Washougal man gets prison time for falsifying accounting entries

A Washougal man was sentenced Aug. 11, to 15 days in federal prison for falsely certifying his business’ 2013 annual report.

James Miller, the former chief financial officer of Vancouver-based Barrett Business Services, pleaded guilty in November 2022 following years of shareholder litigation and a Security and Exchange Commission (SEC) fraud investigation, according to a news release issued by the U.S. Department of Justice.

“The entries were deliberate — you knew what you were doing,” Chief U.S. District Judge David Estudillo told Miller at his sentencing hearing. “We have to be able to rely on the fact that financial statements are accurate.”

Miller was fired in 2016, after he admitted to falsifying the company’s books.

“As a former auditor and CPA, Mr. Miller understood the importance of accurately disclosing financial information,” acting U.S. Attorney Tessa Gorman said.  “Nevertheless, he made fraudulent entries 29 times, totaling over $12 million. He ‘cooked the books’ and then certified the financial reports as accurate – keeping shareholders and company executives in the dark about the fraudulent entries for three years.”

According to records filed in the case between 2008 and 2016, Miller served as the chief of Barrett Business Services Inc. (BBSI), which provided human resources functions for other businesses. “One of the services BBSI provided was calculating and paying workers compensation obligations for its customers,” according to the news release. “The amount of workers’ compensation paid out was a key indicator in assessing the company’s expenses. Between 2012 and 2013, Miller made accounting entries that understated the amount by which the workers compensation expense had increased, and instead attributed $12 million of workers’ compensation expense to payroll taxes and other costs”

According to the news release: “After making each false entry, Miller directed a staff accountant to initial the entry. This created the appearance that the staff accountant had made the entries, when in fact Miller had done so. Even as he was preparing the false entries, Miller exercised his options to sell tens of thousands of shares of BBSI stock, selling $2.4 million worth of shares in just two days in 2013.”

In recommending that the court sentence Miller to 10 months in prison, assistant U.S. Attorney Seth Wilkinson said that “when Miller executed those trades, he knew BBSI’s actuary had reported a substantial increase in workers’ compensation expense. And as Miller admitted in his SEC testimony, he also knew this was an important expense for the company. But, because Miller had secretly gamed BBSI’s accounting, the public — including those who purchased Miller’s stock — did not have this knowledge.”

The Federal Bureau of Investigation led the investigation that exposed Miller’s fraud.