The DEX Coin Tube Scam And How To Catch Someone Doing It

by Mark Manney
Posted On: 10/14/2019

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I have always wanted to put this low-dollar theft cause and cure out to a mass audience past just my limited client base, and what better platform than this blog in Vending Times!

Vending Times published the first of a three-part story that I wrote in my Loss Prevention Chronicles in its Septem­ber/October print issue, and will run the second installment in its November/December issue. It’s about a past investigation in a vending company started by an owner in his garage that he nurtured and grew into a 17-route powerhouse in his market. Talk about the American entrepreneur success story! Now, this wasn’t just any vending investigation: it involved a dishonest loose Wolf Pack conspiracy of nine dishonest, disloyal, corrupt, thieving employees.

That’s right -- nine, and in only a 17-route operation! And you thought you had problems.

A warehouse manager, a customer service manager, and seven route drivers were all hanging out together after hours while teaching one another how to destroy the owner’s legacy to his family. It was one of the worst feeding frenzies of theft I had ever seen in the industry in a company of that size.

All nine were stealing together and they almost drove my client into bankruptcy. And they would have. if not for a jilted girlfriend, a series of well executed and documented stealth pre- and post-audits conducted by the owner and the operations manager at my direction, and last but never least, well-planned ambush cut-throat interrogations. We cracked two of the dishonest employees like eggs on the sidewalk during their interrogations, leading to indisputable full admissions with all the gory details about the entire Wolf Pack’s year of massive “employees gone wild” betrayal. One of the theft MOs (method of operations) was “The Dex Coin Tube Scam.” It is dissected in this blog.

Truth can be stranger than fiction, as the details of this entire investigation and the end-game confrontation will be explained in these three stories in the “Loss Prevention Chronicles,” in the coming issues of Vending Times:

• The Betrayal

• Baiting the Wolf Pack

• Jam’em Up and Flip ’em Over

As you would expect with nine employees stealing in a 17-route company, the losses were massive. There were two other forms of traditional and one unusually bold form of vending theft going on, besides the DEX Coin Tube Scam, that are explained in the 9,000-plus words in the three articles. In this focused blog, though, I wanted to lay out what was discovered about how one route driver started stealing coins. And when nothing was said or done about it, not only did he increase his coin thefts, but he taught six other route drivers exactly how to do it. The drops-in-a-bucket coin thefts soon became a flood of red ink.

DEX was new to this company. There were some problems in navigating the “learning curve,” and in the software installation itself by inexperienced employees. There also was critical turnover in the money room and in the office. This was a perfect storm as the unforeseen problems ganged up, providing cover for the Wolf Pack. The story has a happy ending, both for the software and the owner, who I am still friends with. I condensed below what I learned when it came to the subject of this blog.

The DEX Coin Tube Scam

Most vending machines are equipped with coin changers inside that incorporate tubes filled with coins to give the customer change when making a purchase. Most of the time, these coin tubes replenish themselves with coins inserted by patrons making purchases, and the drivers do not have to do anything with them. For instance, this particular machine I will use as an example is equipped with a coin changer that holds $20 in quarters, $10 in dimes and $4 in nickels in its tubes.

The first customer comes to the machine and buys an item that costs $1 by using a $5 bill. The coin changer will return $4 in change, in quarters, to the customer. The next customer buys something for $1 and uses four quarters. Those quarters automatically are diverted by the coin changer to replenish the quarter tube.

Now let’s stop for a second and understand what has actually taken place here. We have had two sales take place for $1 apiece, for a total of $2 in sales.

• The first customer used a $5 bill, and that bill has been sent to the “dollar stacker” to be collected by the route driver.

• The second customer used four quarters for his purchase, and those coins went into the coin changer tubes.

DEX understands that, even though there was $2 in sales, the driver should bring back $5. It knows what is supposed to be in the bill stacker and what is supposed to be in the coin box.

Each day, all drivers leave the warehouse with a “coin exchange” bag filled with a set amount of coins for use in replenishing the coin tubes in the machines’changers. So, let’s say this particular driver leaves with $100 worth of coins in the change fund. At the end of the day, he must bring back a bag with $100 in it in order to balance.

This driver goes to a machine in which the quarter tube is low and requires a roll of quarters to refill. He uses $10 collected from the bill stacker to “buy” a roll of quarters for the machine. So his “coin exchange bag” will now balance. He will have $90 in coins and $10 in bills.

Let’s say there was $50 in the bill stacker, from which he used $10 to purchase the coins. DEX will ask for $50 and he will only bring back $40. In order to balance this, the driver must tell the handheld that he did a $10 coin exchange in this machine, and then DEX understands that he used $10, and it expects $40 in bills so the driver will not be short.

At this point, the driver takes the $10 in quarters that he purchased and refills the coin tube that is low.

The DEX coin tube thief never puts the roll of quarters in the machine, or at least not all of them. He puts the roll or some of the coins into his pocket.

The only way to prove that this is a machine-level theft, and identify exactly who did, is to conduct an exact and documented pre-and post-audit with two managers. That is the foundational investigative tactic that strikes fear and terror in the dark heart of a dishonest employee, and will be covered in a future blog.

As will be explained in the coming three “Loss Prevention Chronicles” articles, once we learned the seven route drivers were stealing coins, to various degrees with the MO explained above, we focused multiple pre-and post-machine audits on the ringleader who was not only stealing using this MO constantly, but we had information that he had bragged to the other drivers about it, and then taught this theft MO to the other six route drivers, who eventually adopted it.

Soon after the investigation was successfully closed and all nine of the dishonest employees were dealt with, we had to be careful, as my client could not lose all nine employees at once. We got creative, taking out the ringleaders, stopping the theft and intimidating the rest of the thieves and then replacing them with honest new hires. My vending program: The Culture of Controls: Training – Technology – Tools & Tactics was immediately implemented and my client’s profitability returned in an amazingly short time, stayed there, and years later he was still successful while dominating his market.

DEX: Another Operator’s View

 

Soon after all of the above happened, I brought the “DEX Coin Tube Scam” to another client who had much more experience with DEX than my client with the Wolf Pack. It was running smoothly, and they had none of the perfect-storm problems. I asked my contact to review it and give me his opinion. Below is what he e-mailed to me, word for word.

“Mark, I have been thinking about your ‘DEX Coin Tube Scam’ email, and I discussed it with a couple of people in the office. Here is what we have come up with:

• When our route staff enters information into the ‘Coin Tube Replenishment’ section of the handheld, we treat it as informational only.

• We assume the coin mech is full each time the machine is collected.

• Our staff takes a $5 roll of dimes from their change bag and put it in the coin mech. They will take $5 from the bill stacker and place it back in their change bag so it remains even.

• Entering an amount in the ‘Coin Tube Replenishment’ does not affect the DEX meter or the amount of cash expected as sales.

• The only data that our route staff can enter into the handheld that impacts the cash expected are “Test” and “Refund.” Any totals entered in these areas reduce the amount of cash expected by the DEX meter reading.

If the route person enters fictitious information here, they have the ability to pocket the money undetected.

I am not saying that a person can’t take the $5 roll of dimes and place it in their pocket like you have described. I believe the machine would begin showing small shortages on each collection after this, because as items are later purchased, the coin mech would begin to replenish itself with the change being used, causing a shortage. These shortages may be small amounts and thus overlooked. Eventually, if the coin mech does not completely replenish itself, it will be empty.

I hope this helps. For our system, we feel that this is the way it works.”

Once again, while working with this client when DEX (or any software of any type) pointed at someone skimming, we employed my “10 Point Pre- and Post-Flow Chart” investigative steps with two managers, documenting every step. To zero in on the exact timing of the route driver’s entrance and exit of the account/machine(s) being audited, we also employed real-time cover GPS to get to the audited machines just before and just after the “employee of interest” made the stop.

This client had operations in five states. It was a killing-field for the first three months, taking out dishonest employees of many stripes and types. Money room, route drivers, a covert video in a machine showing the senior technician starting to steal, then finding the covert camera, putting the cash back, and then leaving the machine like the Roadrunner in a puff of smoke!

Cash shortage soon came to a screeching halt in all five states. Many years later, it was still at the lowest level in the company’s history.

“Employees of interest” with software cash shortages should always have a bullseye on their back because you suspect they are stealing, but before confronting them, you must have indisputable interrogation level evidence – not just a “probable cause” software report. Too many victim route drivers get “managed out” by operators who have “probable cause” to suspect that the route driver is skimming, but do not do … or know how to conduct … a real investigation collecting indisputable, documented evidence. Many times, the real thief is not the route driver but a technician, a route relief/jumper, a money room person, another route driver with a key no one knows he has, or, occasionally, a manager. And many, many times, the thief is a former employee with a stolen key(s) no one knows he left with. All of them sometimes just target one route, for a variety of reasons.

 

CONCLUSION

 

As a hired gun loss prevention consultant working in over half the states in the country, my continuing contact with DEX was sporadic but steady. It never mattered to me one bit what software system was used by any client; to be honest, I couldn’t care less. Within the confines of my role as a loss prevention consultant with a confined mission to earn my fee, and enhance my reputation to keep the phone ringing, all I ever wanted any software report to do was to tell me three things:

• Where the theft is taking place

• How much was stolen

• In-between what days/times did the thefts happen

I, and a tight field investigative team sworn to secrecy, took it from there. Oh, and I made the field investigative team sign a carefully worded secrecy pledge that I called “Obligation of Confidentiality.” In HR legalese language, it stated that if they blabbed about any investigation, in any way, to anyone, it was their jobs. Two managers were terminated by owners when I brought them evidence of the loose-lip investigative ship-sinkers. (I wanted to get the field investigative teams to sign the secrecy pledge in blood, but could never convince an owner to make them do it.  “Loose lips” by the investigators is the number one reason field investigations fail).

What every operator and/or hired gun must do after reviewing critical cash loss software data is investigate, gather indisputable evidence on who is actually stealing, then successfully confront the thief or thieves in a liability-free clean ending, with restitution. Restitution could be court-ordered, or we could cut a deal to avoid the cops and courts with a Civil Restitution agreement that I would just happen to have in my back pocket after the confession was recorded and the wailing and gnashing of teeth ended. I have seen 401(k)s cashed in, cars sold and bank accounts emptied to avoid multiple felonies, but that was never my decision; that was my clients’.

A series of exactly timed machine-level 10-point pre- and post-flow chart of investigative steps with two managers, documenting every step, will expose the DEX Coin Tube Scam and a lot of other possibilities I don’t have the space to go into, but will in a future blog.

>> MARK MANNEY is the founder and chief executive of Creedmore, NC-based Loss Prevention Results, focused on the vending and foodservice industry. Click here to purchase his "Food Service Manual: The 5 Loss Prevention Common Denominators" and his "Micromarket Loss Prevention Manual" at the Vending Times Bookstore. Coming soon will be Manney's 100-plus-page master "Vending Loss Prevention Manual: Creating a Vending Culture of Controls: Training, Technologies, Tools & Tactics.” Contact him at (919) 812-3602 or mmanneylpr@gmail.com. He enjoys hearing from VT readers.