Business Fraud Case Study: Chesapeake Petroleum and Supply Inc.
Chesapeake Petroleum & Supply Inc. operates as a distributor of automotive lubricants and other related products in the Mid-Atlantic region. It offers bulk and packaged oils, filters, anti-freezes, wiping materials, lubrication equipment, refrigerants, disposable wipers and absorbent pads, sealants, wiper blades, reconditioning and car wash chemicals, floor mats and seat covers, aerosols, ECP protective coatings, wheel weights, hydraulic fluids, and diesel fuel supplements (Company Overview). The company was founded in 1961 and is based in Gaithersburg, Maryland.
On April 26, 2010, Ernest Theodore Solo, the Chief Financial Officer of Chesapeake Petroleum & Supply Inc., pleaded guilty for embezzling over $2.7 million from the company. Solo had been employed with Chesapeake Petroleum & Supply Inc. since 1969, and became the Chief Financial Officer in 1990 (More News). According to Solo’s plea, from at least 2000 through 2008, Solo, “embezzled money from the company by authorizing and signing company checks made payable to himself or to a bank to which Solo owed money. Solo embezzled a total of $2,447,000 in this manner” (Chief Financial Officer Plead Guilty). In addition, during the same time period Solo also stole and additional approximate of $333,000 from the petty cash fund of the company. “Solo had exclusive control over the company’s petty cash fund and although the actual petty cash fund never exceeded $1,000, Solo had multiple checks prepared that were $3,000 or more. After cashing the checks, purportedly for the petty cash fund, Solo replenished the petty cash fund, but kept the excess funds for himself” (Chief Financial Officer Plead Guilty). Additionally, Solo attempted to hide the embezzlement by, falsifying the financial records of the company; destroying records of the checks; and hiding the fraud from outside auditors hired by the company to review its finances. Because of his actions, “Solo faces a maximum sentence of 20 years in prison and
On April 26, 2010, Ernest Theodore Solo, the Chief Financial Officer of Chesapeake Petroleum & Supply Inc., pleaded guilty for embezzling over $2.7 million from the company. Solo had been employed with Chesapeake Petroleum & Supply Inc. since 1969, and became the Chief Financial Officer in 1990 (More News). According to Solo’s plea, from at least 2000 through 2008, Solo, “embezzled money from the company by authorizing and signing company checks made payable to himself or to a bank to which Solo owed money. Solo embezzled a total of $2,447,000 in this manner” (Chief Financial Officer Plead Guilty). In addition, during the same time period Solo also stole and additional approximate of $333,000 from the petty cash fund of the company. “Solo had exclusive control over the company’s petty cash fund and although the actual petty cash fund never exceeded $1,000, Solo had multiple checks prepared that were $3,000 or more. After cashing the checks, purportedly for the petty cash fund, Solo replenished the petty cash fund, but kept the excess funds for himself” (Chief Financial Officer Plead Guilty). Additionally, Solo attempted to hide the embezzlement by, falsifying the financial records of the company; destroying records of the checks; and hiding the fraud from outside auditors hired by the company to review its finances. Because of his actions, “Solo faces a maximum sentence of 20 years in prison and