Recent years have been hard on businesses across the board; few industries have survived the recession without taking a serious hit. While many companies still need all the business they can get to survive, more recently the economy has begun to see signs of slow economic growth. Although there was a lot of uncertainty for a while it would also seem that companies with a history and established customer base would have a more solid foundation to stand on and a better shot at surviving than a newly established company. However, when a top company executive is involved in a multimillion dollar embezzlement scheme all bets are off.
Unfortunately KSL Media, a 32year old media service company, is experiencing this right now. While the investigation is still in its early stages, it is alleged that the firm’s former controller, Geoffrey Charness, embezzled $145 million from the company into an account held by him and his wife and was used to pay their personal credit card bills. The company was forced to file for Chapter 11 bankruptcy on Sept 11 of this year. The FBI is also involved in the investigation.
Of course this is not the only harm that Charness did to the company. During his time as controller, 2006-2010, his poor accounting practices led to heavy and unnecessary losses. One example that has been cited was a suit from Cumberland Packing Corp., marketing agency for Sweet’N Low, that resulted in KSL being forced to settle because of lack of documentation and inability to defend itself.
A forensic accounting firm has been hired to help determine the extent of damage caused by Charness. Unfortunately, the damage has been too great for the business to survive and it was forced to close its doors. The once vibrant company of nearly 130 employees has already shut down its New York office and a small contingency is left in Los Angeles to complete the closure. Although it may take some time, Charness will eventually be held accountable for his actions; however it will be little consolation to the countless employees that now find themselves out of a job.
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