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Clever Embezzlers Took $850,000, Store Says

BIRMINGHAM, Ala. (CN) - Former employees of a Piggly Wiggly supermarket exploited a flaw in Western Union's money wire system to embezzle $850,000, Piggly Wiggly claims in court.

Plaintiff Buy-Lo Quality Foods owns and operates nine Piggly Wiggly markets in and around Birmingham. All the stores offer Western Union wire transfer services.

It claims four former employees figured out that Western Union money transfers would not show up on daily reports if they were backdated to a previous day. By exploiting that glitch they raked in more than $850,000 in 3 years, according to the complaint.

Buy-Lo sued Western Union Financial Services and its four former employees, Tenee Alexander, Joycalyn Cash, Kateshia Dobbins and Sheena Marie Ratcliff, in Jefferson County Court.

Here's how it worked, Buy-Lo says: "At the close of each business day, the equipment provided by Western Union to facilitate wire transfers (the 'Western Union system') would generate a report of that day's wire transfer transactions (the 'daily report'). A flaw in the Western Union system designed and implemented by Western Union is that the daily report included only transactions dated that particular day. Accordingly, a wire transfer that is back-dated does not appear on the daily report generated by the Western Union system on the day it actually occurred. In addition, the Western Union system does not rerun a daily report from the date shown on the back-dated wire transfer.

"Beginning in or about late 2008, the individual defendants became aware of the flaw in the Western Union system designed and implemented by Western Union and began a scheme to embezzle money from BLQF by use of the Western Union system. Such scheme worked as follows: (i) the individual defendants would 'back-date' a wire transfer made payable, or otherwise sent, to an accomplice; (ii) the back-dated wire transfer would be sent from BLQF through the wire transfer facilities of Western Union to the accomplice; (iii) the accomplice would collect cash from the wire transfer; and (iv) because the daily report generated by the Western Union system only included transactions dated that particular day, the daily report would not include the fraudulently back-dated wire transfers. Thus, the fraudulent back-dated wire transfers never appeared on any daily report generated by Western Union system."

The company says the fraud went undetected for more than 3 years.

The brief, 4-page complaint does not describe how the plaintiff figured out what was going on.

Buy-Lo seeks compensatory and punitive damages against the ex-employees for fraud, fraudulent suppression, money had, unjust enrichment, breach of contract and conspiracy, and damages for negligence and breach of contract from Western Union.

It is represented by Timothy Francis, with James L. North & Associates.

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