In what is believed to be the largest tab-divider scam yet perpetrated on a large American law firm, three men are accused of defrauding Wilson Sonsini Goodrich & Rosati out of $1 million by charging it for tab dividers that were never delivered. All three men, one of whom was formerly a purchasing specialist for the firm, were indicted last week by a federal grand jury.
Authorities alleged that John Tashiro would place large orders for tab dividers with cronies at Attorney's Printing Supply (APS), a printing business in San Francisco. Though some of the orders were legitimate, Tashiro would also send fake orders to his APS contact, who would then send invoices back that Tashiro approved on behalf of the firm. The accounting department then cut checks for the invoices, unaware that the tabs listed on the bogus invoices would never be delivered.
Whether or anyone should have noticed this scheme, which went on for at least four years, is hard to say. There is no indication that any attorneys at Wilson were forced to go tab-less or that any important appendices remained untabbed. On the other hand, we are talking about a lot of tab dividers. The indictment listed examples of a purchase order in April 2003 for 49,475 tab dividers, and another in May 2006 for 81,500 tab dividers. Now, I am a little nervous getting into any sort of math, having been called out recently by a Ph.D. for screwing up some simple multiplication, but here we go.
Assuming that these were the sort of tabs that come in sets of 25 - which I want to point out is a highly conservative assumption - and that the indictment was actually intended to refer to individual "tab dividers" and not sets of them, then the 81,500 tab dividers ordered in May 2006 represented 16,300 sets for that month. For comparison, our firm's accounting department, after some prodding, told me that Shook, Hardy and Bacon has ordered 18,147 "sets of tabs" so far this year (through the end of August). Our firm is roughly the same size as Wilson, and so assuming we have a similar rate of tab consumption, these guys ordered, but failed to deliver, up to eight times as many tabs as the Wilson firm needed per month.
The indictment also says the scam cost Wilson $1 million. Based on that, and the fact that a pack of 25 tabs costs about $5 at Office Depot (although you would probably get a price break with orders this big), Wilson paid for five million tab dividers that it did not get. If laid end-to-end, five million tab dividers would stretch for approximately 868 miles, or roughly the distance from Wilson's office in Palo Alto, California, to its office in Seattle. Perhaps more importantly, a tragic and heartbreaking loss of five million individual tabbing opportunities for the paralegals of one of America's great firms.
Link: WSJ Law Blog