News: Employer Failure in New Zealand
Failing to undertake background screening before hiring someone can have devastating financial and reputational effects on a company.
Employers wouldn't dream of committing company funds to an expensive purchase like a computer network or vehicle fleet without undertaking due diligence, but many employers think nothing of hiring staff (always a company's biggest expense and risk), based purely on instinct.
The following stories all concern New Zealand employers who failed to undertake or request adequate background screening and consequently unknowingly hired convicted criminals or CV liars who later stole from them or ruined their organisations' reputation.
- Employee who lied about qualifications awarded $10,000
- Convicted arsonist gains job as fire-fighter
- Beekeeper lied about extent of criminal history
- Theft by staff skyrocketing – Hawkes Bay Today
- Accounts Manager not entitled to work in NZ steals $135,000
- School employs nurse suspended from practicing
- Garage hires mechanic who could not fix cars, or drive
- Child sex offender used fake CV to teach in six schools
- Man with 105 convictions hired as security guard
- Employee checks – where does the responsibility lie?
- Hundreds of Teachers have criminal convictions
- Female fraudsters
- Convicted rapist employed at school camp, sexually assaults 8 girls
- Job applicant with 4 previous convictions forged his NZ criminal history record
- Employee stole from three companies
- Lawyer lied about 39 previous convictions
- Accounts clerk jailed for stealing $379,000 from three employers – chronic history of offending
- Charity President stole $120,000 - history of offending
- Large fraud tops $72m in 6 months
- Office Manager imprisoned for $300,000 theft – history of offending
- Lawyer lied about 39 previous convictions
- Fake physiotherapist employed by up-market gym
- Manager with unchecked false employment history jailed for $5.7 million fraud
- Woman gains new job whilst facing charges of defrauding former employer
- Varnished Truths - have you been scammed?
- CIO sentenced for stealing $16.9 million
- Poor interviewing skills costs businesses time, money and risks legal proceedings
- Sacked Tax agent commits further frauds
- Manager jailed for $128,000 theft – history of offending
- Hospital censured for inadequate pre-employment screening of surgeon
- Two health providers employed unqualified nurse
- Doctor with malpractice history employed by hospital
- Discredited security firm almost reappointed by Government department
- 3,500 unregistered teachers may be working in NZ
- Car dealer stole $17,000 – 13 prior convictions
- Security company employed 12 guards without work permits
- Fraud survey results - average $479,000 loss
- Security company provides unlicensed guards with criminal past to Police
- Paedophile was paid $2,000 to provide accommodation to young student
- Retirement home employed de-registered nurse
- Security officer convicted of burglary
- Nine ACC staff disciplined for dishonesty
- Career criminal employed as security guard
- 15 Immigration staff disciplined for dishonesty
- IRD employed woman who earlier stole $185,000
New Zealand improvements
- Pre-employment screening, don't get caught out
- Call to ban jailed directors for life
- Police checks for senior jobs
- Employers step up use of police checks
Friedriech Gostmann was hired in March 2012 as a refrigeration engineer by Independent Refrigeration & Electrical Ltd of Whakatane. He claimed to have had 15 years' experience as a refrigeration engineer in South Africa.
Unbeknown to the company, because it did not undertake adequate pre-employment checks, Gostmann had in fact lied about his qualifications and experience. His competence to do the work was the subject of some ongoing concern to his employer and it came to a head when it was claimed Gostmann was responsible for almost electrocuting an apprentice. Gostmann’s colleagues all expressed safety concerns about his work and said they did not want to work with him.
The company finally decided to contact Gostmann’s former employer in South Africa and it was only then it was discovered that Gostmann had lied about his qualifications and experience.
He had only worked as a handyman and his “qualifications” were acquired from attendance at two 10 day half day training course, needed to satisfy immigration requirements, only. The New Zealand qualification is three years full time study with extensive practical requirements.
Gostmann’s so-called South African employer reference was actually written by Gostmann himself and signed by an unwitting supermarket worker, rather than by a coolroom and display refrigeration manufacturing company in South Africa, as Gostmann had claimed in his curriculum vitae.
Gostmann was subsequently dismissed without notice but he laid a complaint of unjustified dismissal with the Employment Relations Authority.
In its decision the Authority said Gostmann's dismissal was substantively and procedurally unjustified and ordered the company to pay Gostmann lost wages of $5,304 and a further $5,000 as distress compensation for humiliation, loss of dignity, and injury to his feelings that the unjustified dismissal caused him.
The Authority said the company should have carried out more thorough reference checks but acknowledged Gostmann was 50 per cent to blame for his dismissal because his work was not up to standard.
The company could have completely avoided this situation, including putting the life of one of its apprentices at risk, if it had only taken the time to verify Gostmann’s background before hiring him.
Pre-employment background screening is the single most cost-effective due diligence tool available to employers. If you need help confirming the claims and qualifications of your job applicants, contact us today for a quote. Who knows – you might just save the life of one of your employees, and save your own business reputation too.
Logan Scott Handy a volunteer fire-fighter with Swannanoa Rural Fire Force was recently pictured on the front page of “The Christchurch Press” hosing down the embers of a fire, believed to have been started by children, that burnt through a hectare of scrub.
Several readers contacted Waimakariri District Council to say they recognised Handy as a convicted arsonist.
In August 2007, Handy then aged 19, was sentenced to two years' imprisonment on two charges of unlawful sexual connection with a 14 year-old school-girl, burglary, theft of a vehicle and an arson that involved stealing a truck valued at $30,000 from his employer and setting it alight. He had convictions for earlier offending involving indecent assault on a girl aged under 12, and theft.
“The Press” contacted the Council’s principal rural fire officer to ask if he was aware of Handy's background and conviction for arson. He declined to comment, referring the newspaper to the Council’s chief executive. But he was unavailable for comment.
The newspaper contacted Handy and he said he hadn't disclosed his conviction when he joined the fire force, saying “I didn't think it was necessary to tell anyone."
A Fire Service spokeswoman told the newspaper that volunteer rural fire-fighters were engaged by District Councils and were not the responsibility of the Service. But she said Fire Service recruits were vetted by police and it would not be appropriate to employ anyone with an arson conviction.
The Employment Relations Authority has dismissed a claim of unjustified dismissal by 22 year-old Justin Howes against his former employer, Goldenflow Trust, trading as Kauri Coast Honey. Howes claimed he was hired as a permanent fulltime beekeeper for the company, but the employer said the seasonal nature of beekeeping (bees hibernate for up to six months) meant all its staff were aware that their employment was not full time.
Howes said that during his job interview he was asked about any criminal convictions and told his prospective employer he had been charged with receiving stolen geckos and was serving a sentence of periodic detention in respect of a motor vehicle warrant of fitness offence.
On the basis of this information Howes was hired, but he had in fact been convicted of stealing the 23 geckos from two tourist attractions (the Whangarei Museum, and Kiwi House) where he was serving a sentence of community work for previous crimes. He had also burgled the Ti Point Reptile Park at Leigh near Warkworth.
In evidence, the company said it would not have hired Howes if he had disclosed his criminal record. Beehives are commonly located on many farm properties and the company said farmers had an expectation that beekeepers entering their properties were honest.
If you employ staff and routinely ask questions about their background, including any criminal history, then it is essential that the applicant’s claims are verified. It is utterly futile to ask a candidate about their criminal past if you do not follow it up through independent verification.
If the beekeeping company had done this they would never have hired Howes, and would have been saved the considerable expense incurred in defending itself before the Employment Relations Authority. If you would like assistance with verifying the background of your candidates for employment call us today.
PVL postscript: Four weeks prior to his representing himself before the ERA with his claim of unjustified dismissal, Howes appeared in Court to admit receiving 85 beehives worth $27,000 stolen from beekeepers in Kerikeri, Wellsford and Kamo earlier in the year. He was sentenced to perform 400 hours community work and ordered to pay reparations of $7500 at $40 per week.
An increase in employee-related fraud has prompted a warning from Hawke's Bay police for businesses to make sure they employed trustworthy staff. Read article>>
Adriaan Jantje Bouwer, a 27 year-old Dutch national, was today sentenced in Christchurch for stealing from his employer.
The company, whose identity was suppressed by the Court, hired Bouwer in early 2010 in a senior position. Bouwer’s work visa expired a few months later, in April, but the company continued to employ him. Over the next 18 months (through to the end of 2011), Bouwer made 138 unauthorised transfers from the company’s account, to his own, totalling $135,000.
Bouwer, who had two previous drink-driving convictions and a conviction for driving whilst disqualified since entering New Zealand, was sentenced to two years and three months imprisonment on the theft charge. He will be deported when released from jail.
All PVL background screening packages include verifying the right of foreign-born job applicants to work in New Zealand. Had the company engaged the services of a professional background screening company it would have been alerted to the illegality of employing Bouwer beyond April 2010, and could have avoided being the victim of what the sentencing Judge described as a premeditated and difficult to detect crime that had had a significant impact upon the company, staff, and its clients.
Rosylin Radha Singh, a 40 year-old Auckland nurse, has been struck off the Nurse’s Register after being found guilty of forging her practising certificate.
Singh first appeared before the Health Practitioners Disciplinary Tribunal in 2011 after she forged a prescription for a weight-loss drug for her own use. She pretended it was for an elderly resident at the rest home where she worked, but the Tribunal decided her excuse was "fanciful" and found her guilty of professional misconduct, suspending her from working as a nurse for six months from June 2011.
But within weeks Singh applied for a job as a school nurse. The school admitted that they did not check her qualifications and nursing registration before hiring her. Had they done so, her suspension would have been evident.
Then in November 2011 the school asked Singh to complete an application for ACC Health Provider status. On this form she altered her annual practising certificate expiry date from 31 March 2011 to 31 March 2012, to conceal her suspension. ACC contacted the Nursing Council, they contacted the school and the fraud became evident.
The Police charged Singh with altering a document with the intent to defraud. As she had no previous criminal convictions she was offered diversion. Then this month the Health Practitioners Disciplinary Tribunal cancelled Singh’s registration and ordered her to pay costs of $7000.
One final point to note about this case is that when Singh applied for the school nursing position she included a referee and contact cell phone number, The school contacted the referee who gave a positive reference, but during the Tribunal hearing the person named as the referee testified she had not agreed to be a referee, was never contacted by the school, and that she had never used the cell phone number included as her contact number on Singh’s application.
Clearly Singh or someone else impersonated the “referee”. If you are contacting a referee always call their published business landline number, never use an anonymous uncheckable cell phone number that the candidate has provided – you never know who you might be talking to. If you have any doubt about your ability to assess a job applicant, or their CV, or their referees, call us for advice.
If you are considering hiring a non-New Zealand born candidate contact us and we will verify their right to work in New Zealand, as well as verifying their overseas background.
The Employment Relations Authority has determined that a mechanic who could not drive or fix cars, was justifiably dismissed.
Dapeng Qin, a Chinese national, who was only in New Zealand on a working holiday visa, responded to an advertisement in a local Auckland Chinese-language newspaper placed by Trust Worthy Automotive, seeking an assistant mechanic.
Qin was taken on without any confirmation of his mechanical skills and it transpired very quickly that he had not even the basic knowledge about the workings of motor vehicles, for example he did not know what an air filter was or where to find it in a car, and he did no know how to activate the brake lights.
The owner of Trust Worthy Automotive, Kun Xu, dismissed him, but Qin lodged a personal grievance with the Employment Relations Authority, claiming unjustified dismissal. Qin lost the case
Xu could have avoided the resulting legal costs of having to defend himself if he had first established Qin skills before employing him. It is difficult to see how a person who cannot drive can be of any use in a workshop that fixes cars.
Qin also misled the company about his work eligibility, failing to reveals his visa allowed him to work in New Zealand for only three months.
All PVL pre-employment background screening packages include establishing a non-New Zealand born applicant’s right to work in the country.
Te Rito Henry Miki, a 41 year-old convicted child sex offender from 2004, was today sentenced in the Auckland District Court on seven charges of using false CV’s and a birth certificate to gain teaching positions at six New Zealand schools. He was also sentenced on four charges of breaching a supervision order.
Eight years earlier Miki had been convicted of four charges of indecent assault and two of common assault on a teenage boy and sentenced to two years imprisonment. Upon release he was subject to orders preventing him from having contact with children, but went on to train as a teacher.
Using false identities, stolen identities and false CV’s, Miki was able to gain employment as a teacher in six schools during the period 2007 to 2012, only being discovered by chance when a member of the public, familiar with his criminal history, recognised him driving a van load of school children.
A Ministerial inquiry into this matter is underway but we can reasonably speculate that not one of the schools undertook adequate background checks before hiring Mika. Had just one of them contacted previous employers, they would have uncovered his deception.
One school Principal became suspicious of Miki (presumably after employing him), but when confronted, Miki resigned, claiming he had a brain tumour
A second Principal, despite having been made aware of Mika's convictions and use of aliases, still employed him after Miki said the record belonged to his (non-existent) twin brother.
Miki also claimed to have two degrees from the University of Rochville in the United States. If Miki’s school employers had undertaken a simple New Zealand Google search of this institution, the first search result would have brought them here, to PVL’s web site, where as far back as 2007 we reported Rochville as being a fake “university” selling bogus “degrees” online.
According to the Ministry of Education, Miki was paid $159,634.54 for his work at the six schools. In a 2010 report, before Miki was discovered teaching, a Psychologist describe him as a psychopath and sexual deviant who was likely to commit further sexual offences against male children or adolescents.
Miki, who has an extensive criminal record with 42 convictions over a 23 year period in New Zealand and Australia, was sentenced to four years and six weeks imprisonment.
If you work in the education sector and employ teachers call us now for immediate advice and assistance on how to avoid hiring unqualified or dangerous staff. PVL’s founder has been undertaking pre employment background screening in the New Zealand public and private sector continuously for the last 16 years.
Richard Anthony Edwards, (also known as Greening) has been sentenced to 23 months imprisonment after pleading guilty to fraud, theft of a car, and two charges of breaching prison-release conditions.
Edwards was able to gain employment at Rotorua security company “Independent Security Consultants Ltd" (ISCL), despite having 105 criminal convictions, including 84 for dishonesty.
Edwards went to ISCL on 15 January and completed an application for employment in which he claimed an extensive military background, (having been a lieutenant in the army) and had a Ministry of Justice licence enabling him to be employed as a security guard, and was a person of good character. All of which was untrue.
On the basis of his claims, and apparently without sighting the necessary licence, ISCL’s representative hired Edwards, gave him a $400 cash advance on his first salary, supplied him with a uniform, a vehicle and keys, door access codes and alarm codes to a large number of premises guarded by the security firm.
Under the Private Security Personnel and Private Investigators Act 2010, a licensee who employs or engages as a contractor, a person who does not hold an appropriate certificate of approval is liable to a fine of up to $20,000.
The online public register of approved security guards, maintained by the Ministry of Justice is free. We have therefore difficulty understanding why a security company would hire a person as a guard, particularly via a contractor, without first checking the register to confirm the applicant was licenced.
A few days ago 28 year-old Samuel Wiremu John Edmonds was sentenced to seven years imprisonment for breaking into a woman’s home and sexually assaulting her. It was the biggest police investigation in Blenheim in 2011.
During sentencing, it emerged that Edmonds was an employee of a furniture removal company and that he had worked on a job moving the woman into her property several months earlier.
His employer claimed he had every worker screened and vetted. But why would a furniture removal company, entrusted to safeguard and move their clients’ belongings, hire a convicted thief who failed on 45 occasions to turn up to serve his Community Work Order for earlier offending, and was sentenced to prison in 2010?
What does this say about the removal company’s attitude towards their customers expectations that only trustworthy employees will be handling their property and possessions?
Indeed, if the furniture removal company had operated to a higher standard it would never have employed Edmonds, he would not have come into close proximity with the woman, known where she lived, and not, with premeditation, gone out of his way to find her property, broken into her home and raped her at 5am on a Sunday morning.
PVL’s Principal, Craig Gubbins, discusses this appalling employer failure in The Marlborough Express. Read article>>
Lane Nichols of stuff.co.nz reports that in the last two years teachers have been investigated for sexual misconduct, violence, drug and alcohol abuse, incompetence, dishonesty and viewing pornography.
Of the 664 teachers whose behaviour triggered complaints since November 2009, nearly 300 were convicted of criminal offences. Read article>>
Alistair Bone of the Waikato Times reports on the increasing number of women convicted of workplace fraud. Read article>>
Thirty-seven year-old Mathew Everson was today sentenced to Preventive Detention at the High Court in Rotorua after being convicted of nine charges of performing indecent acts on eight girls aged 11-12 years old who attended a school camp he worked for.
Everson had prior convictions for rape, sexual violation and performing an indecent act on girls and boys, and had served terms of imprisonment for each. In fact, his earlier offending had been so serious that Preventive Detention had been considered at that time.
Today in Court, the Judge permanently suppressed the name of the camp that Everson worked for, saying he was satisfied it wasn't to blame as its staff were unaware of Everson's past. When the news media contacted the camp for a statement it refused all comment.
We have difficulty understanding why the Judge exonerated the camp when clearly it should have known about Everson’s previous criminal record. The camp was responsible for keeping the children in its care, safe. It failed to do so.
Unless there are circumstances we are unaware of, it is our view that the failure of the camp to undertake background screening before employing Everson and then allowing him to have unsupervised contact with children, constitutes one of the worst examples we have encountered of employer failure in the hiring process.
Stephen Miers-Jones was sentenced today after earlier being found guilty by an Auckland jury of forging a document which purported to be from the Ministry of Justice stating he had no criminal convictions.
Miers-Jones submitted the forged document to a disability care provider, McIsaacs Caregiving Agency, in support of an application for employment to a senior position. He was subsequently hired on the basis of his “clean” criminal record, as a Regional Supervisor for the company.
Miers-Jones did in fact, have four criminal convictions dating back to 2003, when in the Tauranga District Court, he was convicted of using a forged Masters degree from Hertfordshire College in England; and lying on a disability allowance application to Work and Income New Zealand.
He claimed in Court that he had been discharged without conviction for the earlier offences. However, the Crown Prosecutor presented evidence showing that Miers-Jones had paid four instalments towards the fines owing for those convictions.
Miers-Jones also argued the job application form did not specifically require him to disclose his previous convictions, and only asked whether there was anything the employer should know which may influence its decision on whether to give him the job.
The Judge sentenced Miers-Jones to 150 hours community work and three months community detention.
This case demonstrates the risks inherent in an approach to hiring that fails to recognise the lack of trustworthiness evident in society today, and the power of computer technology, like "Photoshop", to assist those individuals in their endeavours.
Employers expose themselves to risk when they do not have a proper employment screening policy. Mr Miers-Jones would not have survived the rigours of a background screening by PVL.
Debra Kay Price, a 49 year-old Palmerston North Office Administrator has been sentenced to two years and two months imprisonment for stealing $180,000 from three employers, and defrauding WINZ of $16,517 in welfare payments.
Price began stealing in 2005, first from Mag and Tyre Direct, and then Fore Cars Manawatu. By the time she had resigned in December 2008, Price had stolen $134,327.12, making more than 128 transfers into to her own bank account.
She then went on to work for Signature Homes where she stole $31,397.04 and during this time, over a ten month period, received from Work and Income $16,517 in welfare payments she was not entitled to (specifically, domestic purposes benefit, accommodation supplement and disability allowance payments).
Mag & Tyre and Fore Cars only discovered Price had stolen from them years later, after Signature Homes contacted them, alerting them to their own experience of Price's stealing.
In a victim impact statement, one of the company owners’ said Price's offending had caused him to slash jobs at his business and take out loans to stay afloat. He added that it also had affected his ability to trust other staff.
Any one of these employers might have protected themselves and avoided their losses had they undertaken or requested suitable pre employment background screening enquires of Price, before hiring her.
Shadrach Darren Mitchell, a 38 year-old Wellington employment lawyer has been struck-off as a barrister and solicitor by the Court of Appeal after failing to declare an extensive criminal history and three terms of imprisonment.
When Mitchell applied for admission to the Bar in 2001 he declared he had no criminal convictions, and made a similar claim when he began working for his current employer two years later.
Following a tip-off in July 2008, the Law Society requested a copy of his criminal record from the Police. It was only then his employer and the Society learned he had amassed 39 convictions during the period 1989 -1994.
His offending included drug possession, burglary, theft, assault, intentional damage (13 charges), disorderly behaviour, breaching bail, obstructing Police, failure to attend Periodic Detention, four drink-driving convictions, driving whilst disqualified and giving false details to the Police. In 1991 he served five months in prison.
When his employer confronted him, he assured them he had not been to prison and he continued to hide his past at meetings with the Law Society by denying he was the person in question. Finally, in August 2008, he admitted the truth.
If Mitchell's employer, or the Law Society, had requested even the most cursory of background enquiries – a criminal records check – they would have immediately discovered his past. Instead, the Law Society repeatedly issued practising certificates to him in 2006, 2007 and 2008.
When employing an apparently skilled person such as a solicitor or barrister or medical professional, it is reckless to assume their personal backgrounds are without blemish simply because of their professional training. Always request a background check for any person you are thinking of employing.
This man’s employer undoubtedly wishes they had.
Sarah Marie Olsen of Hamilton was today sentenced to 3½ years imprisonment for stealing $379,339 from three former employers over a period of 18 months.
The 28 year-old stole $16,239 from Mag and Turbo Tyre and Service Centre, $30,336 from Advanced Interiors Ltd (in liquidation) and $332,764 from GJE Ltd, a Hamilton electrical supplier. She had only been working three days for GJE before she began stealing from them. The company spent $30,000 investigating the theft.
Olsen spent the money on an extravagant lifestyle including the purchase of motor vehicles, tickets to concerts in Brisbane and Auckland, holidays in Fiji and Australia, and $650 on a cake for her son’s fifth birthday.
Had just one of her employers sought a pre-employment background check of Olsen they would have discovered the woman who portrayed herself as an affluent accountant with her own business (SMO Accounting Ltd) actually had no formal accountancy qualifications, but did have criminal fraud convictions from 2005 after she defrauded an ealier employer.
Following her more recent court appearance, numerous Waikato businesses have come forward to say they too are owed money by Olsen for unpaid goods and services.
Don’t risk your business by employing a convicted fraudster. We can help - call now to have us screen your job applicants.
Adrian Coombe, the 47 year-old National President of the youth section of the New Zealand Diabetes Association was today convicted of 66 charges of defrauding two Manawatu branches of the charity of $120,967.
The offending occurred over a 15 month period, allegedly to fund his addiction to gambling and online pornography.
Coombe's office computer was littered with pornography and he subscribed to sex chat sites, which he used to peruse in the morning before anyone else arrived at the Palmerston North office,
Coombe had five previous convictions for dishonesty but the charity was unaware of this because it undertook no background checks before appointing him.
Coombe, who was granted legal aid to defend himself, was sentenced to two years and eight months imprisonment.
New Zealanders have swindled about $240.6m in large frauds since January 2008. Read article»
Bernadine Warren, a 37 year-old Christchurch office & accounts Manager was today sentenced to 2½ years imprisonment and ordered to pay $90,000 reparation for stealing $298,537 from her employer, Tourplan Holdings.
The company’s Director said that Warren "systematically fleeced" the company for three years.
Warren began to steal within weeks of being recommended for the position by an employment agency. Some of the money was spent on her own company “Dedicated to Beauty”, a Christchurch beauty treatment business.
Had the recruitment company bothered to undertake even the most basic of background checks – a criminal records check – it would have learnt that Warren already had a history of dishonesty. In 1996 she had been convicted of stealing $60,000 from another employer and was given a suspended prison sentence.
This failure by the recruitment agency was compounded by the employer having no policy in place for reviewing the integrity of its staff from time to time – such checks would also have uncovered Warren’s previous criminal offending.
If your company has no policy for reviewing staff honesty then you are exposed to the exact same risk of theft that this Christchurch employer has suffered. Almost all fraud is committed by longer-serving staff (because they have learnt how to circumvent procedures).
PVL can quickly implement a staff review policy for you that will immediately reduce your exposure to employee fraud. Contact us now.
Jonathon Steven Mann has been convicted of 17 charges of misrepresenting himself as a physiotherapist and osteopath and carrying out treatments on unsuspecting patients at an up-market Auckland gym and sports club, and several rugby clubs.
The offending occurred over an 18 month period and the Ministry of Health said during this time, Mann, a 38 year-old British immigrant with no qualifications in physiotherapy, performed numerous restricted treatments on patients, including "high-velocity" manipulations of the lower spine.
Mann had also claimed to a work colleague that he was completing a doctorate that would make him the highest qualified physiotherapist in the country.
Jonathon Mann was liable to a fine of up to $30,000 but the court fined him $900. According to the Ministry, the size of the fine took account of his financial circumstances and didn't reflect the seriousness of his offending.
A disturbing feature of this case was the failure of any of Mann’s Auckland employers to verify that he was a qualified physiotherapist before hiring him.
Had any one of these organisations retained a pre employment screening company they would have been made aware of Mann’s lack of qualifications and his unsuitability for employment, and avoided putting the health and safety of their clients at risk.
The reputation and profitability of the gym in particular, has been severely compromised by its failure to arrange pre-employment checks of Mann before hiring him.
Scott Alwyn Mackenzie (also known as Scot Mckenzie), a 29 year-old Auckland Property Manager, has been sentenced to three years and eight month imprisonment after earlier being convicted of ten charges of defrauding his employer, and a bank.
Mackenzie commenced working for the Omara Property Group in 2006 after submitting a CV that included a false employment history.
Over the next two years Mackenzie fraudulently created 129 bogus invoices worth $1.6 million that his employer and associated companies unwittingly paid to three companies controlled by Mackenzie/Mckenzie.
Mackenzie was also convicted of a $3.5 million mortgage fraud against a bank. He purchased six properties with loans from the bank by creating false documents that exaggerated his income.
He was also convicted of submitting false GST returns that resulted in Inland Revenue paying him $510,000.
This case again demonstrates the need for New Zealand companies to recognise the importance of practicing due diligence when hiring staff.
Had his employer engaged the services of a pre employment screening company, Mackenzie’s false work history, his use of an alias and the obvious conflict of interest in his owing three property construction businesses of his own, might have alerted the company to his unsuitability and so have avoided it being defrauded of $1.6 million.
In July 2007, we reported the case of a senior executive at Tower Insurance who had been convicted of five charges of defrauding her employer of $111,000. (link to earlier story)
The woman was sentenced to 300 hours' community work and granted permanent name suppression. There is a sequel to this story, and it emerged this week.
It transpires that she changed her name, whilst awaiting the outcome of the 2007 charges against her, and obtained a position with the Far North District Council.
During the recruitment process the woman had been asked by the Council if she had any criminal convictions, and truthfully replied “no”. Presumably she was not asked whether there were any charges pending. As a result it was not disclosed that she was currently before the Court. Subsequent to her conviction, the Council were tipped-off anonymously.
The point here is that if the woman was not asked about any pending criminal charges or whether there was any other relevant information that might affect her suitability for employment, and therefore did not lie during the employment screening process, the Council did not have any legal basis for dismissal.
This case demonstrates how essential it is to know which questions to ask when considering a person for employment. Every pre employment screening assignment undertaken by PVL includes having the candidate complete and sign a declaration, that amongst other things, asks questions about any previous names and any pending court appearances.
Fraud on a massive scale has been in the headlines, from Michael Swann's $17 million efforts at the Otago District Health Board, to US financier Bernard Madoff's Ponzi-scheme billions But fraud is often much more everyday than that, as Kim Dungey and Shane Gilchrist report. View article>>
Michael Andrew Swann was today sentenced to 9½ years imprisonment with a minimum non-parole period of 4½ years.
The 47 year-old former Chief Information Officer was earlier found guilty of defrauding his employer of $16.9 million. It is the largest known employee fraud of taxpayer money ever committed in New Zealand.
In 2006, Swann was sacked by the Otago Health Board for “gross mismanagement”. As CIO, he had been invoicing two companies (Harford Sonntag and Associates, and later, Sonnford Solutions), owned by his associate Kerry Gray Harford (a 48 year-old Queenstown property surveyor with no IT experience), for computer maintenance and software licence agreements.
Although 198 invoices were created and these services were never provided, the two companies received payments from the Health Board totalling $16,902,145. In fact the Health Board was already receiving these services under existing agreements with IBM.
Harford retained 10% of the money and forwarded the remaining $15.2 million to Computer South Ltd, a company controlled by Swann. He was a signatory to the company's bank account, and was in full control of its funds. Harford was also sentenced today, receiving a 4¼ year prison term. (PVL Comment 26 April 2010: Harford only served 58 weeks in prison – he was released three days after becoming eligible for parole).
The Health Board has asset-protection orders against property owned by Swann including, 30 vehicles, mostly luxury cars such as Lamborghini’s and Porsches'; several boats, including the 50-metre launch “Townsend Cromwell”; property in Wanaka including a substantial home; a residence in Dunedin (with a Government valuation of $1.1 million); and a property in Central Otago. Swann’s salary whilst working for the Health Board had been $145,000 a year, but he was receiving an average $43,000 a week from his frauds. The offending spanned more than six years.
An aggravating feature of this case was the Health Board’s failure to ensure that Swann was a fit and proper person to have control of such large sums of public money, and its failure to monitor his delegated authorities over such a long period of time.
When Swann was being considered for appointment, the Board should have been aware that he was a former bankrupt. The Board has admitted in a briefing to the new Minister of Health that no verification of Swann’s background was undertaken before he was employed.
Had it engaged a professional pre-employment screening company, they certainly would have been made aware of his circumstances. Having taken that precaution, the Board may have avoided the stigma of becoming the victim of the largest employee fraud of taxpayers money reported in this country.
The Board has also paid $1.3 million investigating and prosecuting the case - increasing the total cost to $18.2 million. The $1.3m comprised $890,000 in legal fees and $420,000 in other costs such as the recovery, storage, security and valuation of Swann and Harford’s assets, including the cost of returning a yacht from Fiji.
PVL Update (11 February 2010): Last October, a life-long friend of Swann’s, 48 year-old Robin Sew Hoy pleaded guilty to corruption under the Secret Commissions Act and was later sentenced to 10 months' home detention and ordered to repay $325,000 to the Otago Health Board.
During the period 2000-2008, Sew Hoy paid Swann “kick-backs” totalling $757,685 in return for ensuring his company, Innovative Systems Ltd, was awarded a $4.7 million contract for providing the Health Board with IT help desk support. The arrangement was that for every hour charged out at $95, Swann would receive $25. At the time most hospital boards were paying $56 an hour for outside IT support.
When the corrupt payments were discovered the Health Board terminated the contract and made an immediate saving of about $500,000 a year by employing the same three people who had been providing the service on behalf of Sew Hoy.
Swann denied accepting inducements from Sew Hoy and had been due to stand trial in March 2010, but on 17 December 2009 following Sew Hoy’s sentencing, he changed his plea to guilty.
Swann was today sentenced to 20 months prison, to be served concurrently with his current sentence. Swann's lawyer also said there was no more than $5 million in assets available to repay the $17 million he had stolen.
PVL was asked by the ”National Business Review” to comment on the Swann fraud case. Read NBR correspondent Mark Peart’s article here>>
International business leadership consultancy DDI has released a report showing that job interviewers are risking landing their organisation in legal hot water.
It’s 2008 Survey of Global Interviewing Practices and Perceptions found that 54% of interviewers were unable to correctly identify illegal questions and 47% spent less than 30 minutes reviewing candidates’ interview results before making a selection.
The research underlined the need for organisations to have properly developed assessment and selection processes in place, and a greater awareness of the impact a good or poor hire can have on the organisation.
It notes businesses’ due diligence when bringing new people into the organisation is often worryingly lax. Read DDI’s report on their web site here>>
Heather Jean Trudi Manssen, a 37 year-old Whakatane tax agent has been convicted of 79 charges involving the defrauding of Inland Revenue (IRD) of $47,868.
In her professional capacity, Manssen registered 12 people for tax rebates with IRD but entered her own bank account number for the tax refunds to be paid into. In just four months she submitted 70 rebate claims to IRD totalling $43,493.
Her employer discovered the offending last July, dismissed her, and reported the matter to IRD.
However, Heather Manssen went on to secure a job with another Whakatane accountant and she was able to submit another six tax rebate claims to IRD amounting to $3,745.
What is most disturbing is not so much the original charges, but that Manssen was able to obtain another position and continue her offending. It is unlikely she would have been able to do this if her new employer had engaged a pre employment screening company to establish her suitability.
Manssen was sentenced to 12 months home detention, 240 hours community service and ordered to pay IRD reparations of $42,801.
Steve Amstad, the 33 year-old manager of a Christchurch timber treatment plant has been sentenced to 2½ years imprisonment after being convicted of using $128,000 worth of his employers chemicals to undertake more than 100 private jobs at cut rate prices for clients of the firm, earning himself $108,550. Amstad had been employed by the company as its Plant Manager for two years.
Had the company undertaken pre employment screening of Amstad when considering him for the position it would have discovered that he had a series of dishonesty convictions and that he had served a 10-month jail term for a similar type of theft from an employer in 1996.
The Health and Disability Commissioner has censured Wanganui Hospital for the inadequate reference checking it undertook before employing Dr Roman Hasil, an obstetrician and gynaecologist from Slovakia. The enquiry arose from failed tubal ligation operations performed by Hasil that resulted in eight women later becoming pregnant, a failure rate of 25%, compared to an accepted failure rate of 0.2%. A woman also had her ovaries removed by Hasil without her knowledge and only discovered it had happened after a routine visit to her GP, months later.
The Commissioner noted that the Hospital had cut corners in the face of endemic staff shortages and that there had been “a lack of care in appointing staff”. Hasil had originally been referred to the Hospital by recruitment agency “Enterprise Medical”, a branch of Auckland-based “Enterprise Recruitment”, and the Commissioner observed that it was clear that both Hasil and the recruitment agency (which prepared Hasil’s CV) had difficulty in providing satisfactory referees.
The Commissioner’s report concluded that one referee (a consultant obstetrician) had provided a “damming” reference to Enterprise Medical, but that it was not documented nor reported to Wanganui Hospital by Enterprise Medical. The Commissioner reported such agencies have a commercial interest in placing a candidate and that Enterprise Medical’s process was less than reliable.
Unbeknown to the hospital, because it did not undertake adequate independant pre-employment checks, Hasil had previously served a term of imprisonment in Singapore and had a “chequered work and medical registration history” in several Australian States.
In March 2005, five months before being employed by Wanganui Hospital, Hasil resigned from Lismore Base hospital in New South Wales while under investigation for falsifying his timesheets and later that year he was dismissed from Angliss Hospital in Victoria for alcohol use while on duty.
From the outset of his employment at Wanganui, concerns were raised about Hasil. They initially related to his competence and later Hasil was reported to be smelling of alcohol while on duty on several occasions. The concerns about his competence did not abate, and further patient and staff complaints were received.
The Commissioner found Hasil’s background should have come to light during the process of his pre-employment and registration in New Zealand. It did not, owing to inadequate reference checking and credentialing. The Commissioner said his report has national implications.
PVL Footnote (18 March 2008): From April, the British National Health Service will require all medical doctors seeking employment in the UK to submit to mandatory pre-employment verification checks. Read the story here.
Tauaroha Davies a 52 year-old Wairoa woman, was found guilty of malpractice and professional misconduct following the discovery that she falsified a practising certificate allowing her to work as a registered nurse, when she was only qualified to be employed as an enrolled nurse.
From 2001 to 2003 Davies was employed as a registered nurse by the Glengarry House Elderly Care Rest home, and also the local Plunket in Wairoa. Davies registration as an enrolled nurse was cancelled.
The Southland Coroner has ruled that excessive force used in the delivery of a baby girl by a Southland Hospital obstetrician was a contributing factor in her death (he had climbed on to the birthing bed to get better leverage). The Coroner also expressed concern at the doctor’s attempts at "sanitising" the reporting of events before the death.
The obstetrician was Dr Enrique J. Tomeu, a US-trained doctor who had a history of malpractice suits in the United States and was the subject of two complaints from Southland patients.
Earlier in the United States, in 2000, a jury ordered him to pay $328,000 for defaming a nurse during a dispute over a pregnant woman’s care. Then in May 2003, Tomeu settled a malpractice suit for $360,000. A further four malpractice lawsuits against Tomeu were filed between 2002 and 2004, involving claims of infant birthing injuries similar to the Southland complainant’s. Afterwards his U.S malpractice insurance carrier refused to reinstate cover for him.
The Southland woman whose baby died under Tomeu’s care told the Coroner the incident raised questions about the way Southland Hospital vetted potential employees, claiming the hospital should never have employed Tomeu in the first place.
The Ministry of Defence was on the verge of signing a contract with “Specialised Guard Services Ltd” to provide security guards at its Wellington Headquarters when it was disclosed to them that the same company had 12 months earlier had its contract with the Wellington Police cancelled because it had provided it with unlicensed guards with criminal convictions (see story below, dated 21 June 2006). The company continues to offer security guard services, but trades under another name.
Teacher registration is compulsory under the Education Standards Act 2001, but it is estimated by the New Zealand Teachers’ Council that as many as 3,500 teachers remain unregistered, despite the Council holding an amnesty earlier this year.
The Registration process includes checking the teacher’s name against Police records. The reason for this is to ensure that pupils are not exposed to an unacceptable risk.
It is the responsibility of School Boards and Trustees in New Zealand to ensure their teachers are registered, and continued to be registered. In the United Kingdom, political rows have broke out when it was learned there had been instances of sex offenders working in schools.
Alexander Yeo, a 44 year-old Christchurch used car salesman has been convicted of stealing $17,076 from his employer.
Yeo had been “head-hunted” from a neighbouring car yard but over an 11 month period he kept money from the sale of cars on the yard.
Had his employer considered requesting a background screening check of Yee it would have learnt that he already had 13 previous convictions for dishonesty and three for drink-driving.
Yeo, who denied the offending for almost a year, was jailed for nine months, with leave to apply for home detention. He was ordered pay reparations of $17,076.
Chubb New Zealand dismissed 12 of its security guards after it was revealed that the employees did not have permits to work in New Zealand. Chubb had engaged an employment agency to recruit the staff and they had been deployed by Chubb to work in various banks and at Customs Department facilities. None were entitled to work in New Zealand and none were licensed security guards, as is required under New Zealand law.
In it annual fraud survey, KPMG reported that an analysis of 465 responses from private and government sector organisations in New Zealand and Australia revealed that 53% of New Zealand respondents had experienced at least one fraud in the 21 month period to January 2006, and that the average financial loss to the organisation was $479,000.
Fourteen percent of those staff that committed fraud already had a history of dishonesty with a previous employer.
It was reported the surveyed companies admitted they had failed to undertake pre-employment screening, which would have reduced their risk.
Wellington Police suspended its contract with a local security company “Specialised Guard Services Ltd”, after the security firm supplied two unlicensed male security officers with criminal convictions, to monitor a high risk female prisoner being held in the Wellington Central police cells.
The security firm’s actions were compounded by Police staff incorrectly, but reasonably, assuming that the company had completed the compulsory security industry background vetting checks and licensing approvals required for individuals to be employed as security guards. The company had not done so.
One guard had rape and serious assault convictions, whilst the other had convictions for dishonesty.
The Managing Director of “Specialised Guard Services Ltd” claimed the Police had been advised one guard had gang connections and previous convictions. However, he said the second guard lied about his conviction during the recruitment. Wellington’s Police Area Commander Inspector Peter Cowan said he did not accept that Police were informed about the criminal convictions of either guard.
Barrie Cooper, the President of the New Zealand Security Association said there were 4,000 licensed security guards in the country, but he estimated there were a further 2,000-3,000 unlicensed guards working inside New Zealand businesses and companies.
A convicted sex offender with a criminal record dating back 40 years was able to provide home-stay accommodation to a young female student by giving a false name to the agency responsible for finding foreign students places to live.
Paul Franklin-King, aged 65, wrote to the agency under a false name offering student accommodation, specifically requesting a female student to live at his house. An agency representative visited the home to assess his suitability, paid Franklin-King $2,000 and a 17 year-old female student later arrived to live in his home.
Twelve months earlier Franklin-King had been forced to leave the west coast town of Blackball when its residents discovered him living there under the name Graham Wootton. At the time he was on probation after serving a prison sentence for indecent assault on a girl aged under 12. He had other sexual offending convictions dating back to the 1960’s.
Although the agency responsible for finding the home-stay accommodation regularly passed the names of home-stay providers to the Police for vetting, it did nothing to verify the name or identity of individuals.
The Ministry of Health revoked the certificate of the Culverden Group, which operates the Pasifika Centre and Hospital in Mangere, after a series of audits found its standard of care below acceptable practice.
Amongst the findings which influenced it decision, the Ministry noted one employee had claimed to be an experienced psychiatric nurse (although not currently practising), but a check with the Nursing Council found that the person had been removed permanently from the register as a result of a serious criminal conviction.
Jeremy McLaughlin, a security officer, was sentenced to eight months imprisonment for burglary. He used PIN numbers given to him for his security patrol work to defeat a burglar alarm and burgle a house, stealing property to the value of $1484.
McLaughlin was not a licensed to work as a security guard and the company that recruited him was in breach of the Private Investigators & Security Guards Act for having employed him.
During the last ten months the Accident Compensation Corporation took action against nine of its staff for dishonesty, including two employees who were dismissed for falsifying medical records.
Richard John Benefield, who was employed as a security guard, despite having 183 convictions and 21 jail sentences, was sentenced again to a term of imprisonment for stealing property valued at more than $10,000 from the Wellington company he was supposed to be guarding. He was jailed for three years.
Benefield was not licensed to work as a security guard (and would have never be able to qualify for certification) and the security company that recruited him was in breach of the Private Investigators & Security Guards Act by employing him without first ensuring he was approved to work as a security guard.
In the year to June, fifteen Immigration Service employees were found to have committed acts of dishonesty, up from nine the previous year when two locally employed staff at overseas offices were dismissed for accepting bribes. Most of the 15 staff were dismissed.
Kimberley Ware, served a term of imprisonment for stealing $185,000 from her mother’s bank account.
She was later employed by the Inland Revenue Department and whilst working there manipulated IRD numbers and defrauded the department of $23,000.
Ware pleaded guilty to four fraud charges in Wellington and was sentenced to 300 hours community service and 12 month’s supervision.
New Zealand improvements
"It is estimated the cost of a bad hire can total 75% of an employee’s annual salary. Can you really afford to get it wrong? Companies such as Personal Verification Ltd will aid in background, criminal and CV checks". View article>>.
The Securities Commission is pushing for a crackdown on company directors which could see some banned for life, and more sent to jail, as part of an overhaul of securities laws. View article>>.
Police checks on candidates seeking high-profile public sector jobs have become routine since allegations of CV fraud were raised against the former head of the Immigration Service Mary-Anne Thompson this year. view article»
PVL Comment: Readers should be aware that a ‘Police check” (sic) will reveal disclosable criminal convictions of a person, however, it will not uncover a fraudulent CV.
Use a pre-employment screening company to verify a CV.
Employers anxious not to hire sex offenders and fraudsters are flocking to the police for background checks. view article»