Oh My Fraud

Warning: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Greg: Let's say you steal my credit card and buy $250,000 worth of Darby caps and woolen scarves or something like that. Yes, if I stole your credit card,

Caleb: I would definitely buy $250,000 worth of Darby caps and scarves, no doubt.

Greg: Of course you would. But that's not my point. Let's say that when I found out that you had purchased $250,000 worth of Darby caps and woolen scarves on my credit card, uh, when I confront you about it, if you if you [00:00:30] were to reply like, oh, no, you caught me, my bad. And then you immediately Venmo me $250,000 like you just had $250,000 sitting in your bank account. If you did that, then I am absolutely going to have to believe that you stole way more than $250,000 from me, because how the hell else would you have $250,000 just sitting in your bank account? Because the 250,000 that you stole from me, you already blew that on [00:01:00] Darby caps and woolen scarves.

Blake: If you'd like to earn CPE credit for listening to this episode, visit earmark Cpcomm. Download the app, take a short quiz, and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Greg: Hello and welcome to Oh My Fraud, a true crime [00:01:30] podcast where our criminals do commit identity theft, but generally don't do it by cutting off your face and wearing it over their face. I'm Greg Kight, and I'm Caleb Newquist. Caleb, uh, before we get into it, I'd love to read a listener email real quick, if you don't mind.

Caleb: I don't mind at all.

Greg: Nice. Uh, this one comes from a listener named itchy. Itchy says, hey, I love the show. Been listening for six months. I've learned a lot about an interesting industry, and [00:02:00] the banter between you two is the best part of the show. Hey.

Caleb: Thanks, itchy. We also enjoy the banter.

Greg: Shut the fuck up, Caleb, if you like. Oh my fraud. Uh, please take a minute to send us a delightful email. Like itches. Or even better yet, write us a review. And who knows, we might read your email or your review on the show. Yeah.

Caleb: And, uh, also remember, we are, uh, we are available for speaking engagements, uh, either separate or as a team so we can speak on fraud [00:02:30] or ethics, even do a live podcast at your training event or conference.

Greg: So true. And it's so much fun. I just recently did a fraud presentation for the Accounting and Financial Women's Association, a delightful group, uh, who had their Women Who Count conference in Reno. So much fun, such a good time. And really, I'd have to say just, you know, as an unbiased, uh, objective person, their conference is much, much better [00:03:00] because of my, my participation in it. But it was they loved it and it was a good presentation. I'm not it's it's just hard to it's hard to, uh, to to give yourself a positive affirmations like that out loud in front of a bunch of people. I thought it was it was kick ass. And it was so much fun.

Caleb: Awesome. That's great. Greg, we're all very happy for you. If you want more information. Uh, on on what Greg and I could do for you at one of these engagements. Send us [00:03:30] an email at omie. Fraud at earmark cpe.com.

Greg: So, Caleb.

Caleb: Yes.

Greg: Changing subjects completely. Do you have any stories of teachers gone wild? Uh, it doesn't it doesn't have to be from when you were in school. Uh, and it doesn't have to be about a teacher having sex with a student or like a Walter White style chemistry teacher turned drug dealer kind of thing. But if you do [00:04:00] have any, uh, stories of that, I. Please. You got to drop them right now.

Caleb: Uh, I don't have any stories like that. I'm sorry to say, um, I do, yeah. I mean, um, I do remember, uh, one of my teachers chewing tobacco in class. Oh. Uh, yeah. And this is a this is a great school teacher, mind you. Uh, he also kind of shamelessly picked his nose and discarded it in interesting ways. And so as, [00:04:30] as grade school kids, we we got quite a kick out of that. Uh, yeah, but he was older and tenured, you know, so he definitely did not give a shit what we thought. So, you know, chewing tobacco and picking his nose. You know, he's. Yeah. He was way beyond caring by that point.

Greg: So wait, did he, did he have just like a, like a old, like, 7-Eleven Big Gulp cup that he'd. No.

Caleb: Nothing like that, as far as I could tell. As far as we knew, he just swallowed it. And so, uh. But you could but like, if you went up to talk to him, [00:05:00] you could see the the grains in his lower lip a little bit, like he didn't put in big dips, but he would have he would have small dips and he could conceal it rather easily. You know, those old guys and they've been chewing forever. Like, they just they just they just do it, you know? Right. Um, and.

Greg: In the Nebraska, you probably can't you probably can't graduate high school if you can't demonstrate proficiency in chore.

Caleb: Indeed. You know what, though? It's it's funny because I loved him as a teacher. He was funny. Yeah. And, um, he [00:05:30] he kept us in line. Like, he was kind of tough on us, but, uh, he he was he was funny. And I just remember liking him a lot, and he wasn't a creep with the girls or, you know, or the boys for that matter. So, like, good. You know, it was just one of those things. So does that kind of qualify? I don't know if that. Yeah.

Greg: I mean I think so. It was at least a, a bad example like somebody so a good teacher setting a bad example.

Caleb: Oh sure. Yeah yeah yeah.

Greg: Yeah yeah yeah.

Caleb: Like you say in Nebraska it was you know, people are like, yeah, there were definitely parents who like who gives a shit, [00:06:00] you know.

Greg: Right. I uh, it's funny because that that makes me think. And again, I wouldn't say this is so much a teacher's gone wild kind of situation. My, my pre-algebra teacher again loved him to death, but no, no. Pre-calc. Sorry. Pre-calculus teacher. Um, I had him right after lunch, and it was clear that all he did during lunch was drink coffee and smoke cigarets because.

Caleb: You could.

Greg: Smell his his cigaret and coffee breath. From, like, feet away. Like if he just spoke in your [00:06:30] direction, you're like, I think I'm, I think I'm, I think that's second hand smoke cancer. I just got from. From your breath. Yeah.

Caleb: What about you, Greg? You got any. You got any. You got any teachers Gone Wild stories.

Greg: Oh I, oh I, oh yes I do. Oh nice. And I'm going to say do they involve you.

Caleb: My question is do they involve you Greg. Since you.

Greg: Well you were a teacher. They don't directly involve me, but uh, but my, my best I well, no, I think these are both probably of equal quality. Uh, but when I [00:07:00] was in high school, I was. I was on the swim team. Yeah. Uh, for four year letterman. Not to brag. Well done. Uh, yeah, well, sort of. We just had a crappy team.

Caleb: So is that how you got those boulder shoulders, Greg? Is that.

Greg: Oh, my gosh, this. No, I listen, I was a completely different person in high school than I am now, but I see, uh, but but we had a swim my, my freshman and sophomore year. We had the swim coach. Really cool guy. Uh, did it. He was a he was a great [00:07:30] coach, too. He ended up getting fired, uh, kind of out of the blue because he had a part, like a beer party at his house and a couple of the swimmers, like the seniors on the team, just, like, showed up at his place while he was having this party. And he just didn't he didn't, like, shoo him away. And so I don't I mean, you got to assume that they came in and he probably it probably had to do with, you know, serving alcohol to underage. Sure. People, stuff like that. But but [00:08:00] the official story we had was just they they came they showed up at his party and he didn't tell him to get the hell out. And so that was enough to to get him canned. Yeah. The job.

Caleb: Right. Exactly. Yeah. Yeah, yeah. All right.

Greg: Interesting story here. Okay, Caleb. Completely new topic. Okay. The left turn from where? Where we just talking about. Absolutely. If someone made a movie about your life, what actor would you want them to hire to play? Caleb Newquist? Oh, in Caleb Newquist [00:08:30] biopic.

Caleb: Okay, this is kind of fun. Um, how, like, how close does the likeness have to be? Yeah. Okay. Okay. So there's there's a spectrum.

Greg: Just answer the just answer the damn question.

Caleb: Okay. Well I would say if it needs it okay I will I will preface this. If the likeness has to be very close, then I would say Anthony Rapp would have to play me probably. And I'd totally be fine with that because I, I, I like Anthony Rapp quite a lot. Do you know who he is?

Greg: I have no idea who.

Caleb: Okay. So the so so [00:09:00] the musical theater nerds out there are yelling at you right now. Anthony Rapp Anthony Rapp was, uh, he he was he, um, he played Roger in the original production of rent. And and he but he's also the the Star Trek nerds are also yelling at you. But he is now he is now best known for being in Star Trek Discovery. And I do not remember his character's name, but that's the most recent thing that he's in. But he's, uh, he's mostly, uh, he's mostly known in the theater world.

Greg: Okay. [00:09:30] Okay.

Caleb: Yeah. What about.

Greg: You? Well, well, it's Samuel L Jackson all day long. Oh, fine. Choice if if, if, uh, I would settle for Chris Hemsworth. Um, because I figure if you give him some glasses, shave his head and make him wear, like, a really heavy coat. Yeah. Then I think he and I would look indistinguishable, of course. But my first choice, unquestionably Samuel L Jackson. And the reason why this is impertinent all to [00:10:00] today's episode, is because today's fraud takes place in a public school district in New York. And it's such an amazing story that they even made a feature length movie about it. But unfortunately, that movie didn't star Samuel L Jackson. So, Caleb, for better or for worse, public schools are funded in part through property taxes and much less through Powerball [00:10:30] tickets, as we're all led to believe. Uh, here, here's a really, really oversimplified explanation of public school funding. About 10% of public school funding comes from the federal government. The rest comes from state and local tax revenue. The state and federal funding is allocated more or less evenly. I think that the state and federal government do try to funnel a little bit more funds to underprivileged schools, but really, by [00:11:00] and large, it is it is just a how many students do you have? Here's here's how much money your school gets. So, uh, which is why.

Caleb: Which is why like, uh, vouchers are so controversial, right? Because if you live in a place that has vouchers, essentially school choice, like we, we have open enrollment where we live. And so, um, and yeah, it's a disadvantage to some schools because if everybody from, if everybody's uh, in in a that is close to a [00:11:30] school is chasing into other schools. Yeah. Then the district they're leaving gets less money. And that's I think you're going to talk about this a little bit. But that's but that's the idea right.

Greg: Yeah. That well that's that's part of it okay. But what we do see and I think everybody knows this is that in public education. Even though the federal and and state funding is largely dispersed evenly. And even if that's dispersed through vouchers, you still have schools that have very, very [00:12:00] different levels of funding. Uh, you know, school to school. And sometimes it's even different within the same district. And those disparities, the differences that we see there are a result of differences in property tax revenue is what we see. And so, uh, so, so and here, I mean, like I said, it does make a big difference even sometimes within school districts, because back when I was a teacher, I taught at the poor school, uh, on the poor end of town. And we had an objectively shittier school [00:12:30] than the rich middle school that was on the rich side of town. And again, all that has to do is with property taxes. That's all that I can tell, because we did not have the same quality of homes around my middle school as they had up by the, uh, the uppity, uh, middle school. Right. And, uh, and, and here's the thing that makes it weird because this way of funding schools like the, the housing, the, the, the property tax side of funding can create like [00:13:00] this vortex of weirdness. Because if follow me through with this. So let's say you've got a school that that doesn't have as much funding as another school. Well, we know that funding is is a driver for academic outcomes.

Greg: So you have less funding, you're going to get worse outcomes. And then because like, you know, standardized test scores, those kinds of things, um, and because of, of those sorts of quality metrics, when people are shopping for homes because [00:13:30] you you've purchased a home, I'm sure your realtor said, hey, this home is within the boundaries of these schools. Yes. And then you can check those schools out. So if you're in a and I know, I know for a fact that parents do, that's a very big deal to them, is to see where their kid is going to go to school if they pick this certain home. So if the school has crappy quality metrics, uh, people are probably not going to be as motivated to buy homes in within the boundaries of that school. [00:14:00] Right? And then supply and demand, there's less demand for those homes. Therefore, the property values go down. And if property values are down, then they're not going to collect as much property tax revenue from those homes. And then those schools that were already poorly funded are even more poorly funded. And that leads to even more bad quality metrics and bad standardized test outcomes. Hence the four decks of weirdness where a bad school gets worse and you can see the opposite happen to where you have a great school. People want to live there. That's driving up the home value, [00:14:30] driving up the property tax revenue, give them more funding to that school district or to that school, that sort of thing.

Caleb: Now let's switch our attention to a specific school system in New York, the Roslyn School District, located on Long Island. It's about 27 miles outside Manhattan. A diploma from Roslyn High School, which is the district's only high school. Is that true? That's that's. Wow. Weird. Yeah. Okay.

Greg: It's only one high school district. Okay. Seems pretty small to me.

Caleb: Yeah, it means you've got a good [00:15:00] chance of getting into an Ivy League school. 95% of Roslyn High School graduates go to college, compared to 62% nationwide. And 25% of Roslyn High School graduates get into highly selective colleges like Harvard, Yale or Brigham Young University. And it says here, woot woot, go, cougars and I don't. Am I supposed to say that, Greg? Sorry.

Greg: Yeah, yeah, you're supposed to say it with like you mean it.

Caleb: Damn it. Uh, actually. Just kidding. There's no Mormons in New York anymore. They all left in [00:15:30] 1833.

Greg: They got kicked out in 1830. They got kicked.

Caleb: Out in 1833.

Greg: Yeah. They were they were asked to leave.

Caleb: Yeah, yeah. And it's it's a good story. So look, that one it is. Anyway, the incredible success of the Roslyn School District was largely due to the leadership of the district's highly respected, maybe we would say venerated superintendent Frank Tassone. Okay. Frank was hired as Roslyn superintendent in 1992. And just a few, just [00:16:00] a few years later, was named the man of the year by the Rotary Club, which.

Greg: I think is so interesting because a Rotary Club is like a business, like it's it's all the the old business guys having lunch and, and, uh.

Caleb: They wear funny.

Greg: Hats and stuff. Or do they. I don't think the Rotary Club does, but it's not. Okay. Yeah. It's not necessarily. You usually don't get a whole lot of representation from, uh, government bodies in your rotary clubs. [00:16:30] All right. So the fact the fact that he was named man of the year by the Rotary Club, I think that means he was a mover and shaker. He's out there, you know, he he was a man of the people. He was getting getting people to know who he was. He was influential beyond the boundaries of his school district.

Caleb: Work in the community. Right.

Greg: Exactly.

Caleb: Yeah. Okay. Um, yeah. So Frank Tassoni was adored by parents, teachers and students alike. One of his assistant superintendents was quoted as saying, Frank really was [00:17:00] the master. I mean, this guy was loved. He walked on water. And I think that endorsement technically makes him the Lord and savior of public education, don't you, Greg?

Greg: I think yeah, blasphemy. Blasphemy be damned. Yeah, I think I think that did. Right.

Caleb: Yeah, right. All right. Another kind of fun fact about Frank. He was always dressed immaculately, like a CEO of a fortune 500 company. And his, uh, CV included a master's degree in languages and literature. [00:17:30] And he also had another master's degree in educational administration and a doctorate in educational administration. And most people with that much higher education are not public school superintendents. They're usually neurosurgeons or something else quite fancy. And I have to say, I'm going off script here a little bit, but a superintendent is kind of a fancy job, I have to say, like superintendents are are generally they it's not positions of power per [00:18:00] se, but they do have a lot of influence and they do have a lot of there is kind of a political nature to it sometimes. Like they're not are they always appointed or they're you have to it's not an appointed position, is it? Or does it depend.

Greg: Not not well it depends on what you mean by appointed. It's in the districts that I worked in. Yeah. It was, it was, it was the the superintendent was still just an employee. Yeah. You just got hired of the district. Yeah. But but I think I believe you were hired by [00:18:30] the school board. And the school board is a voted, uh, is a body that's voted on. Right. So that makes sense. So at that point you go, really, what's the difference being hired or being appointed? It's pretty much the same thing. So, so yeah. But but it also is within public education. There's not a higher position that you can get in a school district. I mean, superintendent, you're the president. You're you're the you're the CEO of the school district.

Caleb: Yep. [00:19:00] Superintendent is the boss.

Greg: Because of doctor Tyson, Roslin was one of the ten best school districts in the country based on their test scores, and in 2002, Roslin High School was ranked as the sixth best public high school in America by The Wall Street Journal. And Caleb, just to put that in perspective, there are over 23,000 high schools in the United States of America, and [00:19:30] they got number six. So, uh, pulling some impressive numbers there. Yeah, Frank.

Caleb: Not bad, not bad.

Greg: Uh, Frank Tyson also introduced foreign language classes to the elementary schools. Which makes me think back to your kids being in elementary school. Are there is your daughter in kindergarten getting any foreign language exposure?

Caleb: Uh, a little bit, yeah. Yeah. She comes home with a little bit of Spanish here and there, but I don't think [00:20:00] they actually don't do Spanish club. Like she's not eligible to do Spanish club until I think second or third grade.

Greg: Okay. Because I and the weird thing is because we're talking I mean, again, he started in 1992. Yeah. These are.

Caleb: The 90s.

Greg: Yeah. Yeah. This is and early 2000. And that's back when I mean, again, I was I was still teaching I was teaching in the early 2000 too. And that was just when you would start hearing here and there of some schools, [00:20:30] you know, some some high schools having languages other than French and Spanish. Right. As your only two choices. Right, for a foreign language. Um, and then, you know, and then it's become more, you know, sexier in the school, uh, school districts, if you have, you know, if you're, you're able to teach Mandarin to your fifth graders, that kind of stuff. But. Right. Frank, Frank was on the front end of introducing stuff like that. He also introduced a values education curriculum at the high school. There were free [00:21:00] condoms in a jar in the Roslyn High Health room, which I have to think would be so awkward if you needed one of those condoms. Yeah. Uh, what's the what's the approach there? How do you how do you, uh, how do you either you're how do.

Caleb: You take advantage of that without being, you know, completely mortified.

Greg: Right? Right. Uh, another thing Frank Tyson did this was part of his values based education. He also introduced a community service requirement for graduation [00:21:30] from Roslyn High School. Um, which again, has to feed into the has to feed into the college admissions thing because colleges love people who do community service. So you bet. Again, I think this is this all? I mean, it looked good for the high school, but it also helped them keep their numbers where they wanted them. Uh, to be frank, uh, didn't work alone. He had a right hand woman named Pam Gluckin. Uh, and, like, I don't know why [00:22:00] say the name Pam Gluckin brings me joy. She started as a treasurer for the Roslyn School District in 1990, which was a couple years before Frank Tyson was hired, and Frank gave her a series of promotions all the way up to assistant superintendent for business. So basically, Pam Gluckin was the CFO of the Roslyn School District. She did everything from overseeing the district's $70 million [00:22:30] budget to approving trips for conferences to deciding who got credit cards. Uh, apparently she was charming. She had fantastic interpersonal skills, and she worked her ass off, one parent was quoted as saying, we loved her at our meetings. If you didn't understand something, she would explain it ten times over if she had to.

Caleb: In 2002, while performing a routine audit of the Roslyn School District [00:23:00] books, about $10,000 of transactions were flagged as needing additional scrutiny. Even the accountant Andrew Miller, the district's outside auditor, the guy who found these suspicious transactions, admitted that $10,000 was immaterial in light of the district's huge $70 million budget. But regardless, he started digging into it. Right.

Greg: Which you did. I've never done audit work. Yeah. How do you feel about that? I mean, I because because I guess I go two ways. Go. [00:23:30] Yeah. $10,000 with a $70 million budget. You just go, okay, who cares? But I also the other thing that comes to mind is the whole thing that in accounting, there is no materiality threshold for fraud. If you suspect fraud, it doesn't matter how small it is, you got to go after it.

Caleb: You're correct. Um, I, we I don't think we have the, the specifics of this and why he took the action that he did, but something tells me [00:24:00] that he must have suspected something.

Greg: Untoward.

Caleb: Because you're right. The materiality is, uh, it's it's it's not there, you know, 10-K. Yeah. Okay. 70 million is is is not close. But but you're right. The the quantitative nature or the quantitative aspect of it is I don't want to say it's not irrelevant. I guess it is irrelevant. If you suspect fraud then you it's irrelevant. Yeah. Um, [00:24:30] but again, I think for a school district, I also, I also don't know, like standards for auditing like governments and school districts and things like that are slightly different than, um, that's true than like a private company. That's true. So good point that that could be a factor as well. Uh, because it's taxpayer money. There might be some different rules around that. Yeah, but there are some. There is someone listening who's who knows this stuff better than us. Can probably tell us. Yeah, but yeah, yeah.

Greg: Fraud, fraud waste fraud, abuse and waste. That's the drum. [00:25:00] That's that. They beat a lot in the in the governmental accounting world. So. Yeah. Right. That would make sense too. Yeah. Yeah. So yeah.

Caleb: What's strange is that shortly after that, while he was digging around, a guy from Home Depot reached out to the district. Apparently he noticed that lots and lots of building materials were being purchased at his store on a Roslyn School District credit card, which in and of itself was a little weird. Schools generally don't need huge amounts of construction material, but what made it even weirder was that his Home Depot store [00:25:30] was about 50 miles away, and the items weren't being delivered to any Roslyn School District school now.

Greg: Yeah, 50 miles. I mean, again, that's like twice. That's like going from Roslyn to Manhattan and then going that same distance past Manhattan to get to Home Depot to when you think.

Caleb: About the population density of Long Island and you think about all the homes that are out there. Yeah, just all the neighborhoods and all the school districts there might be. Yeah. 50 miles [00:26:00] is a long way.

Greg: There's got to be tons of Home Depots. Yes. Way closer than way closer. I mean, I got let's see. I'm, I'm where I live is nowhere near as densely populated as that is. And I've got two Home Depots that are each less than ten miles from my house.

Caleb: Yeah, yeah.

Greg: Easily one of them. Way less than ten miles right now. Never. Never mind the Lowe's.

Caleb: Yeah. Lowe's. [00:26:30] Okay. Now, with this new Home Depot information, Andrew Miller and his team dug even deeper into the district's accounts payable records and found that Pam and her family had used Roslyn School District credit cards to pay for almost a quarter million dollars of personal expenses. Everything. Yikes. Everything from gas to food to building supplies from Home Depot. Oh, and that address where the [00:27:00] Home Depot orders were being delivered. That was Pam's son's house.

Greg: So Andrew Miller, the accountant, presented the information about Pam embezzling $250,000 to Frank. And Frank circled the wagons, including the school board and other administrators, and he tried his hardest to defuze the situation. Uh, here's a quote from New York magazine about what was going on. It says to [00:27:30] sewn made a moving, eloquent argument for compassion and leniency. The culprit, Pam Gluckin, had tearfully confessed. He said her marriage was falling apart. She was ill, she'd been desperate. And if the board didn't press charges, she'd agreed to quietly resign, give up her administrators license and give back the money right away. He also made sure that they knew that if they didn't deal with this quietly, it would affect their college admission [00:28:00] rate. Because, you know, Harvard, they've never had anyone associated with their school that has been part of a financial scandal. Uh, and also, if, uh, college admission rate went down, their property values would go down, which would affect their funding. He also speculated that school board members, you know, the school board members in this meeting would have a hard time getting reelected if the voters knew that something like this had happened on their watch. So after [00:28:30] receiving legal counsel that the board was not required by law to press charges, the board demanded Pam's resignation. They demanded that she forfeited her administrator's license, and they demanded that she repay all $250,000. Uh, here's a quote from Newsday that says she was gone the next day. Her departure was so abrupt and mysterious that people began to ask questions, Pamela Gluckin, the district said. Left for personal and [00:29:00] medical reasons. Some Tas even sent her flowers, wishing her a quick recovery. And Caleb, here's what's crazy Pam did pay back the $250,000. And I mean for someone who just got fired from their $160,000 a year job, handing over $250,000 that you'd already spent at Home Depot. Super easy. No sweat. Nothing more to see here.

Caleb: So everything was cool. The public relations shit show was [00:29:30] averted. Everyone lived happily ever after until February 2004, when an anonymous letter was sent to a bunch of people, including local politicians, accusing Pam of stealing a whole lot more than $250,000, and that Frank, with Pam's help, also stole a bunch of money. One of the letters was even accidentally delivered to Frank, which gave him a chance to get ahead of it. Now, let me just stop here to say who is the fucking dum dum [00:30:00] who sent the letter to Frank to Sue?

Greg: Right. I think it was. What was it? I think it was one of those things where, uh, I did read the story about that. My understanding is that the letter was sent and the return address was the school was was the school district, and one of them was undeliverable. And so it got returned to the school district. And that's how Frank got his hands on it.

Caleb: So it was, oh, man.

Greg: It wasn't so much that, [00:30:30] uh, they sent one to him going, oh, you know who really needs to see this? The guy that we're accusing.

Caleb: Yeah.

Greg: This money. But it was just like, oops. Oh, no. Yeah. It got to him.

Caleb: So Frank called everyone to a meeting. Everyone from the custodial staff to the administrators to the PTA. Frank said the letter was bullshit, and he put the whole thing back on Pam, that someone had found out what she had done. They were pissed and they wanted their pound of flesh. Frank, the consummate educator, even [00:31:00] pointed out misspellings in the letter as a way to discredit it. You know, the same way you figure out that an email didn't come from the Toyota warranty department, but from Russian hackers.

Greg: Right? I just imagine the letter, like with a bunch of things circled in red. Yeah. And you know, and like sentence being diagramed going well, really? You how seriously we're supposed to take this person if with this dangling participle I. That's right, I don't how could they who splits their infinitives. [00:31:30]

Caleb: No, I.

Greg: Mean ridiculous.

Caleb: Unbelievable.

Greg: Not somebody who graduated from our high school.

Caleb: Can't take this seriously.

Greg: They can't be within the boundaries of our school district.

Caleb: An interesting twist in the story is that somehow the letter also found its way to both of the coeditors at the Roslyn High School newspaper, the Hilltop Beacon. After reading the letter, Rebecca Rambam, one of the school paper's coeditors, decided she should go to the upcoming school board meeting. [00:32:00] She also decided to go because that's what cool kids do, right? Right? Yeah. At the school board meeting, she heard the school board president read a statement about Pam's $250,000 embezzlement and was like, that sounds like a great article for the school newspaper. So she wrote it and published it, making her the first journalist and making the Hilltop Beacon the first news outlet to cover the story, which.

Greg: Is pretty freaking cool.

Caleb: That is cool. Very cool. And [00:32:30] if you watch the movie Bad Education, which we have not mentioned up to this point, this is HBO's dramatization of the Roslyn School District scandal. Their portrayal of the school newspaper's involvement and impact on the scandal was the second biggest departure from the real story. Uh, the biggest departure was casting Hugh Jackman as Frank Tassone.

Greg: So, so true.

Caleb: Yeah, the real Frank Tassone does not look like Wolverine. Okay, no.

Greg: No, he does. Decidedly [00:33:00] does not.

Caleb: So in real life, Rachel Rosenbaum didn't do in-depth investigative journalism like poring through old invoices or visiting the physical addresses of suspicious, suspicious vendors. She just wrote an article that basically said that Pam Gluckin resigned because she was caught stealing, but she didn't explicitly say it was Pam Gluckin because apparently she wasn't allowed to.

Greg: Shortly after the anonymous letter, the district attorney launched an investigation and Frank cooperated [00:33:30] fully. He brought back Andrew Miller, the same accountant who had discovered the initial missing $250,000, and this time Miller found not just weird credit card shenanigans. He also found invoices from phony companies that had been approved and paid by Pam, which brought the total missing money up to $1 million. Uh oh. And the cat? Yeah, and the cat was out of the bag. The people in the town were furious with the school board. And here's another quote [00:34:00] from Newsday. Uh, the target of the town's fury was the school board letting Pam resign rather than pressing charges was seen as collusive, conspiratorial and even Faustian, which is a testament to how good the public schools were in Roslyn, because apparently everyone in the community knew the meaning of the word Faustian and Frank. Listen, Frank was pissed and felt deeply betrayed by Pam, [00:34:30] and everybody felt enraged and betrayed right along with him. And so at this point, he wasn't just the leader of the Roslyn School district. He was now also the leader of an angry mob.

Caleb: But the probe into the district's finances changed all that when even more disturbing information surfaced, like the district paying the rent for Frank's Upper East Side apartment, the district paying for Frank's Mercedes, the district paying for jewelry and skin treatments for Frank, and [00:35:00] also paying for over $33,000 of his dry cleaning. Yikes. Understandably, the town's wrath turned to Frank when he was confronted about these payments. Frank said, look, in my contract, it covers all reasonable expenses.

Greg: Which I think is fantastic.

Caleb: That's hilarious.

Greg: Tastic is how am I supposed to? How am I supposed to do my job if I don't have a car to get from my Manhattan, [00:35:30] uh, apartment to 27 miles out here to to Long Island, how am I supposed to. How am I supposed to function if I can't get a good night's sleep? I need an apartment to be able to to rest in. These are all reasonable expenses.

Caleb: They also found a company called Word Power that the Roslyn School District had paid about $800,000 over 12 years, and the business address for Word power was Frank's home address, and the person who owned and operated Word Power [00:36:00] was Frank's decades long life partner, Stephen Signorelli. The school board relieved Frank of his duties on June 4th, 2004.

Greg: Frank and Pam were both promptly arrested, along with Pam's niece, Debra Ragano, who worked under Pam in the district's business office. The office of the New York State Comptroller initiated an exhaustive no stone left unturned investigation, [00:36:30] which definitively showed that Pam had stolen over $4.6 million, that Frank had stolen $2.4 million, and that Debra had stolen $334,000. The the comptroller's report, which, uh. Caleb, did you have a chance to look at that report? I didn't it it was it was so it was so comprehensive. It was impossible to read. It was like they got they [00:37:00] got they got into minutia that just like you were like, I really don't care about how deep this goes. Just give me only the.

Caleb: Real accountants can handle that, Greg.

Greg: Right. And apparently I'm not one of them. But that comptroller's report also showed that Steven Signorelli received almost $900,000 of ill gotten gains. So he also got arrested. He also got indicted. Damn. And all in all, that [00:37:30] comptroller's report traced misappropriated funds to 29 different individuals. But what's weird is only these four were prosecuted. And an even weirder thing is that the report shows a line item that shows $1.5 million of money was missing, but was, quote, not traceable to an individual, which in my mind means it absolutely went to either [00:38:00] Frank or Pam. Right?

Caleb: Don't you like where else it's got to be, I don't know.

Greg: Yeah, it's got to be.

Caleb: It's a very strange way to describe that. Right. Like trace it to. To what? Like an entity? I don't know, like.

Greg: I think they just were like, here's a bunch of money that we know was fishy, but we don't know where it landed.

Caleb: Mhm.

Greg: I think, I think it was, it was mostly like here's the bounds of what we can definitively [00:38:30] say based on our forensic audit, we can definitively say this money's gone, but we can't definitively say where it went. So it went to Pam and Frank. That's what I'm saying. That's my that's my that's me connecting dots. Gotcha. That these that that these forensic accountants were to to scared to do. Gotcha.

Caleb: That's makes sense.

Greg: But another interesting thing. Yes. When we think when we think about all that, when we think about the 1.5 million that was not traceable to an individual, when we think of the other 25 people [00:39:00] who were implicated. But apparently the district attorney didn't have the resources to go after all of them, or maybe didn't have a strong enough case they felt to take it to court.

Caleb: They were probably smaller players, right?

Greg: They they they were. There was one actually, that one of them was shown to to have taken more money than Deborah had. There was Deborah was actually, uh, the, the fifth largest person, uh, in terms of just money that was traced to them. So there was somebody else that they didn't think [00:39:30] they had. Yeah. As. But then, yeah, it went, it went down pretty precipitously after, after Deborah Ragano then we're but but still we're talking, you know, there's people who had over $100,000 that and many that had in the, you know, dozens of thousands of dollars that was traceable to them. So it was it was a pretty extensive list. And it wasn't. I mean, again, if you're talking about on an individual level, it didn't seem like an immaterial amount of money that went to any of these people that didn't get prosecuted. But what's really weird is they found [00:40:00] 11.2 million total that was missing, but about 3 million of that was basically just written off by the legal system, either as untraceable to people or just people were not going to prosecute. So that's that's a huge chunk that's about, you know, that's close to 25% of the money that was missing. That, like I said, was just basically written off. And here's a here's another great quote from Newsday. At the sentencing hearing, a school board trustee said, you stole taxpayer money that [00:40:30] was earmarked for the education of our children. It's hard to imagine a more heinous crime. Um, it's actually really easy to imagine a more heinous crime. This this is just me spitballing here, but let's go with Frank murdering students, uh, eating their flesh and keeping their bones in the crawl space under his office. That's just right off the top of my dome, Caleb. And and way more heinous. Seems heinous. Yeah, way more [00:41:00] heinous on.

Caleb: An order of magnitude more heinous.

Greg: Yeah, I'd say clearly. Objectively more heinous. Uh, and I'm also saying maybe, uh, Roslyn, schools aren't as great as everybody thought, because it seems like their school board trustees maybe don't know the meaning of the word heinous.

Caleb: Faustian? Yes. Heinous. Nah.

Greg: Nope. If it's if you say heinous, I need blood.

Caleb: Yeah, yeah. It's got to make its. There has to. It has to make you [00:41:30] feel like. Oh, Hannibal. Hannibal Lecter must have right. Made an appearance.

Greg: That's that's another chant that would happen at school board meetings. They'd go, Hannibal, you say blood, heinous blood.

Caleb: Heinous blood.

Greg: You know, you know the cheer I.

Caleb: Do, I do now, Greg, this story has an interesting epilog. In March 2004, the district submitted claims to three of its insurance companies. The district had policies with each of these companies [00:42:00] that covered things like employee theft. The total coverage was something like $28 million. Knowing insurance companies, I'm sure Roslyn would have had to fight tooth and nail to get the insurance companies to pay out on the policies. But here's what really happened. All three companies denied the district's claims on the grounds that the district failed to notify them promptly, as required by the terms of the various policies. Damn. Yeah. Damn. By letting Pam go quietly for the initial $250,000 [00:42:30] back in 2002, the district forfeited its right to collect any insurance proceeds on the policies that they had in place to protect themselves from these kinds of losses. Oof! Savage. And they say insurance companies are faceless. I yeah, right.

Greg: Right. And they say you're in good hands with Allstate. But yeah, I these guys clearly their, their, uh, employee theft loss was not underwritten by [00:43:00] Allstate.

Caleb: Right.

Greg: That's what I've got. That's what I, I've got to believe. Right.

Caleb: Here's another weird thing. Even after Pam was arrested and convicted, she still. A need to receive a 50 $55,000 annual pension from the Roslyn School District, and to her credit, by 2011, she had reportedly paid back about half of the 4.6 million that she had stolen.

Greg: That's that's that's impressive. Not bad. I, I kind of, but but I gotta think I mean, again, they don't really break that down. And part of me wonders [00:43:30] how much of that was assets that they had confiscated from her as well. Yeah. Because because apparently she had like a couple of homes, like, like her primary residence, like a beach house in the Hamptons or something like that. Yeah. So, uh. Yeah. So but but still, I think that kind of restitution being found is, is pretty, uh, is nice to hear. It's a.

Caleb: Good outcome.

Greg: Yeah. For the.

Caleb: Bad situation, especially.

Greg: For a district that can't get their insurance policies to pay [00:44:00] out on their employee theft. No kidding. Pretty good.

Caleb: Even more interesting, Frank had a golden parachute in his employment contract, so he collects over $170,000 every year from the Roslyn School district, and he will continue to receive it for the rest of his life. But also and this is crazy. Frank has repaid the entire $2.4 million that he stole. Never mind that to date, he has received over $3 million in payments from the district since his sentencing. But still, you know, good for him. And maybe. [00:44:30] Maybe that's why the fraud gods let Hugh Jackman play him in the movie. All right, Greg, did we learn anything?

Greg: Yeah, I there's a there's a few things that I, that I really want to highlight from this case. The first one, Caleb, it has to go back to the, the whole, uh, insurance thing. Yep. The snafu that the district had with the insurance, [00:45:00] one of the things that we don't talk about enough on the podcast is because we talk a lot about how there's organizations that are so small that they can't have proper internal controls. Now, I would not say that the Roslyn School District qualifies as one of those. I think it was big enough to have proper internal controls, but either they didn't use it or Pam just regularly overrode the the internal controls. So yeah, either they weren't there or there was a material weakness [00:45:30] in those internal controls. But one of the things that you can do if your entity, whether it's a governmental entity or a private entity, if you don't have enough, uh, bodies there to really have those effective internal controls, you really do need to have a robust insurance policy to cover employee theft. And then and then if you have it, make sure you follow it. Don't. Yeah. Don't invalidate it by being an idiot. Right. Like these guys here. But again it was invalidated [00:46:00] because Frank saw that if if things got too nasty with it, if Pam wasn't let go quietly, he would be taken down with her. So obviously there was there was that motivation that was there as well. So that's one of the things that came to mind in this. Another one is, is just, uh, it comes to the, the rationalization side of fraud. Yeah. And one of the common rationalizations for fraudsters is to look at how much more people [00:46:30] are getting at other companies or people who have other jobs. So, so like, for instance, this was this was a quote I found, uh, from the Frank was quoted as saying this where he said, look, the CEO of IBM, they're making zillions and we're here making $200,000. And that right there is the that's the seeds for fraud, right? Because first off, $200,000 back, I mean, because this all [00:47:00] exploded in 2004.

Caleb: Not a bad not a bad salary. Yeah.

Greg: I mean, again, we're talking we're talking Long Island. So not the cheapest place to live. But still I did what I did. Look up, uh, median household income for New York State in 2015. And the median household income was $56,000. But okay, like we said before, Frank had two master's degrees in a PhD. Yes. And he lived. So he's probably going, oh, you know, kind of like we were joking. People who went [00:47:30] to school that long were neurosurgeons. Yeah. And neurosurgeons are making more than $200,000 a year, for sure. Plus, the dude had an apartment in Manhattan. And I'll tell you if there's ever a place to go, I mean, one of the best places to go if you just really want to feel poor is, is go to someplace like Manhattan. Yeah. And look at how people how some people are living there. So if he's if he's constantly being, you know, in front of a parade of people who, who to him, [00:48:00] they're like, this guy's got an easier job. This guy hasn't gotten as much education. Yep. But they're making so much more money than me. Then all of a sudden that's when you start going, oh, you know what? My reasonable expenses are $33,000 worth of dry cleaning. My reasonable expenses is, uh, a luxury apartment and a Mercedes. So, yeah, I think I think that's that's a very interesting aspect of this, of the rationalization side of things. Yep. Uh, I also thought it was it was interesting, [00:48:30] maybe even cool how Frank got everyone to collude with him.

Greg: Yeah. Uh, just just to make this go away because because everyone's motivation was, like, aligned for this to for everybody to basically pretend like this never happened, right? Because he got Pam to agree to resign and return the $250,000, because Pam probably knew that she had stolen way more than $250,000. Right? So if she's like, if he's like [00:49:00] going, listen, get out of here with just having to repay the $250,000, the rest of it, just shut the fuck up about that. Yeah. And and everybody's fine. But then obviously so that that makes her want to resign quietly. She's not going to want to throw Frank under the bus because of that. But then he got the school board to agree with the deal, to let Pam go quietly because, uh, because it would be hard for them to get reelected. Like we said, if something like this happened on their [00:49:30] watch, he got the auditor to help because the auditor knew that he fucked up. Because what did this guy, the Andrew Miller guy, he. He came back three different times to re to to to look into the books more closely and every time found more. I'm surprised that he that he was brought back as many times as he was. That was a that was a weird part of the story. Um, and and it was, it was probably, uh, artistic license in the, in that, [00:50:00] uh, bad education movie.

Greg: The HBO movie. Yeah. But even in that, it showed a scene where the student editor of the school newspaper didn't want to run the article because it made Doctor Tyson look bad. And he was like going, but Doctor Tyson is writing my letter of recommendation to get into Yale or something like that. Right? So even even from the newspaper there, like I could the we need to run the story on the one hand, but on the other hand, this could have bad consequences for me. [00:50:30] So it was just bizarre how everybody that this scandal touched was, was really had some sort of benefit to having it just not, not come to light. Yeah. Which was which which again Caleb, we've talked we've kind of hinted at this before because we still don't know if it's if we're at a point yet when I can tell the full story of the, the fraud that happened at my company. Right. But it was a very similar thing where nobody wanted it to come out because everybody, [00:51:00] everybody was afraid that the stakeholders would want their heads if it was found out that a fraud of the magnitude that happened at my business, if the other owners found out about that, the ones who weren't the managing members or on the board, that sort of thing. So, yeah, it's a it's a very real and very interesting kind of interpersonal and psychological dynamic that happens with a lot of frauds.

Caleb: Yeah. This is kind of a. I don't know how many people have [00:51:30] listened to have seen the movie, but one thing that's important to remember is, um, Hollywood always writes its own story. So if you're if you're if you're watching, uh, bad Education, even though it's a true story, it's just kind of a rare thing for, uh, a movie or a show based on a true story to follow it to the letter. So, like you mentioned a couple things that, you know, that like the, the in in the movie, they make it seem like [00:52:00] the school paper, like blew the story open. And in real life it really didn't hap didn't quite happen that way. You know, like you say she wrote like Michael and Pam wasn't even mentioned in the article at all, so.

Greg: And likely it all would have come to light too. It was just right that the school paper mostly beat everybody else to the punch, right?

Caleb: Yeah, it was the first to write about it, but like it was it was kind of unraveling on its own. And, um, I read one interview, uh, with Tassoni after he [00:52:30] was out of jail, uh, where he said he thought that the movie, he saw the movie and he thought it was like 40 to 50% accurate. And I think he's maybe lowballing a bit, but he's also not wrong. Like the Hugh Jackman character, you know, in the movie has an affair with a former student. And Tassoni said that he never, ever did that or would have done that. And I guess I'm inclined to believe that, you know, I mean, even though he stole millions of dollars, that doesn't mean right? He's going to sleep with a former student, you know? Right. Um, which brings me [00:53:00] to another point, Greg, that I want to discuss with you, which is, um, do you, uh, think that Frank and Pam were good people who did a bad thing? Or were they just bad people who did a bad thing.

Greg: That I see and I hate, especially after doing this podcast for as long as we have? I hate that kind of question. Yeah. Because, because, because I, I guess my, my knee jerk reaction is go bad people. They're just bad people. Yep. But then but [00:53:30] then I go, um, maybe they're just normal people who made bad decisions. Yep. Which I think is a different thing. And then there's also part of me that goes, oh, because. Because listen, Caleb, I've been reading a lot of books that have been, uh, featured on Oprah. And so, uh, because of that, I'd like to think that everyone, no matter who they are, is worthy of love and human connection. Yeah. And that they're not bad people. They're good people that [00:54:00] made bad choices. Yeah. So, so so I don't know how to answer your question. Yeah.

Caleb: I mean, I think your response is the right one then, because I, I definitely have mixed feelings about it to where, you know, I read, you know, again, you even even the movie again, the movie puts Pam and Frank in a slightly sympathetic light. Um, and when, you know, you read, like I said, I read that interview with Frank Dyson, [00:54:30] and he says that at the end of the movie is he's like, the end of the movie is spot on because he's because if and look, the movie's a few years old, so sorry spoiling. But at the end of the movie there, Frank has this, um, kind of fantasy. He's in jail and he has this fantasy where he walks into Roslyn and they're the number one public school in, in, in the country. And he's standing on stage and he's he's kind of like the people the crowd [00:55:00] is cheering and like. And then it ends. Right? And he said, yeah, I threw that all away. And so like you and I don't know, maybe I've maybe I'm, uh, you know, maybe I'm just too soft or whatever, but like, it just seems to me that, like, people that decide to work in public education, like these two people, that kind of attitude or commitment to public service, like there is something in that that is inherently good, in my opinion. [00:55:30]

Caleb: And so that's where I kind of that's why I kind of lean into what you said, which is these are just normal people that made bad decisions, got caught up in it and, and it just and it just blew up their lives. And that's kind of how I see it. I don't see them, I don't. And again, maybe I just, I just the world's just not that black and white to me. And so I just and there's I guarantee there's people listening who's just like fuck that. They're fucking they should still be in jail like, you know, and it's like, right. No, no, [00:56:00] I just I just don't like you said we've been doing maybe we've been doing this podcast for too long now, but it's just I, it's hard for me, you know, Kelly Richmond Pope like everybody's capable. Everybody's capable of it. Right. Whatever. Everybody is. And so that's I guess that's that's just where I'm at. So anyway, yeah, I was actually I'm, I'm I'm not impressed. Not surprised I am. Greg. Greg, you've kind of you've kind of come toward me on this a little bit more than I thought you would have. [00:56:30] Oh, yeah. Yeah, I think we're just closer to the same place than we used to be.

Greg: I think. No, I think you're right. I think you're absolutely right. And one of the things that I think is underscored by this case that we've seen so many times, Pam was great at her job.

Caleb: Yeah, right. Well, to.

Greg: Some, to Frank to other than the stealing. Yeah, right. She was great at her job. Right. And same with same with Frank. I mean, he the dude. I mean, it's clear that this guy was passionate. Yeah. That he wanted [00:57:00] the best for his students. He wanted the he he was driven to make this school district the best school district in his high school, the best high school in the country. And and he did he did so much to make that happen. And it sounds like he really was one of those public educators that made a difference in the lives of these students, in the lives of the families who were in his, his district. So, I mean, the guy did a lot of good. But then you also have to go, but he stole.

Caleb: Stole [00:57:30] millions of dollars, millions.

Greg: Millions of dollars.

Caleb: And I think, you know, you going back to the to the, um, uh, the rationalization bit about, you know, he's talking about CEOs making millions of dollars and. There are all kinds of people out there who like flashy shit. Okay, yeah, the vast majority of them do not still steal millions of dollars, right?

Greg: Right?

Caleb: Right, right. And yeah, the other thing is, is like, because this is America, [00:58:00] there is always going to be someone who has flashier shit than you do. So yeah. So oh, it is it's one of those things where like, I don't want to talk about temptation because temptation is not technically part of the fraud triangle. But like in terms of like the coveting that goes on. Yeah. And that's what and Nathan Mueller talked about that with us where he's just like he did I want a nice shit. You know, like I liked money. Yeah. You know, and I, I have to believe [00:58:30] in, you know, at least it sounds like in, in this case is. Yeah. I mean that that was a factor. It was it was a significant factor and. Yeah. So it it's I don't know again it's I think it's normal people have a normal feelings being in perfectly normal situations but then making a colossally bad decision.

Greg: Right, right. Exactly. All right. That's it for this episode. Remember, a heinous crime is [00:59:00] one where a Faustian bargain is made by an erstwhile erudite piece of shit.

Caleb: And also remember, if you're a judge and you send someone to prison, but then Hugh Jackman plays them in a movie, justice has not been served.

Greg: If you want to drop us a line, send us an email at Omi. Fraud at earmark Cpcomm and Caleb, where can people find you out there if they want to?

Caleb: You can try to find me on X the the last tweet I think I actually you know what I did [00:59:30] tweet the other day. Do they call them tweets anymore? I don't even know what they call them.

Greg: They call them exes now. They call.

Caleb: Them exes. Oh wow.

Greg: No they don't. I don't think they still call.

Caleb: Way to go, Ellen, you dumb. What a dummy. But I don't know. Give me on LinkedIn, I guess. Whatever. Jeez.

Greg: Yeah, yeah, I'd say at this point, if you want to get Ahold of me, uh, just send me an email. Greg, at Greg Wkyt.com. That's the. Why are we beating around the bush?

Caleb: Yeah, if you want to. If you want to get Ahold of me, just. Yeah. See newquist at gmail.com. Oh, my fraud is written by me and Greg [01:00:00] Kite. Our producer is Zach Frank. If you like the show rate review, uh, share it with a friend, because that's how people find the show. Really? Anything you can do to get the word out about our show is greatly. Please do that. Isn't that appreciated? It's definitely appreciated.

Greg: So much. Deeply appreciated.

Caleb: Absolutely. Uh, if you're an accountant and you need CPE, I believe this. I believe this episode will come out with just a few days left in the year. So listen on Snatch it Up, listen on the earmark app, [01:00:30] and you can get some CPE if you're coming down to the wire. Are you coming down the wire, Greg? You're not coming down.

Greg: Nope. I got another year, dude. Got another year.

Caleb: Be like Greg. People be like, Greg. Join us next time for more average swindlers and scams from stories that will make you say, oh my God.

Greg: Oh my fraud.