Adam and Jeffrey Yazco were brothers. They were less than two years apart in age and were the only children in a middle-class family in a suburb of Columbia, South Carolina. Adam was a senior in high school and had a very outgoing personality. Jeffrey was right behind Adam — a high-school junior. While Adam spent most of his time in school socializing and making new friends, Jeffrey was considered a loner. One thing students at school relied on Jeffrey for was troubleshooting their computer problems. But he had few social skills and, as a result, no real friends. Neither of the Yazco brothers, though, was by any means popular with the school administration. Both had truancy records and had been in trouble with the law. Vandalism and destruction of property in their neighborhood had their parents, both of whom had jobs, scrambling to keep their sons out of the local juvenile correctional facility. Mr. and Mrs. Yazco were instrumental in enabling — through the liberal application of attorneys' fees — Adam and Jeffrey to each receive one year of unsupervised probation for their crimes. The juvenile judge informed the brothers that, should any additional trouble follow them during their year on probation, they would both be spending time behind bars.
The neighborhood in which the Yazco brothers' vandalism occurred was used to these types of juvenile crimes. Many of the homes were abandoned in the 1990s and their upkeep was minimal at best. This led to a decrease in property values and an increase in crimes. Adam and Jeffrey had one thing in common with many kids who lived in the neighborhood and whose parents worked late — an abundance of unsupervised time.
After their juvenile court proceedings, both Adam and Jeffrey promised their parents that they would find after-school jobs. Adam found his first job in no time; he had such an engaging personality, after all. He was hired by a local discount retail store, BAM's Inc, to stock shelves in the evenings, usually from 4:00 PM to 9:00 PM. Mr. and Mrs. Yazco were relieved and hoped that maybe, just maybe, this would keep their son out of trouble. When the Yazcos asked Jeffrey how his job search was going, he explained that he was not having the same luck as Adam had. In actuality, his computer was just too interesting to him; he didn't want a part-time job that would interfere with his time online. But Jeffrey was able to convince his parents that he was "in the running" for various opportunities, but would lose out when someone else at school was hired or because the business decided not to fill the position at the last minute. His luck was horrible, he claimed. That then left Jeffrey home alone after school day after day — it was just what he wanted.
Adam loved his first job at BAM's, and BAM's loved Adam's work. He was extremely helpful and friendly with the customers, and they praised him to his store manager. Management offered Adam extra hours, and then an additional day here or there. He was quickly promoted to a shift manager. The 18-year-old liked the money he was able to make and his new spending capabilities; he would come home with his paycheck and brag about it to his brother. "Check this out, Jeff. I'm getting that new CD I was telling you about. How's the job hunting going with you?"
"Don't you dare tell Mom and Dad," Jeffrey threatened, "but I'm not looking."
"What in the world are you doing here after school every day?" Adam asked.
"Just messing around on the Internet. I've found all kinds of things on here you can do to make money."
"Oh, yeah, like what?"
"Well, you've heard of those Internet auction sites, you know, the ones where you can put an item or items up for sale and people nationwide place bids on them?"
"You mean like eBay? What do we have around this place that's gonna make you money on eBay, Jeff?"
"I've been doing some serious thinking lately, Adam. It's not so much what junk we have around here, but what we don't have! Secondly, it's not how much money I can make, but how much we can make! And, most of all, Mom and Dad don't have to know what we do. I can make them think I got a job. They'll never know."
Adam's interest piqued he couldn't resist. "I'm all ears, bro. Tell me more!"
Brian Andrew Mistoff grew up in a farming family just outside of Greenville, South Carolina, during the 1950s. The grueling, day-to-day, tedious work of managing a farm with his father was not his idea of a career. Mistoff was restless at the age of 18. He noticed that his family had to travel into town to buy staple items for the farm every weekend and the process took an entire day. And hauling those huge bags of rice from the truck to the house was not his idea of a great time. No sir, Mistoff was not going to do that his entire life. He longed for something more challenging.
When he was 19 years old, Brian married his high-school sweetheart, Marilyn. They both agreed that farming was not in their future. Mistoff realized that the only grocery store in town, located on Main Street, was getting everyone's business. What if Mistoff started his own, but put it outside the town? That way, everyone coming into town would have to pass by it on their way. Plus, he was raising so many cows and chickens on the farm, why not offer his customers fresh meat as well? When Brian told Marilyn his idea, she endorsed it right away. The Mistoffs chose their location, renovated the building and set their business plan in motion within a year. Brian hired his family members as meat processors and cutters and BAM's Inc. became a reality.
Brian and Marilyn Mistoff owned their first business, and it was just what they envisioned. As word of mouth spread through the community, most of the townspeople began patronizing BAM's. The store's signature product became fresh-cut meat. As business exploded, the Mistoffs invested and managed their money to the point that they could hire new staff members and then open a second store on the opposite end of town. Throughout the 1960s, the business became more and more profitable. BAM's stores began opening in other towns around Greenville and a few years later, the Mistoffs purchased land and built their first distribution center. BAM's catered to the young and old alike, and began adding grocery items, mainly canned and boxed products. People of every age eventually came to identify BAM's by the large statue of a cow in front of each store staring out over a flock of cars in the parking lot. Children wanted their parents to take pictures next to a BAM's cow as soon as they arrived. The Mistoffs' vision of a friendly, neighborhood store became the place to shop in upstate South Carolina. BAM's grew to more than 250 stores throughout the region, and eventually had a workforce of 15,000 employees. The product line expanded and the company catered to clientele from lower to upper-middle class families. In every city where BAM's operated, it was in the top three in market share.
However, the larger a company becomes, the more the opportunities there are for both employee dishonesty and customer shoplifting. When an employee steals from a company, it is known as occupation fraud or internal theft. When a customer steals, it is external theft. In general, 55 to 60 percent of retail companies' losses are from internal theft; 35 to 40 percent come from external theft; and the rest is due to operational errors, spillage, breakage, incorrect shipments and so on. BAM's was no exception.
To minimize their losses, BAM's management established a loss prevention department and I was the regional loss prevention manager based out of Columbia, South Carolina. While I was sorting through some of my endless paperwork one day I received a phone call from Tom Flannery at the Columbia branch of the FBI. He informed me that an investigator for eBay, the Internet auction site, contacted him to report a suspected fraud. Individuals were posting items for sale on eBay, collecting money from the winning bidder via Western Union transfers, but not shipping the merchandise. The eBay investigator was able to trace the IP address of the computer used to set up the auctions to the Yazco residence in Columbia. Tom was calling me because he suspected that one of the Yazco brothers worked at a BAM's store in the area; he wanted to know if I could look into Adam Yazco's records to help develop a fraud case. I looked up Adam in BAM's employee database and, sure enough, he worked at a store on Fleet Street. I told Flannery I'd be happy to help with the investigation.
After hanging up the phone, I contacted my supervisor, John Grover-ton, the director of loss prevention for BAM's. I filled him in on what Flan-nery shared with me, and Groverton asked that I keep him informed of the investigation along the way. When our conversation ended, I sat back in my chair and took a deep breath. "Wow, I wonder what will come of this one. Well, time to get started!" I picked up my coat and notebook and headed out the door, straight for the Fleet Street BAM's, thinking along the way of what my next steps might be.
I hit the ground running. I verified through the store's employee list that Adam Yazco was still employed there. I decided to focus on the Western Union reports and closed-circuit TV (CCTV) tapes first. According to Flan-nery, Adam was receiving Western Union payments from Internet auction bidders but not shipping the products to them. I was hoping to find a record of Adam cashing these payments either in the store's paperwork or on the surveillance tapes or both. According to BAM's procedures, Western Union records were kept for six weeks and categorized as sent and received. Each day, the bookkeeper printed a copy of both reports and filed them for safekeeping. I was primarily interested in looking at the received Western Union reports; they would show the date, time, register number, cashier/ bookkeeper ID number, receiver's name, sender's name and dollar amount of the transfer. I thought that if I found Adam Yazco's name in the received records, I might also find him transferring funds to another party. Therefore, I would need to review the sent Western Union files as well.
But what if a bookkeeper, for example, was in on the fraud with Yazco? If so, one of their ID numbers would consistently appear on the reports when Adam transferred funds. And what about his brother? Would he be involved in receiving Western Union payments at the store? There was another BAM's even closer to the Yazcos' home than the one where Adam worked. What would be found there?
I began looking at the Western Union records from six weeks ago and quickly found that Adam Yazco had received three Western Union payments at the Fleet Street BAM's. A week later, Adam started receiving more payments — his fraudulent Internet sales seemed to be increasing. In the six-week period for which we had records, Adam Yazco amassed more than $5,000 in Western Union transfers to BAM's Fleet Street location.
Next I reviewed the Western Union sent reports, but neither Yazco boy's name appeared on any file as a sender. While inspecting the Western Union reports for common bookkeeper ID numbers on Adam's transactions, I found that many different bookkeepers processed his transactions. Therefore, Adam Yazco appeared to be receiving money from his fraudulent eBay auctions and keeping it for himself without the involvement of other store employees. He was also not turning around and sending the funds to another person or location.
Then I collected the CCTV tapes that coincided with the dates of Adam's wire transactions. Sure enough, Adam appeared at the customer service desk, signed for the transaction, and was given the funds by various bookkeepers on different days. His body language gave away his actions — tapes showed him looking very nervous and glancing around. I organized my evidence for Flannery at the FBI by placing each day's videotapes with their corresponding Western Union paperwork in separate, large envelopes. The envelopes were labeled with Adam Yazco's name, BAM's store number and the date.
I sent my findings to the appropriate company executives and continued my investigation at the other BAM's store in the area, the one near the Yazcos' home. I found no evidence of Adam, but the CCTV tapes did show his brother, Jeff, picking up Western Union transactions from different cashiers and bookkeepers. The store's reports showed that the six weeks' worth of Western Union funds Jeffrey received at the second BAM's store totaled more than $3,000.
After gathering evidence from the two stores, I checked the Western Union transfers and CCTV tapes at other stores in the district, but did not find more of Adam's or Jeffrey's illicit conduct. My evidence indicated that in six weeks the Yazco brothers cashed more than $8,000 worth of Western Union transfers from defrauded Internet auction victims. The money came from individuals in multiple states and were cashed at the two local BAM's stores.
At the end of my investigation, I sent an e-mail to the district manager, the vice president of operations, and my direct supervisor to recap my findings. They gave me permission to send my report, files and evidence to the FBI; a few days after I did so, I received a call from Flannery who said that warrants had been issued for the arrests of Adam and Jeffrey Yazco on federal wire fraud charges. They wanted to take Adam into custody first at the Fleet Street BAM's location as soon as he clocked out of work. Then they would go straight to the Yazcos' house to arrest Jeffrey. I reported this news to BAM's executives, and they requested that Adam's arrest take place in the parking lot so as not to disrupt business. I called the manager at the Fleet Street BAM's to inform him of the upcoming arrest and asked when Adam was working that week. The manager told me that Adam had been a no-call, no-show for three straight days. When the manager tried to reach Adam, his calls went unanswered. Undaunted, the FBI decided to arrest Adam and Jeffrey together, at home. A few days later, I learned that the brothers had indeed been arrested at home and charged with wire fraud.
The Yazcos were both tried in court as adults, even though Jeffrey was 17 years old at the time. Flannery told me that both pleaded guilty to their charges in a plea bargain. The court ordered them to pay full restitution to their eBay customers and to serve a two-year prison sentence, but they both received suspended jail time upon the successful completion of five years of supervised probation. They were also fined, but the amount was not disclosed.
Note
Lessons Learned
The BAM's store where Adam Yazco worked was a high-volume location. Therefore, the staff and management easily overlooked the red flags that were raised by Adam's actions. The store's bookkeepers and managers, who were supposed to review the paperwork on a daily basis for accuracy and completeness, did not question the numerous Western Union transactions Adam received, although they appeared on the nightly Western Union reports. These should have raised suspicions because they involved an employee and should have prompted someone to contact the loss prevention department.
This case also demonstrated the importance of maintaining CCTV systems. A substantial portion of our evidence against the brothers came from the surveillance tapes in two stores. Most important, BAM's had no program in place to check potential employees' backgrounds. The company had experimented with pre-employment screening in the past, but the executives did not allocate enough funds in the budget to permanently implement a process. If BAM's had pre-employment background checks at the time, Adam's prior criminal record would have surfaced and he would not have been hired in the first place. As Flannery and the FBI were preparing to arrest Adam they found a misdemeanor shoplifting conviction on his record. He had been caught stealing CDs from a local electronics store before he was hired by BAM's. These CDs, by the way, were photographed and placed for sale on a fraudulent eBay auction by the Yazcos, as were many of their other personal possessions. When the brothers received the wire transfers from eBay customers, they did not ship the CDs or other items to the buyers; they simply kept the money.
Gerard (Jerry) Buchleitner, BA, Criminology and Psychology, Indiana University of Pennsylvania, has more than 25 years of district and regional retail loss prevention management experience, including conducting background investigations for federal government agencies and for large corporations in the health care and telecommunications industries.
He is an active member of the ACFE, a published coauthor, has achieved the certified protection professional (CPP) designation, and is a public speaker at local colleges and universities to future criminal justice professionals. Jerry and his wife, Julie, live in Columbia, South Carolina.