I just attended another presentation on fraud this morning and felt compelled to write. This is also after a conversation with a fellow investigator about dental office embezzlements. Also, talking with a friend this week about a family business that I see no good coming down the road. Talking about these cases is so interesting to me because of the red flags that are exhibited that no one paid attention to. If something does not make sense about a business partner or an employee you may want to pay closer attention to your financial matters. For example, the saying of living out of the company checkbook. People have different viewpoints on this. Some people realize that taxpayers, especially W-2 taxpayers, pay for these purchases. Some people don’t think it hurts anyone. That is until it is your money they are using. This is a grey area for some people, employers and employees alike.
As in the presentation this morning where do you draw that line? Well I think once you cross the line or boundary, it becomes a very slippery slope. That is where behavior comes in. Talking to victims of embezzlement after the fact leads to discovery of facts that may have started the embezzlement. The facts can be addiction to drugs or gambling, family relationship issues, and then there is just the dishonest person. Since approximately 80% of all embezzlers have no criminal record we won’t concentrate on the all around dishonest employee. After all, a criminal history should weed these people out. What do you think happens when a good person goes “bad”? Do you think they woke up and decided to steal. No, they probably saw stealing (or in their minds borrowing) as a temporary way to solve their problem. So this is a long way of saying pay attention to your employees. If all of the sudden they are hanging out at the local video poker outlet, buying all sorts of presents for fellow staff, you may want to pay close attention to your banking statements. As a convicted embezzler stated, “it wasn’t one check for $500k but a series of small checks that led to my arrest”. Maybe it is because I have seen so many of these cases but the clues were there. There was a recent case where the woman assistant was stealing from her boss. He realized one day that she was driving an Escalade and had horses as a hobby. He also realized what he paid her. A phone call to local law enforcement was the start of an investigation that led to an $800k+ theft. The money came from somewhere and it was not her legitimate paycheck. Listen to your gut. If it smells wrong, start looking.