A Case Study of Truck Driver Theft

A Case Study of Truck Driver Theft
The Situation

Marvin Raggins, an independent trucker, contracted with a small wood dealer to provide him with wood. The dealer’s business consisted of providing timber products to several Florida mills under supply agreements. Raggins claimed to have his own source of wood and the wood dealer provided him with authorization cards for delivering the loads to several area mills. Two of the mills were owned by Smurfit Stone and Champion International at Whitehouse. (I know a walk down memory lane for some of us and ancient history to others)!

For more than three years, Raggins provided the wood to various mills using the authorization cards provided by the dealer. However, he also diverted three or more loads each month which was not credited to the logger’s account. Eventually, the logger realized he was losing money and his business was at risk. So the logger began watching things more carefully and eventually became suspicious that timber theft was the cause of his problem.

The incident that closed the case for the logger was easy to track once he started looking. On Friday, Raggins left the job with a load of chip-n-saw (CNS) that he was delivering to Smurfit’s mill. Chip, another driver from the same logging job spotted Raggins delivering the wood to Smurfit and confirmed the drop off. Chip couldn’t tell that, unknown to him, Raggins had delivered the load using the dealer’s s authorization card and not the logger’s authorization card. When questioned by the logger, Raggins couldn’t produce a ticket with the correct information on it. Even after waiting a few days to allow the driver to produce the scale ticket, when Raggins still had no scale ticket and no explanation, he was fired and prosecuted.
A Series of Unfortunate Events

Besides the straight-forward theft issue and the mechanics of how the theft was perpetrated, this case outlines a series of unfortunate events that led to the mill’s inability to see the fraudulent activities. 

1.      Prior to this incident, Raggins had a good reputation as a hard worker and dedicated employee. His father had also worked for the mill in the past and had an outstanding reputation as well. It’s easy to assume that good employees will stay that way. That perception prevented the logger from even attempting to look into the problem. The logger trusted him.

 2.      When Raggins began having trouble with the IRS, he panicked, knowing he had five children and a family to support. As we’ve said before, a change in financial circumstances can prompt a change in ethical behavior. Whether or not the employee carries out the fraud is dependent on his perception of whether or not he can actually get away with it. Raggin’s didn’t think the logger was closely monitoring how many loads were hauled every week. Making it easy to rationalize the theft and begin diverting loads.

3.  At Smurfit Stone, the logger kept a good load sheet and all shipments were tagged with the company’s blue tags. Unfortunately, no reconciliation was performed by the logger or by Smurfit Stone. So all Raggins did was remove the blue tag and deliver the wood as his own. The thefts went undetected.

4.  At Champion mill, drivers were required to sign scale tickets. When Raggins turned in a load for the logger, he signed his full name. When he used the dealer’s authorization cards, he used his initials. The scaler at the time wasn’t alert to the subtle change. Once the company began to match the right dealer and the right scale tickets, they identified over 140 loads of CNS diverted by Raggins to the Whitehouse mill over the three-year period. 

 5.  One of the problems in prosecuting the case was that the logger fired the driver before notifying Smurfit. This made investigation even more difficult and may have weakened the prosecution’s case when it went to trial.
Pulling off the Theft was easy – Lots of people do it!

The investigation of Raggins was led by a corporate security manager who laid it all out for a Florida Department of Law Enforcement investigator. When Raggins was questioned, his response was candid and surprising, “Yep, I did it. I’ve been doing this for a long time. It was easy. Lots of people do it.”

The final verdict sentenced Raggins to restitution, community service and a suspended jail sentence. However, to make matters worse, Raggins ultimately failed to pay restitution and was eventually jailed. When Timber Security personnel tried to track down any assets Raggins owned in an effort to recover its losses, they found he had transferred everything to his wife so there weren’t any assets they could go after.

Moral of the Story

Unfortunately, this isn’t the only case where the practice of “passing out authorization cards” to anyone with a log truck, has resulted in large quantities of wood vanishing from the rightful owners into the bank accounts of the fraudster. This practice is fairly common in most wood procurement basins and in many cases the mills who receive the wood without asking more detailed questions are at best ignoring the problem, and at worst, aiding and abetting the fraudster.

The resulting losses are actually compounded when there is an absence of disciplined control measures within the supply chain.   Because of the nature of small wood dealer’s work, there is little time or resources to develop and implement an appropriate security plan.

This case caused Smurfit to institute a policy of verifying load ledgers and also verifying any new loggers delivering wood to the mill. The on-ground verification of new loggers included verifying their existence while working in the woods. If everyone did this, these kinds of cases could be eliminated or at least greatly reduced.