Chapter 16
Numbers and Investigations
When court reconvened, Justice Richardson told everyone that she hoped they had enjoyed the break because she was not going to allow another one for the rest of the day. Clearly showing her ill temper, she curtly asked the crown to call the next witness.
"The crown now calls Ms. Geraldine Stavros to the stand," Samantha said.
"Ms. Stavros what is your occupation?" Samantha asked.
"I am a chartered accountant with the Auckland Firm," Stavros replied.
"Why were you hired by Mr. Taylor?"
"Scott Taylor suspected that something was out of sorts with the company finances and wanted me to perform a full audit of the books."
"Just so the court can understand, can you quickly describe what an audit of a company normally would look like?" asked Samantha.
"Well, a company hires an outside auditing firm, like the one I work for, to independently examine the entire business. A normal audit would include not only the company's financial statements, but their tax filings, holdings, as well as any inventory. Once the audit is started, auditors would first examine the financial statements presented to make sure the math adds up. Once that is complete, the auditor would randomly select certain expenses to examine more closely. There would be a cross-check of a billing company's name and information against those employees of the company being audited to make sure that the company involved was legitimate. There would also be an inventory check to make sure that what was being bought was in fact being delivered. Assuming everything was in order, the audit could take anywhere from 6-8 weeks after which time the auditor would issue a report on the findings."
"We just heard testimony that some companies give the auditor a list of pre-approved companies that they do business with, as sort of a way to speed up the process. We heard that this could have the effect of hiding illegitimate companies. Did Mr. Taylor give you such a list?"
"Well Ma'am, it is true that companies sometimes provide auditors with a list of companies that they do business with, and it is true that it does speed up the process, but it does not have the effect of hiding fake companies," Stavros responded.
"How so?" Samantha asked.
"Because, as I just told you, a random number of financial expenditures are chosen to be scrutinized further. If the auditor wanted to examine all food services expenditures for example, he would be free to do so, pre-approved companies list notwithstanding. If a company provides a list, it makes our job a lot easier because we don't have to do a majority of the research, but it doesn't circumvent the system."
"But what if a person knew that. What if a person provided you with false information on this list. Couldn't that lead to a company being accepted as legitimate when in fact it wasn't?"
"Not if you had a really good auditor. A really good auditor still would cross check the information against the employee's data of the company. A really good auditor would still do research to determine if the information provided was in fact true. But even if he didn't do that, he would still examine the invoices closely for financial irregularities that are bound to be present if the company was a fake," Stavros explained.
Having heard enough, and seeing that the jury had almost fallen asleep, Elijah decided that he had to step in.
"Your Honor, when this testimony began, the madam prosecutor said that she wanted this witness to quickly explain how an audit works so that this court would understand the process. I assumed when she said quickly, she meant in less than 2 minutes, not more than 10. This trial is devolving into an accounting lecture. If counsel has a point to this line of questioning, I suggest you urge her to make it before this entire courtroom nods off," Elijah said, as a couple people in the gallery chuckled.
"I apologize for straying off topic a little." Samantha said, "I will move on to the point."
"See that you do," Justice Richardson said.
"So did you receive a pre-approved list from Mr. Taylor?" Samantha asked.
"No," Stavros said.
"Why not, seeing as how it was common practice with this company to do so."
"When Scott Taylor approached me in February of last year, he suspected that during the 2009 season, someone had been stealing money from the park. He ordered me to do a full audit, as opposed to the normal audit that I have just explained. He felt that in order to succeed in finding out if he was right, that I should have no more information than was absolutely necessary to complete my work. To that end, he did not provide me with any information as to the companies that the park frequently did business with."
"So what were your findings after this audit?" Samantha asked.
"Well my findings were inconclusive," Stavros responded.
"In what way?" Samantha asked, looking a little puzzled.
"Well, if a person was stealing from the company, they were really good. They didn't make the mistake of double charging the company for items. They didn't use any of the employee's initials or addresses in the paperwork creating the company. They didn't even issue fake checks that were deposited into an employee's personal account," Stavros explained.
"Then what concerned you?"
"The only thing that grabbed my attention was entries in the ledger of weekly payments of $45,454.54 to a 'Just in Time Supplies' online supply shop. This payment amounted to exactly $1,000,000 for the period between May 1, 2009 and September 25, 2009. Although companies sometimes have regular payments to banks, it is very rare that a company would have these types of payments to a vendor unless there was a signed contract. There was no such contract in this case."
"After researching about this online store, what did you find?"
"Upon looking at the website, it showed that this particular online shop was for the Metro Toronto Area and only sold items to businesses that were hard to inventory. These things might include garbage bags, soap, plastic cups, and things along those lines. In other words, they were a catch all. What made this store different is that they specialized in getting businesses items that were needed in an emergency. So, if for some reason, your inventory manager screwed up and didn't order enough garbage bags, you could phone the store and order what you needed and they would guarantee delivery within 8 hours-- for a hefty price of course. I tried to phone the company several times, but no one ever answered. This was highly irregular because the only way you could order from the company was to phone them, so if you could not reach them, how could you place an order?"
"Did you find out who owned the business?"
"The website didn't mention the owner, but listed the President as Eric Turnbow," Stavros said.
"Objection Your Honor," Elijah piped in, "but we've listened to this witness for over 25 minutes and she has not presented this court with one iota of relevant evidence that ties my client, Elliot Ravenwood, to this company. I wish that the crown be admonished for presenting a witness that would confuse the jury."
"Your Honor," Samantha said, "this witness is going to set the foundation for what Mr. Taylor would do next. I ask for a little leeway, for I'm almost through."
"I'll overrule the objection for now, but I'm warning you Ms. Howard, if this witness' testimony does not somewhere tie together with the rest of the case, there will be consequences," Justice Richardson said.
"Thank you Your Honor," Samantha replied. "Just two more questions. Besides the weekly payments, and no answer by the business, was there anything else that piqued your interest?"
"The only thing was that the President's name was listed as Eric Turnbow. Typically with frauds, the person committing the fraud picks an alias that somehow is connected to themselves, either by using their initials or some other thing relating to them so it is easy to remember their alter-ego's name. In this case the initials E.T. didn't raise any concerns until I looked at people's full names. With Elliot Ravenwood's middle name being Travis, this certainly did fit the pattern which fraudsters use to conceal thei
r identity," Stavros said.
"Finally, what was your recommendation to Mr. Taylor?"
"I told Mr. Taylor that although nothing was conclusive, that he should investigate the company 'Just in Time Supplies' further in order to confirm what his company bought from that vendor. I gave this recommendation to him over the phone six weeks before his death, and delivered the copy of the completed official paperwork for the audit in person the day before he died."
"Thank you Ms. Stavros. No further questions," Samantha said.
"Any questions for the defense?" the judge asked.
"Just one Your Honor. Ms. Stavros you just said that since the initials of the President of this company was E.T., that it COULD suggest that this was an alias for my client. Was Elliot Ravenwood the only one in the entire Metro Toronto area with the initials E.T.? You don't have to answer that because it's impossible for you to know," Elijah said with a smirk on his face. "But after you said that, I asked my associate to quickly go into the hall and pull up a telephone directory for the Metro Toronto area. You know what she found? There are over 750 people with the initials E.T. just in the City of Toronto alone. That's not including the suburbs. So isn't it possible that it was one of them?"
"Not likely?" Stavros said.
"Why not?" Elijah asked.
"Because the only one working at the park with the initials E.T. is your client, Mr. Ravenwood."
"Ah yes, that's if your theory is correct, but in your years of experience, have embezzlers always used their initials when creating fake identities?"
"No, not always."
"So isn't it possible that that is exactly what happened in this case and that your theory is simply incorrect?" Elijah inquired.
"Objection, my learned friend here is being argumentative, and asking the witness to speculate," Samantha said.
"Objection sustained," said Justice Richardson.
"I have no further questions of this witness."
"Ms. Howard, do you wish to re-examine the witness?"
"No Your Honor," Samantha said.
"Then the witness is excused."
"The crown would now like to call Mr. Andrew Minaldi to the stand," Samantha said.
"Mr. Minaldi," Samantha started, following the swearing in of the witness, "what is your occupation?"
"I am a licensed private investigator," Minaldi replied.
"Why did Mr. Taylor hire you?"
"He got a report that suggested that the company 'Just in Time Supplies' was a front company that was siphoning around $1 million dollars from the park during 2009. He hired me to investigate the company to determine if this was in fact the case," Minaldi said.
"Was it the case Mr. Minaldi?"
"Yes it was. Over the course of five weeks, I used my contacts in the community to get a look at this company's books. The company itself was owned by a man named Elliot Ravenwood, even though it listed its President as Eric Turnbow. The financial statements also showed that apart from the renting of their one room office located in western Toronto for $1,454.54 a month, the only other withdrawals were into two personal savings accounts at the Sovereign Bank of Toronto. The accounts were registered under the names Sal Aria and Ivan Tory, but interestingly enough, both also had Elliot Ravenwood listed as a signature on the accounts."
"Did you have a chance to view the statements to these accounts?"
"Yes I did. After obtaining a subpoena from the Ontario Provincial Court, I was provided with a copy of the accounts' activities for the period of May, 2009 to September, 2009. At some point during each week that 'Just in Time Supplies' deposited money into the accounts of Sal Aria and Ivan Tory, Mr. Ravenwood withdrew that same amount in cash, leaving his balance at the minimum amount of $10.00 that the bank requires.
"How much would Mr. Ravenwood withdraw out of these accounts each week?"
"He would always withdraw exactly $44,661.16 in cash. After withdrawing these amounts, we don't know what Mr. Ravenwood did with the money," Minaldi responded.
"How did the withdrawal of such money not come under suspicion by the bank?"
"Because Mr. Ravenwood did not just withdraw the money over one day but over four days. What you have to know is that a bank tracks all accounts that exceed $10,000 in cash movement per day. To avoid detection, one would simply have withdrawn less than $10,000 per day, which is exactly what Mr. Ravenwood did. Remember that there are two accounts being used. On the way to work, Mr. Ravenwood would enter and make two transactions, one from each account. It would take four days, but doing this would avoid detection," Minaldi said.
"How could you be sure that it was Mr. Ravenwood who withdrew those amounts and not someone else?" Samantha asked.
"After examining the records, all the withdrawals were signed by Elliot Ravenwood, per bank policy."
"Thank you Mr. Minaldi. No further questions."
"Mr. Deville, would you like to cross-examine this witness," asked Justice Richardson.
"Oh yes Your Honor, I would!" Elijah exclaimed.
"Mr. Minaldi, you said that my client allegedly withdrew $44,661.16 from his account every week for 22 weeks. Over this period of time, that meant that he withdrew $982,545.52, with the remainder of the money being kept by the alleged front company in order to pay for the office space. Did anyone specifically see Mr. Ravenwood do this?"
"No," Minaldi responded.
"But Mr. Minaldi, according to you there were 176 transactions between these two accounts, and yet in the course of your investigation, not one teller remembered Mr. Ravenwood?"
"Mr. Deville, this branch is a large branch, employing over 50 tellers, I'm sure that it would be easy to avoid detection by going to different tellers." Minaldi said.
"One more thing Mr. Minaldi," Elijah continued, "I'm sure you said this before, but what bank were these accounts from again?"
"It was the Sovereign Bank of Toronto located on Albion Rd.," Minaldi responded.
"Thank you, Mr. Minaldi. No further questions," Elijah said as he took his seat in frustration.
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