Here, There, and Everywhere: Embezzlement is BIG Business, and Business is Good.

Just read the following headlines for a mere sampling of the hundreds of articles appearing online in only the past two weeks:

  • Ex-ICE Intelligence Chief Pleads Guilty to Embezzlement
  • Dixon, Illinois Comptroller Allegedly Embezzled $30 Million To Fund Horse Breeding Business
  • State of Okla. charges former, current City of Cleveland employees with embezzlement
  • Jail for woman accused of embezzling from Jensen’s Animal Hospital
  • Former Tea Fire Department treasurer pleads not guilty to embezzlement
  • Former Macomb County sheriff’s deputy with embezzling funds from Romeo Lions Club
  • Church bookkeeper accused of theft
  • Parish mgr charged in 2nd embezzlement
  • Guilty plea in youth hockey embezzlement case

Thus the age-old question: Are more people stealing today, or have we become better at detecting it?

Regardless of which school of thought you subscribe, one thing appears obvious to me:  I am observing more incidents of such theft occurring  than ever in my 23 years “in the business.”

I base my conclusion not upon how many cases I have investigated recently, but by the sheer number of Google AlertsTM I receive daily based on the search term “embezzlement.”  The trend for the past two years provides between 12 and 20 alerts, each and every day, and, when you consider only one in nine of such matters ever becomes public, that extrapolates to a range of between 108 and 180 instances, daily!

The frequency of thefts wherein individuals violate their positions of trust for personal gain, coupled with the wide range of unexpected and non-traditional contexts for embezzlements, should sound alarms and send warning signals to each and every employer to ensure controls exist and operate as designed to prevent and detect thefts.

Beyond the traditional contexts of for-profit, not-for-profit, and governmental employers safeguarding assets from employee theft, risk exists within every organization of every type and size.

Most everyone belongs to some interest group or committee, religious organization, scout troop, club, or sports program.  Each and every entity requires some element of finance, sometimes significant, and other times inconsequential in amount.  However, every single one that exists involves some level of funds entrusted to someone, often a volunteer, to safeguard, maintain, use, track, and report for the sole benefit of the entity, whatever the group’s purpose or mission.

The sampling of headlines above demonstrates that no one exists above suspicion, and therefore building a system on internal controls based upon “trust” constitutes a recipe for potential disaster.  All too often, the person least suspicious, glowing with the illusion of trustworthiness, ends up the same individual who diverts unimaginable amounts of funds, resulting in a financial crisis for the organization.

We’ve issued warnings for years.  The time for you to act is now.  Don’t stand on the sidelines hoping someone else will take action and addresses this issue.  To ensure you, your clients, and your organizations will not fall victim to theft and embezzlement, start today by asking questions about internal controls.

One measure you can take immediately as your first step in this process: review your insurance policies to ensure your company, organization or group carries adequate insurance in the event of theft or embezzlement.  Anything less than $100,000 may prove insufficient given today’s thefts, where amounts reach into the hundreds of thousands and millions of dollars.  Enlist the assistance of your agent to determine your group’s adequacy of coverage.

Given the current economic climate, and the potential for financial fraud, we must remember the words of the late Ronald Reagan: “Trust, but verify.”  As always, remain vigilant.

Here’s a link to an interesting (and tragic) story out of Oklahoma where a convicted embezzler recently murdered her husband, buried his body in the back yard, and planted a flower garden over where he was buried:

http://www.wesh.com/r/30874828/detail.html

Tagged with: , , , , , , , , ,

We have the resources to get to the bottom of your most complex financial matters. Our team of forensic accountants brings a varied background of experience to each matter.

Heading the team is Stephen A. Pedneault. A CPA and forensic accountant, Steve is also a Certified Fraud Examiner (CFE), Certified in Financial Forensics (CFF) and is a Forensic Certified Public Accountant (FCPA). He brings nearly three decades of accounting and fraud investigation experience to the firm.