Wednesday, October 14, 2015

Innovate Mississippi CFO accused of embezzling $1 million

Innovate Mississippi sued its former accounting firm on October 7 in U.S. District Court for failing to detect alleged embezzlement by its former Chief Financial Officer, Tanya Klauser. The company demands Carr, Riggs, & Ingram, LLP repay all fees and expenses.  Innovate Mississippi is a Ridgeland non-profit company that focuses on helping technology start-up companies obtain venture capital from private investors.  The company charged that CRI should have detected Ms. Klauser's alleged embezzlement:

For each year it prepared audits for Innovate, CRI issued "clean" audit reports in every material aspect.  At no time during its tenure did CRI ever raise a concern of any significance involving Innovate's management, internal contrnols, or financial practices.  CRI repeatedly informed Innovate's board of directors that it uncovered no material deficiencies...

Innovate replaced CRI with BKD, LLP as its new auditor for the fiscal year ending on June 30, 2013.

Durins its initial assessment, BKD immediately discovered several issues of concern regarding Innovate's CFO, Tanya Klauser, and Innovate's internal controls.

BKD advised Innovate regarding its concerns and Innovate subsequently engaged BKD to conduct a full forensic investigation.

Through its forensic investigation, BDK discovered three types of unauthorized transactions perpetuated by Klauser:

1) unauthorized payments to Klauser's personal credit card.
2) unauthorized expense report charges
3) unauthorized charges to Innovate's credit card.

It was discovered that Klauser had embezzled more than $500,000 from Innovate during her employment.  The exact amount of Klauser's embezzlement has not been finally commputed but is believed to be approximately $1.0 million....

Indeed, BKD discovered Klauser's fraudulent activity in a matter of days whereas CRI gave no hint during its long engagement (six years) that either fraud was occurring....



The 2013 tax return states Ms. Klauser's salary was $115,916 and her benefits were $12,619.  The 2012 tax return states her salary was $110,311.  The 2013 tax return claims a loss on embezzlement of $165,123 although the 2014 tax return is not available.

Innovate Mississippi was formerly called the Mississippi Technology Alliance.  The case has been assigned to Judge Dan Jordan, III.  Attorney Zachary Bonner represents Innovate Mississippi.


36 comments:

Anonymous said...

Someone was asleep at the wheel.

Sal Mineo said...

It sounds like a sweetheart client that they got comfortable with and then sent new staff out every year for training and out of convenience. They may have been way behind on other work and this job was "clean" with no problems. This will be super-hard for CRI to defend. BKD knows what they are doing and it shows.

Kingfish said...

CL to rip off in 3....2....1....

Anonymous said...

I disagree that this is the result of new employees training on the client. Someone right out of college is biting at the bit to find something and get noticed. If a new employee cant trace a basic credit card payment or discovers an unapproved expense report, they're definitely going to speak up to their senior or manager. I suspect someone higher up at CRI was involved. Someone that lost their job around June of 2013

Anonymous said...

This must be a mistake. This company helps technology start-up companies obtain venture capital from private investors. Surely the leadership pays more attention to details than this.

Anonymous said...

20 dollars maybe, but 1Million. The leadership over there is stellar. They would miss that money. This is a mistake.

Anonymous said...

They haven't had leadership in years.

Anonymous said...

What happened to her? I'm curious. Did she go to jail? How do things like this work?

I see that on her LinkedIn she still lists herself as the CFO of MTA. I doubt she will ever be the CFO of anything anywhere again.

Jimmy Olsen said...

The Clarion Ledger, Statewide Newspaper, will clarify all of your concerns shortly. Breaking stories are always incomplete and patched together quickly.

Anonymous said...

@9:09 what do you mean a mistake? are you saying this didn't happen?

Anonymous said...

The board should really clean house. That is a small company. Who was approving her expenses during that time?

Anonymous said...

Promoted to CFO in 2010. Bach degree from DSU, Masters from MSU

http://msbusiness.com/2010/07/mta-promotes-two-hires-one/

http://www.tonklaus.com/about/

Anonymous said...

@9:09 and 9:45: It's obvious something happened...Kingfish added copies of legal documents. Maybe the CL can explain the $1Million. Somebody needs to.

Anonymous said...

@11:12: Name everyone involved. Not just the obvious sacrificial lamb.

Anonymous said...

Kingfish why are you protecting CRI?

Who was the CRI employee and partner who were in charge of this audit? Someone reading this knows...

Anonymous said...

@9:55am: Right!

Kingfish said...

Meaning Innovate Mississippi contacted a friendly reporter and is going to manage the story.

Anonymous said...

@ 11:12 dig deeper.

Anonymous said...

This doesn't appear like a managed deal. Sadly, these things don't get picked as quickly as they should. What you'll find is there was some sort of collusion with the CPA and the CFO. Ain't no doubt. As to their leadership, I'll say they're the only group in this state that is trying to do what they do. Further, the fact that there's only one group doing it is sad. These guys have had some good wins! What's also not surprising are the clowns here acting like these guys are no good. Damn, do we have to be last forever guys?

Anonymous said...

The State of Mississippi needs to stop wasting tax dollars on this group.

Anonymous said...

@ Jimmy Olsen... More like bury. No one even commented on this article from the statewide newspaper.
http://www.clarionledger.com/story/money/business/2014/05/23/innovate-mississippi-accounting-stcrutiny/9475991/

Anonymous said...

@11:39 They are unique and fill a needed role.. BUT someone did drop the ball. Admit that! Yeah you're right. It's no big deal that the money is gone. Hang the CFO out to dry.

Anonymous said...

Of course they need to manage the story Kingfish. The C-L doesn't want to impede the flow of stupid Tony Jeff columns about podcasts and Youtube How-To videos. Jeff is stuck in a time warp back to at least 2005.

Anonymous said...

@11:39 Yes you do! They managed public money and public trust.

Anonymous said...

Another Mississippi State grad and fellow CPA was at the helm of a quarter billion dollar disaster at singing River health system. Chris Anderson is his name.

Anonymous said...

Hey 11:41 step away from the fry cooker for a minute and tell me what should the state be doing to try and innovate at all? Has it ever dawned on you that other states (our competitors) are doing this in a bigger way than we are?? What is your solution?? Just stay 50th and keep being broked*&k?? Give us some answers while you're on your smoke break. geez you people.

Anonymous said...

Zack Bonner represents Innovate???

Anonymous said...

@12:05 Many private and public LEADERS manage their mission and public money without scandal. To your point, Mismanagement of public funds may be why Mississippi is 50th in somethings like innovation management.

Hykykie said...

The C-L said they had not heard of the lawsuit.

Anonymous said...

Nice try 12:37. This happens everyday sadly and they changed audit firms and it was caught, the bad guy has plead guilty. Now, let's support these guys, THEY are a minority here in the state.

Kingfish said...

I'm covering for CRI?

How?

Anonymous said...

Touche'1:12pm It's time for new blood over there. Not too long ago a similar scandal happened with another innovation organization called ITD. That was more than 20 years ago. Missions will outlive their leadership. There is a core group of people over there who are built to survive leadership change. The board should know this well.

Anonymous said...

With the amount of founding they are getting, their output should be thru the roof. Yes, there are other places in Mississippi that provide services like that and they do it efficiently. So, the scheme with In MS is to take the entreprenuers through a LONG computerized process, requiring numerous wasted meetings, while giving the entreprenuers a glimmer of hope that they may someday see an angel investor who actually foots the bill.

What in the world does that non-profit actually spend that much funding on?

And for the record, there are other ways of helping start-ups, rather than pouring buckets of money into a center that actually stifles growth.

Perhaps the everyday investors and angel investors will have more access to see the start-ups when Mississippi's first round of Equity Crowdfunding launches in the next couple of weeks.

We have to get out of this non-profit mindset and get into having skin in the game. Quit relying on the government to provide all these services and let's get out and make it happen, FOR PROFIT

Anonymous said...

At 11:44PM. 10-15 years ago this company brought awareness to the need for innovation and entrepreneurial activity in MS. They were unique and ahead of their time. A better question is when did they stop pushing the envelope? They challenged private and public entities to step up their game. It worked. So you are right there are other organization in the state that provide business development services, but they don't do what Innovate does and they don't understand the mission the way Innovate and the board once did. The management of the money matters as much as the mission. The State made a worthwhile investment. The leadership fell asleep at the wheel. It's time for the board to be present and steer the org back towards the original intent.

Anonymous said...

According to the profile information on her Facebook page, Tonya is now an Accounting Manager at U-Save Auto & Truck Rental's Corporate office. Cha-ching!

Anonymous said...

It's actually not the auditors job to look for fraud. They should be aware of opportunities that could lead to fraud and consider internal control environments. But nowhere in a typical engagement letter does it say they are going to look for and detect fraud. They audit the financial statement for reasonableness. Now, having said that - the fact that BDO found it in a matter of days makes a huge case to sue the predecessor firm.

An anonymous CPA

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