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A Fraud Case Study: $8.5 Million Stolen from ING

Gusto Editors  
Businessman sitting in the office and doing the paperwork at night.

Do you want to know how one person carried out a million-dollar fraud scheme and went undetected for years? 

For the full breakdown of this case study, check out our webinar “Fraud: What Do Morocco, Albania, and Fraudsters Have in Common? Red Flags.” 

Greg Kyte is an accountant, comedian, and unique voice in the accounting world. With 12 years of standup experience, he brings a fresh, funny take to CPE education.  Caleb Newquist is Editor-at-Large at Gusto and founding editor of Going Concern, a leading accounting news publication featuring breaking news, developing stories, and industry insights in the field.  

They discussed this fascinating example of fraud that serves as an excellent fraud case study.

Who is Nathan Mueller?

Nathan Mueller is a former accountant who specialized in financial reporting and worked for financial services giant ING Bank Netherlands. While he started as an ethical employee, he eventually embezzled 8.5 million dollars from ING to pay off personal debts and eventually to fuel a gambling addiction. The famous case made headlines because of the duration in which he got away with it due to lax security controls. 

Nathan served five and half years in prison, during which he had an awakening and dedicated his life to reform. He is now a sought-after speaker for compliance and ethics presentations throughout the country. He’s given presentations for the FBI, the FDIC, The Federal Reserve, Nationwide Insurance, General Mills, and many other organizations. He is also a lecturer for academic and accounting societies across the country.

Nathan is an example of a seemingly ordinary guy with a white-collar job who appeared to get swept up in poor choices. He had no criminal history and had the opportunity to steal for a year before he gave into temptation. 

As Greg and Caleb shared, feeling temptation is a natural human trait. When you pair that with accountants’ accessibility to financial transactions and other circumstances, it can be a recipe for fraud. This is all the more reason why firms need to invest in strict measures of internal controls.

“If you know that you’re being tempted to steal stuff, get out [of the situation]. … Go talk to somebody about it. … Say, ‘Hey, do you know what’s going on? I can authorize a check up to $250,000. … There’s a possibility of a huge fraud here.’ … Transparency’s one of the biggest things you can have working for you. … [There‘s a concept in ethics called] ego depletion. … [It means] that over time your self-control in matters like this is going to erode. … According to psychiatrists, it’s going to erode, and eventually, you’re going to cave.”

Greg Kyte

Everyone knows the experience of temptation, but not everyone acts on it. How did Nathan Mueller give in to his desires?

How Nathan Mueller embezzled $8.5 million from ING

Mueller was able to steal funds from ING because of a particular set of conditions. First, there were lax internal control measures in place. Nathan was able to authorize checks of up to $250,000 on his own. That alone is a weak security measure, as most companies should have multiple people involved in processing such high dollar amounts. 

It took a few years before Nathan first realized that there were no systems in place to prevent him from both requesting and authorizing checks. This was because he was on a small team of only three people. Since it was such a small department, everyone had each other’s log-in and password information. This enabled them to cover each other’s duties in case someone was out of the office. As a result, it dawned on Nathan that he could request a check in one person’s name and authorize it in another person’s name. Nathan sat on that information for a year before he did anything about it. 

A business associate is writing checks in the office.

At the time, Nathan made around $80,000 annually, which is no small salary. Greg shared that the median salary where Nathan lived at that time was $52,000, but he didn’t feel it was enough. He felt burdened by high debts and was growing concerned about how that would impact his family. 

Nathan eventually gave in to temptation. His scam began in 2003 when he started paying the amount that was due on his credit card. To supplement his credit card bill, he used funds from ING that he cut and authorized. He noted that his credit card company had the word “universal” in its name, and he knew that ING cut a lot of checks to another company with “universal” in their name, which made it a relatively smooth process. 

The first fraudulent check he cut was for $1,100. Two weeks later, he cut a check for $18,000. By the end of the summer, he paid down all of his $88,000 in debt. 

At the end of the first year, Nathan learned that one of his checks didn’t clear either with his credit card company or at ING. Convinced he’d been caught, he braced himself for a call from the authorities. Fortunately for him, the check had been returned to the ING office, where the AP department didn’t know where it belonged. By chance, they sent it to Nathan’s desk. If it had ended up in someone else’s hands, he’d have been caught. This deterred Nathan from committing fraud for a while.

“He was like, ‘Well, all my debts [are] paid off, I’m where I wanted to be … I’m out of the game. I’m out of the fraud game.’ Then less than a year later, he’s like, ‘I’m back in the fraud game.’ He just couldn’t help himself.”

– Greg Kyte

In 2004, Nathan registered an LLC with the state. He called it Ace, as he knew ING sent a lot of checks to another company called ACE. This time, he started with $27,000. Throughout 2004, he stole a total of one million dollars. He increased the amount to $2 million in 2005, and in 2006, he stole $4 million. He exponentially increased the amount he stole as time went on.

Nathan got by pretty easily. On days he needed to work his scam, he’d give his colleagues or team the afternoon or even the day off. Next, he’d go to request and approve the books. To conceal the losses, he hid the money in ING’s exchange rate. He could manipulate ING’s exchange rate enough to hide the fact that money was missing.

While Nathan was stealing easily, he still had to come up with an excuse for why he was living so far beyond his means. When he first started out, he told people that he was doing tax returns on the side. As his lifestyle became more and more lavish, with luxury cars and frequent trips to Las Vegas, he came up with a new story. He said he was getting rich from slot-machine winnings.

Nathan divorced in 2006, which he later claimed was intentional to protect his ex-wife from all the consequences coming his way. This was the beginning of the end. In 2007, ING management realized the lax measures around cutting and authorizing checks, and Nathan feigned shock and surprise. Later in 2007, Nathan’s ex-wife was having lunch with one of his co-workers, as they were friends. During lunch, she said she never really believed his gambling was responsible for the money he was making. This alerted the co-worker, who ran an inquiry for all 2007 checks. Nathan was caught. By the following Monday, Nathan was confronted during a meeting in which he ran out to evade consequences. The FBI arrested him the next day.

The signs that something was wrong

Nathan’s story is fascinating because of the case study it provides into fraudulent behavior. 

First, there is motivation. Fraud investigators know that the fraud triangle includes an incentive or perceived pressure. One common pressure fraudsters have confessed to is the belief that they are not getting fairly compensated. Nathan had an excellent salary that was well above the median at that time. However, he wasn’t satisfied with it. Nathan later shared that he realized that he had been fairly compensated, [and] he’d just been living above his means.

Man on black suit writing on paper.

Nathan’s admission points to another big red flag—living beyond your means. Nathan had a lot of debt to begin with, which likely indicates that he wasn’t handling his finances properly prior to his embezzlement. What should have been a red flag to his colleagues was the fact that he drove expensive cars, wore luxury items, and took frequent expensive vacations while giving an inconsistent story. He originally claimed that he traveled because of tax prep work, but later, he said he was taking vacations because of his success with slot machines. Considering how long that went on, it should have roused suspicion prior to his arrest.

The gambling is also a red flag. Some fraud investigators state that a third of fraud criminals have a gambling issue. If a colleague is both unreasonably wealthy and publicly states that they gamble regularly, that should be a warning sign. 

“After he started [making] big bucks, he started saying that it was [because of] slot machine winnings, which is so ridiculous. … No one has a system for slot machines. It’s [understandable to say], ‘I’m a good poker player. I’ve really been studying poker,’ and you can make a lot if you’re smart, … [but] he said, ‘No, I do slot machines well.’ … Talk about a red flag.”

– Greg Kyte

The divorce should have also indicated a problem. While divorce alone is no reason to suspect fraud, it can indicate an issue when combined with other suspicious activities.

Finally, there are the actual numbers and dollar amounts on the checks. Nathan stole increasingly high sums of money as the years progressed. A simple auditing procedure analyzing vendor payments from year to year would have shown unnatural exponential growth. 

Learn more about this multi-million-dollar fraud case

Nathan Mueller is an example of how a seemingly well-intentioned, upright person can give in to temptation. As a highly skilled accountant who made a good salary, he wasn’t the picture of a criminal, but that didn’t deter him. He had the accessibility and skill set to embezzle from his employer because of their lax security measures and his accounting position. 

Nathan’s case demonstrates how poor internal controls and a lack of rigorous auditing and reviews make it easy to embezzle. He also exhibited classic characteristics of fraudsters. He lived beyond his means, he was dissatisfied with his salary, he developed a gambling problem, and his increasing criminal activity put a strain on his marriage. When investigating fraud, consider how all these elements can merge to both cause and indicate criminal activity.

Don’t forget to check out our other two articles based on the same webinar “3 Types of Occupational Fraud and How They Affect Your Accounting Career” and “A Fraud Case Study: NC Firefighter Embezzlement.”

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