Nathan Mueller ING Fraud
Alec Doig
Fraud Examination
3-26-2014

After going to the Duluth Prison Camp, one most interesting and informative field trips of my academic career, I was intrigued by two of the white-collar criminals who spoke to us. Nate Mueller and Brad Weaver not only caught my attention during our visit to the DPC, but also made me want to learn more about them, their crime, and why they got caught. After initial research and with the information I had gained from the prison, I decided to focus on Nate Mueller for my paper. The main reason for choosing Nate over Brad was that I have so much in common with him. Most importantly, Nate was an accountant. Not only was he an accountant, but also an accountant working a mid-level job in corporate America, a job that I could easily see myself doing. He grew up in central Minnesota in an upper middle class family and attended Gustavus Adolphus College (Duluth News Tribune, 2012). He was a very intelligent and knowledgeable accountant in addition to being very personable. All of these similarities really intrigued me and also scared me about who can commit a fraud and how easily the lines can be crossed. Now onto Nathan Mueller—the criminal. Nate was working as an accounting manager for ING Resurgence Corporation in their re-insurance division (St. Anthony, 2008). Before ING Resurgence, a subsidiary of the ING GROUP, had acquired ReliaStar Life Insurance Company, Nate began learning the new accounting information system People Soft. He was then trained to be the system specialist for his office. During the transitional stage from the prior system to ING’s People Soft system, Nate was able not only become extremely knowledgeable in relation to the operations of the system, but also found that the system had some anomalies or inconsistencies that were unknown to many if not all of the other members of the office. For a while, Nate was ethically doing his duties as an accounting manager but one day in early 2003, everything changed. With his understanding of the accounting system, Nate realized that inside his duties as an accounting manager, he could request checks (Phelps, 2009). He also came to find out that he could by-pass the general authorization process and authorize them himself (Phelps 2009). Nate then decided to request and authorize a check not for ING business purposes, but instead, to help with issues he was having financially. The amounts of the each check that Nate wrote to himself were, early on, very small. The first check he received was for only $1,100. It was almost as if he was testing the waters to see if he would get caught. By the time summer had rolled around in 2003, Nate had stolen over $88,000. He knew he was not getting caught, so the numbers began to get larger. With all of this disposable income, Nate was able to afford and do many things including buy expensive cars, houses, and jewelry (FBI, 2009). He was also able to pick up some very desirable habits including women, drugs, and gambling (FBI, 2009).
Gambling was an interesting habit for Nate. Nate began gambling not because he wanted to win money, but because he needed the tax slip that a gambler receives when they win a jackpot. Nate would use the jackpot slips to help legitimize some of the money he was stealing. In a visit to the Federal Prison Camp in Duluth, Nate said that it did not matter how much money it took to win a jackpot, as long as he could get a slip at the end of the night. In each of the four years that the fraud went on, Nate won approximately $180,000, $380,000, $870,000, and $1,300,000 although the amount of money he spent to win that much is unknown. Among Nate’s other habits, women were second behind the gambling. He spent a vast amount of time and money in strip clubs. One of Nate’s favorite hang-outs was Schiek’s Gentlemen’s Club in downtown Minneapolis. According to a Star Tribune article, Nate spent over $40,000 in tips and gratuity to the floor staff while committing the fraud (St. Anthony, 2008).
As stated previously, after the first year, the amounts of each check he was writing were getting larger. Nate decided that in order to better hide his fraud from co-workers he would create false entities that had names similar to ING clients. These false entities did in fact work as camouflage for his fraud, but they made the fraud even more complex. For many, this complexity would have lead to errors and eventually getting caught. Nate however, kept it all straight for the four years that the fraud lasted. He kept track of all of the money that was going to each dummy corporation, and filed tax returns for them.
When Nate was finally caught in 2007, He was relieved to say the least. The stress and guilt that had built up over the 4-year fraud weighed very heavy on him. Ironically though, he did not get caught because he screwed up with any of the documents or paper trail. A co-worker who was a close friend began to look a bit closer at Nate and realized that things some things were not adding up. First was the financial piece. An accounting manager making approximately $85,000 a year could not live as lavishly as Nate was. Nate backed up the finances by saying he won the lottery, but in reality, if a person won the lottery, I highly doubt they would continue to work a middle management position in Corporate America. The second point the co-worker noticed was how Nate was acting and how Nate always appeared to be under extremely high stress and pressure; Nate’s personality was not naturally that way. When it was all said and done, Nate had stolen over $8.5 million dollars from ING through 99 fraudulent checks (FBI, 2009). He was looking at up to twenty years in prison with hefty fines and restitution. Through a plea agreement, he was able to get 87 months in prison, which lies on the low end of the possible prison time for his offense and amount of money taken (Phelps 2009).
In order to better analyze Nate’s fraud, we need to look at the fraud triangle. The fraud triangle is a model for explaining the three factors that must be present to commit a fraud. The three factors are pressure, rationalization, and opportunity. Nate only appears to have one main pressure when he begins the fraud. That pressure was financial need. In his interview, Nate spoke about how when the fraud began he was trying to pay off some bills because he had a daughter on the way. He needed the money to support his family. Later on in the fraud, I feel his pressure changes to an internal pressure to continue living the lavish lifestyle he become accustomed too.
Nate’s rationalization stemmed from the belief that he was undervalued and was not being fully utilized (Phelps. 2009). Nate believed that if he worked hard and did the right things at ING, He would be rewarded and would be promoted. After six years, he was basically doing the same job (Phelps, 2009); Nate was disillusioned. Another smaller part of Nate’s rationalization goes back to his pressure, financial need. Nate felt he needed the money and if he did in fact “need” the money, it doesn’t matter what his rationalization is. He is going to justify it.
In this case, Nate’s opportunity to commit the fraud encompasses many things. First, Nate himself is an aspect of his opportunity. Nate has an education and background in accounting, which allows him a better understanding of the company’s financial processes. Second, his position at ING definitely added to his opportunity to commit the fraud. He was in a position of leadership. Even though he was not upper management, he was expected to make proper decisions in the accounting department for the company as a whole. The third and most important aspect of Nate’s opportunity to commit the fraud was internal controls, and more specifically, the weakness of internal controls.
Nate was in a position to request checks be written. Internal controls, specifically separation of duties was lacking at ING. Technically there was separation of duties because Nate could not authorize them himself, but Nate knew other employees passwords to authorize the checks, which made the separation of duties ineffective. Another internal control issue was with the fraud prevention system. As long as Nate wrote the checks for less that $250,000, the check would pass the detection system without being flagged (Phelps, 2009). Although ING is a massive Corporation, having a minimum of $250,000 to flag transactions is partially responsible for Nate’s opportunity to commit the Fraud.
One final way to look at this case is by pointing out differences that were seen between the interview at the FPC in Duluth, and the outside research we did on our own. The first point that does not seem to correlate between the interview and my personal research was why Nate committed the fraud. In the interview, Nate spoke about the financial trouble he was facing, but in the Star Tribune articles Nate’s Lawyer speaks to the effect that it was Nate’s dissatisfaction with his job and his lack of advancement that caused him to do it (Phelps 2009). Another point that differs between the interview and the FPC visit was that in the Newspaper, Nate said he “did not care if he was caught and… was simply waiting for it” (Phelps, 2009). In the visit, Nate did agree that that he was waiting to get caught, but I personally feel that if he did not care, he would have stolen near or more than he did in year 3, in year 4. The reality is that he stole one-fourth the amount in year four as he did in year 3. Another fairly small difference that relates to the inability to advance in ING was how, in articles, Nate’s lawyer speaks to the effect that others at ING were being promoted because of how they networked themselves at the office and not how they performed (Phelps, 2009). Nate never admitted that this was true, but in watching Nate in the interview, he is a very social person. He is not only social, but also knows how to captivate an audience. I find it hard that Nate would not be able to advance because of being less social than co-workers.
All in all, the interview and research process brought one huge thought to my mind. This could be me someday. Many things about Nate make me believe that I could be in a similar situation career wise. I do not believe that I will commit a fraud and hope I never do, but in reality, lines are not perfectly black and white. I just hope I never blur them to the point where I don’t know where the line is or if I have crossed it.

Sources Cited

1. Department of Justice, (2009). Eden prairie man sentenced to 97 months for defrauding his employer. Retrieved from The Federal Bureau of Investigation website: http://www.fbi.gov/minneapolis/press-releases/2009/mp_011309a.htm

2. Inmates describe ease of falling into white-collar crime. (2012, february 8). The Duluth News Tribune. Retrieved from http://accounting.smartpros.com/x73386.xml

3. Phelps, D. (2009, January 12). Mueller gets 8 years for $8.5 million ING fraud. The Star Tribune. Retrieved from http://www.startribune.com/business/37479859.html

4. St. Anthony, N. (2008, august 19). Mueller expected to plead guilty to $8.5 ing embezzlement. The Star Tribune. Retrieved from http://www.startribune.com/business/26362604.html