by Kevin Dicciani
Weavers Way Co-Op revealed this week that its chief financial officer, Michael McGeary, resigned in mid-April over allegations that he used the business’ corporate credit card for personal expenses.
According to Weavers Way General Manager Glenn Bergman, the matter began when Weavers Way’s Finance Manager Susan Beetle noticed a suspicious charge during a routine credit card review. Initially, it looked as if $2,000 was missing.
McGeary confessed to using the card improperly and resigned on April 18. Bergman said that auditors then reviewed statements dating back two-and a half years and found the charges were much more extensive than originally thought, with some estimates ranging from $25,000 to $30,000.
In a letter appearing in the June 2014 issue of The Shuttle, Weavers Way’s monthly publication, Bergman explained the situation and went into further detail about the theft charges. He wrote that when he first accepted McGeary’s resignation, he was “replaying the tape from 11 years ago” in his head, referencing an incident at Weavers Way when a bookkeeper made significant mistakes, covering up more than $500,000 in debts and losses that threatened Weavers Way’s future at the time.
McGeary, a longtime financial officer for ACME markets, was hired to be Weavers Way’s CFO in July 2011. Bergman said he began using Weavers Way’s business credit card to pay for personal expenses in July 2012, which Bergman said “betrayed our trust.” In July 2013, Bergman said, the thefts began to escalate.
Around that same time, Bergman said that McGeary altered the financial review process so that only he could review his credit card statements, which he did not disclose as required to auditors or the Co-Op’s financial consultants at the annual audit. Bergman said McGeary also kept track of his receipts and made up his own statements, one of the reasons why it’s been difficult to get an actual number on the amount of money he fraudulently spent.
According to Bergman, the thefts were initially hard to detect because McGeary used the credit card for minor expenses, such as gas and meals.
“This is not a major theft,” Bergman said. “But, over a two-year period, the minor stuff adds up.”
Weavers Way handed all of its documents and information over to its insurance company, which has reimbursed the Co-op for its losses. Bergman said he believes the insurance company will pursue the investigation further under the legal doctrine of subrogation, in which a creditor assumes the legal rights and reliefs of against its debtor. If charges are filed, it will be the insurance company that pursues those charges.
Efforts to contact McGeary have so far been unsuccessful.
Bergman said The Co-op’s auditors and financial consultants have thoroughly searched the business’ control systems, their bookkeeping and their financial reports and believe McGeary’s credit card misuse to be the only issue.
To protect from similar fraud in the future, Bergman said that the Co-op will have more in-depth audits as well as having two people review credit card statements, with Bergman personally signing off on the usage.
Even though money is at the center of the incident, the real incident, for Bergman, is about trust.
He told the Local that writing a letter to the Co-op’s members and detailing the incident as transparent as possible was the right thing to do.
“We have 5,200 members,” he said. “It’s important for me to be upfront and honest with them and let them know what’s going on with our business – good and bad.”