Former Chief Financial Officer sentenced to prison for falsifying accounting entries for publicly traded Vancouver, Washington staffing firm

Tacoma – The former Chief Financial Officer of Barrett Business Services, Inc. (BBSI) of Vancouver, Washington, was sentenced today in U.S. District Court in Tacoma to 15 days in federal prison for falsely certifying the company’s 2013 annual report, announced Acting U.S. Attorney Tessa M. Gorman.  James Miller, 61, of Washougal, Washington, pleaded guilty on November 4, 2022, following years of shareholder litigation and a Security and Exchange Commission (SEC) fraud investigation.  At the sentencing hearing Chief U.S. District Judge David G. Estudillo said, “The entries were deliberate – you knew what you were doing…. We have to be able to rely on the fact that financial statements are accurate.”

“As a former auditor and CPA, Mr. Miller understood the importance of accurately disclosing financial information,” said Acting U.S. Attorney Gorman.  “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 CFO of Barrett Business Services Inc. The company provided human resources functions for other businesses. One of the services BBSI provided was calculating and paying workers compensation obligations for its customers. 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.  Miller’s accounting entries violated Generally Accepted Accounting Principles and concealed potentially important trend from analysts evaluating the company.

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 ten months in prison, Assistant United States Attorney Seth Wilkinson noted, “When Miller executed those (stock) 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 case was investigated by the Federal Bureau of Investigation.

The case was prosecuted by Assistant United States Attorney Seth Wilkinson.