Tue, June 11th, 2013 - 10:29 am - By Gordon Basichis
Employee theft is a lot like the weather–everybody talks about it, but nobody is entirely sure what to do about it. Employers implement all sorts of security precautions, but sill employee theft continues at pace. Since the Recession, there has been a noted increase in employee theft as staff members in desperation attempted to supplement their rapidly slipping lifestyles.
I have written about employee theft on several occasions. One such article is Another Case of Employee Theft.
With most cases employee theft results in shrinkage. the pilfering of office supplies to the stealing of inventory, there are more than a few cases where more elaborate schemes result in the theft of hundreds of thousands or millions of dollars. The more creative thieves set up bogus accounts and funnel money out through that channel while others merely still and try to cook the books. Most will eventually get caught, but not until the damage is done.
In this recent case, the fashion forward apparel manufacturer, Haute Hippie clothing, found that certain employees allegedly stole enough money out of the corporate till to live flamboyant lifestyles. According to the article in the Daily News…”Four former employees of the chic clothing label Haute Hippie, along with 10 others, are accused of stealing hundreds of thousands of dollars from the company to finance extravagant lifestyles, according to a New York state Supreme Court filing. Some of those involved allegedly used company credit cards to purchase expensive dinners, drinks, nightclub visits, vacations to California and Washington, clothes, and gym memberships. They also allegedly used company cars as “virtual round-the-clock chauffeur[s],” according to the filing. One defendant in the case allegedly used the funds to finance his dental work as well as $1,800 worth of purchases at an Apple store. The lawsuit accuses an employee in the company’s accounting department of being the mastermind of the theft. An attorney for Haute Hippie said the money scam was exposed last summer, and he added the rapid growth of the company since 2008 had served to hide the misuse of funds.”
While nothing can guarantee prevention of employee theft, a vigorous pre-employment screening program is vital to assure the employer is not hiring the same thieves who pilfered the preceding company. Some employers do not press criminal charges, and quite often they will file a lawsuit, which is found in the county civil records search.
Of course, better surveillance techniques, careful monitoring of the accounting procedures. But in the case of Haute Hippie, one of the accounting staff was allegedly in on the scheme. So rigorous auditing is well in order.
The employer may not be able to stop employee theft entirely. But they can limit it and possible assure that the effect doesn’t create total disaster, resulting in the destruction of the company.