On April 2, 2019 Wash DC out of home executive Don MacCord pleaded guilty and was sentenced to $1.4 million of restitution and 30 months jail followed by 3 years of supervised release for conspiracy to commit wire fraud. Here’s a list of MacCord’s misdeeds mentioned in the Sentencing Memorandum.
- MacCord raised money from investors to build a digital sign plant in Washington DC by overstating the number of signed leases than Digi Outdoor Media had.
- MacCord misrepresented to Branded Cities that Digi Outdoor Media had the rights for 125 sign locations and then backed up these misrepresentations by providing 8 forged leases.
- MacCord provided 12 forged leases to his auditor Hartley Moore and then fired the auditing firm after it insisted in verifying the leases.
- MacCord and Doyle personally stole $1.4 million from investors by creating a fake contractor agreement and fake invoices supporting supposed work. The money paid against the invoices was diverted to MacCord and Doyle.
- MaCord and Doyle produced forged leases for the SEC when it began to investigate and lied under oath to the SEC.
How can you protect yourself or out of home company from unscrupulous employees or contractors who try to defraud you? Take these six steps.
Write the checks yourself. Fraud occurs when someone besides the business owner controls the checkbook. MacCord and Doyle had full run of the company with no one looking over their shoulder. Even if you don’t write all the checks yourself you should have full access to the bank statements and you should let your managers and employees know that you check the bank statements periodically.
Use an independent, reputable fabricator and installer with a track record. There are plenty of independent sign fabricators with outstanding reputations. Selective Structures, Profab and RMG come to mind. Look for OAAA or IBOUSA associate members. The fabricator and the installer need to be independent. Be suspicious of new sign companies or fabricators without extensive business documentation. MacCord and Doyle defrauded investors by forming a sign company – Signworks – to bill for development and construction. Insider checked Signworks initial formation docs at the Washington Secretary of State and no Signworks officers were listed. Signworks, LLC. had no website. This should have raised red flags.
Use a reputable digital sign manufacturer. Anthem, Daktronics, Formetco, Lightking, Media Resources, Panasonic, Watchfire. Reliable manufacturers with a history and a concern about protecting their good name.
Be suspicious of accelerated growth. Most out of home fraud involves the fast development of a large number of out of home signs. Fraud and complexity go together. At one point Digi Outdoor Media claimed to be developing 76 sites involving 14 leases. It’s hard to spot fraud which occurs when lots of sites are being developed simultaneously. It’s easier to spot fraud involving a single sign.
If a deal is too good to be true it’s probably a fraud. MacCord and Doyle offered investors two year 25% promissory notes. Should have raised huge red flags.
Require Audited Financials. Audited financial statements may not prevent fraud but they increase the chance a fraud will be spotted. Audited financial statements require an accounting firm to independently confirm several aspects of a company’s financials (e.g. payables, receivables, material agreements like leases). It’s a big red flag if an auditing firm resigns or is fired. Digi Outdoor Media fired its auditor after the auditor insisted on sending confirmation letters to landlords to confirm that leases were valid. This should have been a red flag for investors.
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