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Dodson Group hit crisis mode after trusted CFO was suspected of $422K theft.

Article Excerpt
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At first, small-business owner Jim Dodson figured the problem must be a technical glitch.

During a routine analysis of aging unpaid invoices last September, one of his employees couldn't tie the latest figures to the company's ledger. So Dodson asked his longtime chief financial officer, a trusted friend, to check it out and report back the next day.

The next morning, CFO David Sullivan didn't show up for work. Dodson soon began digging into archived spreadsheets. And with each discovery, his worst suspicions curdled into downright fear.

Accounts receivable for his company, the Dodson Group, had been overstated by $2.7 million--double their true value. And $422,539 was missing from the firm's coffers.

In a flash, Dodson, 48, understood the implications: scandal, possible bankruptcy for his firm, and prison for the 11-year employee he says had pulled off the scheme.

Dodson contacted authorities, spawning an investigation that culminated Aug. 17 in the filing of a felony wire fraud against Sullivan, 45. If U.S. District Court Judge Larry McKinney accepts a plea agreement submitted the same day, Sullivan could be sentenced to up to 20 years in prison. Sullivan could not be reached, and his attorney declined to comment.

For Dodson, the financial shenanigans spawned the most daunting business challenges he has faced since starting the office-products-distribution-and-supply firm 23 years ago.

Plenty of negotiating lay ahead, since seven-figure bank loans and supplier credit lines had been based upon company financials that were flat wrong.

First, he had to untangle the web of falsified figures that he claims allowed...

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