I wanted to get away from this last wife and any complications that would arise in a legal battle. So, I went to Florida to see what would work out in the divorce and in my future employment.
I checked into a nice hotel on Singer Island, which is just off the ocean. It was an ideal place, except for the roaches. There are a lot of them.
I remembered I had a friend of mine who I worked with at a bank—one where I worked—in New York. We were good friends while working in New York. He was now working as a Chief Executive officer in a bank in Florida. I called him to see if he had any idea of any openings for a person like me I south Florida either in the banking industry or something else. You see, as a CPA, I am well qualified to get involved with all kinds of diversified companies.
I went down to Miami to meet him. I explained to him my situation and why I was in south Florida. I told him about my current divorce; he knew my history. He was a marvelous individual, one of the best people I have ever known in my life.
These magical words came out of his mouth: “Your timing couldn’t be more perfect. There’s a bank here in south Florida that is having lots of problems. The directors have asked me if I could find a qualified person to be the Chief Auditor to help them out.”
I was elated to hear this. I jumped into my Beamer and drove up to another town and met the bank’s president.
“You’re hired!” he told me. “Because, your recommendation is outstanding. We know who recommended you, and he is an outstanding fellow. And if he recommended you, that means you’re an outstanding guy, too.”
I was only in south Florida for less than two weeks, and I was hired by a large bank.
The President wanted me to look into some serious problems. The first priority was the loss of $163,000 from their vault. They looked high and low, and they couldn’t find it. The local police couldn’t find it, the FBI had looked into it, and a few others had tried to figure out. Nothing. This was a little strange to me, because I had worked with the FBI before, and they usually do not miss a thing.
So, when I was told that the FBI couldn’t find anything, that raised a flag with me that there was something suspicious going on here.
I met with the president and key personnel and had them map out for me the whole procedure of how money come in and went out of the bank. They kept telling me that it was just a $163,000 computer error. But when they mentioned it was a computer error, I wanted to call them a liar. But I knew that there was more going on that what they were telling me.
The money just flat out disappeared. It wasn’t in the vault, but it was in the computer.
I didn’t get much cooperation from the employees. So I went to the Federal Reserve Bank in south Florida to talk with them about their procedures for transiting money to this bank.
Their first words to me astounded me: even though they knew of a missing $163,000, no one had asked them or approached them to check their records about the delivery of the money. I went into their records and discovered that there was a record of a delivery of $163,000 to this bank. I looked for a receipt from my bank, but there was no receipt. I began to believe that any receipt made was destroyed, which meant that the money had been stolen before it was deposited into the vault.
I confronted the president of the bank.
“We have a serious problem here. The Federal Reserve told me that they were not approached by anybody from your bank about the money forwarded from their bank to your bank. That’s highly unusual that if you’re missing money you don’t approach the Federal Reserve to see if any shipments were not properly handled.”
The president was a bit confused at first. He didn’t know what to do.
“What do you recommend?”
“How about lie-detector tests? Have you done that yet?”
He said: “No.”
That raised another flag with me. You are missing money, and you have to turn over all kinds of rocks to find out what happened to it. One of these rocks is a lie-detector test to find out if someone is possibly lying.
The president was a bit reluctant in conducting a lie-detector test because he knew he would have to take one himself. Although they are not one-hundred percent accurate, they can raise flags to increase further investigations on people’s backgrounds.
The lie-detector tests were done. The branch manager and his daughter, who worked for the same bank, failed the tests. They were directly involved in supposedly handling the $163,000 transfer from the Federal Reserve. They maintained that they had not seen the money. They were lying. I had copies of the shipping receipts from the Federal Reserve Bank. When they were confronted with this information, they finally admitted stealing the money to cover gambling losses. The daughter's husband was a big time gambler and heavily indebted to loan sharks. They thought they could steal the money to save the husband and just blame the error on the computer. Now we had collusion between the bank manager and his daughter.
The bank didn’t want to press charges. The president also failed the lie-detector test. I went to the Board of Directors.
“Maybe he was involved with the missing money.”
“Let’s just forget about him entirely. We trust him,” they told me.
I was flabbergasted. It wasn’t until later that I found out why.
As I worked longer with this bank, I got involved with the mortgage bank securities. Without going into all the details, there were all kinds of shenanigans going on in making real estate loans, packaging them, and selling them to Fanny Mack and Virginia Mae, two government agencies that buy up mortgages from banks. The reason why the president failed the lie-detector test was because he was possibly involved in the fictitious loans, phony appraisals, of these real estate loans that were being made.
I went back to the Board of Directors.
They asked: “What do you recommend?”
“First off, close down your mortgage company. They are so incompetent that they are losing you a great deal of money. Big time money.”
They closed down the mortgage company, which was a subsidiary of the bank, and let go all the people.
I was convinced without a doubt that the bank was riddled, top to bottom, with corruption. They didn’t want to prosecute the president or even question why he failed the test. Even the mortgage company president was evasive and didn’t want to answer questions about the loans being sold to Fanny Mack and Virginia Mae.
I didn’t know what else was going on in this bank, and I didn’t want to be involved. Sometimes you can end up with a bullet in your head if you start digging too deep and asking the wrong questions. So, I called up my good friend who helped me land this job and asked him for help to leave and go elsewhere.
I thanked the Board of Directors for giving me the job opportunity, and they thank