Our weekly round-up of fraud stories will return next week. The Wall Street Journal ran a story about small business fraud on Monday that was so good, I wanted it to be the focus of this week’s blog.

The story covers a manufacturing company, E.F. Couvrette Co., that had grown to $10M per year in revenue.

The owner hired a COO who stole more than $300,000 with the usual tricks… he covered his tracks by altering company records and altered credit card bills to show personal transactions as business expenses.

Now Mr. Couvrette’s annual revenue has been slashed by 60% and so has his production line—to about 30 workers, down from 150 five years ago. The hulking gray manufacturing plant on his company’s 10-acre site contains pockets of workers, but most of the production line is quiet. Many of his former bank customers have found other suppliers. And Mr. Couvrette’s credit is shot.

What struck me about the story is what I call the “triple whammy”.  First the owner lost money from the actual crime… $300K is not pocket change, even for a $10M business.  Next, he “lost” the time and expenses associated with trying the case.  The article doesn’t document them.  The owner probably doesn’t want to even add them up.  The final whammy is the fallout from the crime.  Mr. Couvrette can’t get the working capital he needs to run his business as a result of the fraud.

Get the full details by clicking the link above.  There is even a second story about Jay Myers… his bookkeeper robbed him while he was struggling with his brothers death.  There are also expert tips on how to protect small businesses from fraud.

-CP Morey