Employee Embezzlement: Prevention, Detection, and Cure
David Lillehaug
Employee embezzlement costs American employers about $6 billion per year. Embezzlement is the fraudulent taking of personal property with which one has been entrusted. By definition, the offender is someone trusted by the employer. When detected, embezzlement brings great heartache to the perpetrator’s victims and families. The typical motive for embezzlement is simple greed. However, theft arising out of addiction to gambling has grown along with the Minnesota gaming industry.
How does an employer prevent embezzlement? As a famous judge once observed, “Sunshine is the best disinfectant.†Or, as the Americans and Soviets agreed, “Trust but verify.†A business should screen new hires thoroughly. References should be checked, and criminal and credit background checks performed.
The most common embezzlement methods are:
1. Failure to recordcash transactions
2. Claims for false reimbursements
3. Use of company accounts for personal transactions
4. Payroll fraud
5. Fraud through supplier accounts and other payables
6. Kickbacks
For the entire article go to HRResources.com
Corra finds this news disturbing but not surprising. Six Billion is a lot of bucks, even when you say it quickly. That’s a lot of loss. Embezzlement also proves demoralizing to the majority of your work force. Apparently, most in your office resent that someone they know is stealing and that nothing is being done about it. Yeah, they know who is stealing.
For some employees it is the first time–they get greedy or in over their heads, with one vice or another. For some it is simply a matter of doing the same old business at a different stand. Very often they have either not gotten caught at their stealing, although suspicions might have played a part in their dismissal. Sometimes they are caught, and the theft for a number of reasons, embarrassment being one of them, goes unreported.
It is important to run pre-employment background checks on all your employment candidates. You should be running a criminal trace, or, if they have access to your sensitive databases and proprietary information, a series of criminal checks. You may wish to run the Nationwide Criminal Search and the Federal Criminal search, to see if your employee has been culpable previously to white collar crimes.
It never hurts to conduct employment verifications as well. For nominal cost you can get a better idea of who your candidate really is. Check them out before you hire.
