Case Analysis : James Guisti, A Trusted 14 Year Employee And The Manager Of An Office Of Greater
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James Guisti, a trusted 14-year employee and the manager of an office of Greater Providence Deposit & Trust (GPD&T) was caught embezzling after his superior received an anonymous tip. James was abusing his power in the bank and taking advantage of his loan signing limit to write small loans for several unknowing or fake individuals. All of the loans were between $10,000 and $63,500 and were 90-day notes that did not require any type of collateral to secure them. James was then instructing other trusting employees of the bank to cosign the checks and cash the loan funds. Due to inefficiencies in bank policy, and the fact that the loans were small, the audit team was unable to detect the fraud. Also, in order to avoid being caught for unpaid loans, when the loans would mature James would take out new loans to pay off the old loans.
James Guisti was in a role in the bank that allowed him to sign loans up to a certain dollar amount – those amounts increasing over time from $10,000, to $15,000, and finally to $25,000. Many of the loans that Mr. Guisti was writing were within these limits and would therefore not have been caught by auditors; however, there were some above these limits which should have raised flags but unfortunately secondary approval was not obtained. While it is common practice in the banking industry to allow managers to have small lending limits that do not require additional approval, Mr. Guisti was able to bypass these limits without question. James was