In one of the nation's largest cases of corporate travel embezzlement, Tri-Pen Management founder, president and CFO Victoria Wofford last week pleaded guilty to charges that she stole more than $17 million and used the funds to develop software, buy an apartment and invest in a restaurant chain. Wofford confessed that during a three-year period she fraudulently billed two American Express business travel accounts of a client that outsourced travel management to her company.
Following the guilty plea, Tri-Pen Management Corp. and Tri-Pen TravelMaster Technologies announced that Wofford "will be stepping down from her day-to-day responsibilities while she deals with her legal issues," according to a statement sent to clients and the press.
"No other employee of either Tri-Pen Management or TravelMaster Technologies has been implicated in any way, and it is our understanding that whatever Ms. Wofford may have done, she was acting completely on her own," according to the statement. Both companies are "working closely with clients to ensure the seamless day-to-day servicing of their business."
Lessons Learned
Management Alternatives president Carol Ann Salcito said the case highlights why corporations need to consider the independence of contractors. "If a company is managing a travel program with total objectivity," Salcito noted, "how can they do that if they're also receiving income from suppliers?"
Acquis Consulting strategy development director Greeley Koch noted that "fraud is fraud," and said the case illustrates why companies need to maintain appropriate controls, audits and oversight of their travel and card programs.
$35 Million With Fees, Interest
In an indictment filed in New York State Supreme Court, the Manhattan district attorney's office wrote, "Wofford used dormant BTAs to present fictitious merchant charges" as she "pretended to be an employee of the client, responsible for handling the travel expenses." Wofford pleaded guilty to felony grand larceny, but the indictment also includes counts of forgery, identity theft and fraud. Prosecutors claim Wofford "fraudulently charged more than $35 million to her client's BTA," but a spokeswoman for the district attorney's office acknowledged that the figure includes fees and interest.
"She pocketed $17 million, but Amex is out $35 million that it counted on receiving," the spokeswoman told Management.travelto explain the discrepancy in the billing amount. At a hearing last week, Wofford's attorney said the total received was $17 million and attributed the rest to Amex fees and interest, while Assistant District Attorney Gary Fishman cited the loss at $19 million, according to the Wall Street Journal. Calls to Tri-Pen headquarters and Wofford's attorney were not returned.
"Wofford used most of the stolen funds to support a start-up software venture she founded to enhance her travel management business," according to court documents. She used $475,000 to buy an apartment in St. Petersburg, Fla., in her husband's name and provided her husband with $2.4 million to invest in a California restaurant chain, according to records.
Corporate Victim Unidentified
The district attorney's office declined to identify the corporate victim, but a spokeswoman said the "client had a very large account with [Tri-Pen] in the hundreds of millions of dollars. She constructed the scheme in a way that she was able to hide it from them." She declined to reveal other details so as not to "create a blueprint" for fraud.
An American Express corporate card spokeswoman declined to identify the client or comment on liability. "We are looking into it," she said. "It involves the commercial card client outsourcing the administration of the commercial card program to Tri-Pen, so Tri-Pen was managing and had access to the accounts. It does not impact our tens of thousands of card and business travel customers who we continue to service as usual."
While it remains a Tri-Pen client, Johnson Controls denied that it was the corporate victim and noted that it doesn't use BTAs, according to global travel services manager Michael Hall. "We are still benefitting from the resources we use from Tri-Pen,and we were not exposed in any way to this."
Founded by veteran corporate travel directors to provide outsourced travel program management to large companies, Tri-Pen as of 2008 managed more than $750 million worth of travel spending for 18 corporations. In 2007, the company claimed it managed $120 million in annual volume for its largest client and $1.5 million for its smallest. On its Web site last week, Tri-Pen cited Grace, L-1 Identity Solutions, L3 Communications, Loral and NCH Corp. in addition to Johnson Controls among past and present clients. The clients and partners section of its Web site has since been removed.
To help manage the travel and reporting, Tri-Pen formed a separate technology company, Tri-Pen TravelMaster Technologies, that built a data management platform to aggregate credit card, agency and other data from multiple sources. TravelMaster is used internally for BPO clients and marketed externally to other companies, card issuers and associations and other suppliers.
The prosecutor said Wofford contacted an attorney in February 2010 when her "fraudulent scheme was about to be uncovered by American Express." The attorney contacted the district attorney's office in March, and "Wofford provided a full confession to the scheme" and has cooperated with prosecutors and American Express.
"Balanced against her cooperation and plea for leniency is the simple fact that this was a long-term, intentional and systematic course of fraudulent conduct that results in the theft of millions of dollars," according to court records.
Sentencing is expected at a July hearing. The district attorney did not offer a plea bargain. Wofford faces a minimum sentence of one year and maximum of 25 years. "There is mandatory jail time, no matter what restitution" Wofford makes, said the district attorney’s office spokeswoman.
The case is one of the first prosecuted by the major economic crimes bureau announced in February by the district attorney and aimed at white-collar crimes.
Within the travel industry, Wofford is among dozens of travel management companies suppliers, corporate travel and meeting managers, travelers and administrative assistants who have been convicted of fraud, embezzlement or other crimes during the past 25 years. However, a review of news reports and ARC files indicated that most of those cases involved thefts of less than $1 million.