And though it won’t prevent embezzlement, company owners should always purchase adequate business insurance to mitigate the consequences of employee theft. 4) Review all bank statements - If possible, open the statements yourself before the bookkeeper gets to them. He later found out that she had stolen over $2 million from several businesses over the course of several years!! Lean Startup Plan: Which Is Best When Starting Your New Business? Embezzlement is considered a white-collar crime, and can affect both small and large businesses. 1) Perform criminal and civil background checks - A Certified Fraud Examiner does a civil check in addition to criminal check. Given the potential damage embezzlement can cause, we’ve highlighted some of the key factors associated with small-business embezzlement from the Hiscox study, along with offering suggestions for preventing such crimes and what you should do if you suspect someone is stealing from you. He also was a little less careful and more trusting when he was getting over the loss of his brother -- he thought that his employees were looking out for him. Thanks for your interest. Hiscox advises keeping an eye out for employees who live lavish lifestyles that are out of proportion to their salaries. Filing charges probably won’t help you recover the money that was embezzled, but it will send a strong signal to other employees that you won’t tolerate fraudulent behavior. Like most other crimes, there aren’t any characteristics specific to all embezzlers.
If you do discover that embezzlement occurred, it’s important to talk to an attorney and report the crime to the authorities. Believe it or not, corporate theft falls under the Secret Service's jurisdiction.
He had 16 employees and sales of over $5 million. The most popular form of embezzlement is funds theft; it accounts for more than one-third of cases. It's a good investment in the long run. The study found that the median loss for a single incident of embezzlement for small businesses is nearly $290,000—which could prove fatal for some companies. Small Business Embezzlement -- With the Economy Worsening, Watch Out! Not only are small businesses disproportionately affected by embezzlement, but they also suffer disproportionately large costs from this crime in comparison to big companies with big bank accounts. If you own or run a business sooner or later someone will embezzle from you. We are asked on occasion to help a business victimized by employee embezzlement of company funds and goods. 7) Require employees to take a vacation - This was one I hadn't thought of. Visit your state election office website to find out if you can vote by mail. Email Rieva at. This will help prevent anyone from stealing from your business ever again. Last, but not least, learn from the experience. Small businesses are especially vulnerable. The Girl Scout Case. Over time, however, those small amounts begin to add up. Women are slightly more likely to embezzle (51%) than their male counterparts. But don’t assume all is well because an employee has passed a background check. You never think it's going to happen to you -- especially in a small company, where you think that you're treating your employees like your family. Jay came out with a book about his experiences. He had made the Inc. list of fastest growing companies in the country and business was going well. Credit card fraud accounts for about 10% of cases; however, the majority of those who commit credit card fraud are managers. The second most popular method is check fraud, whereby an embezzler forges or alters checks, which accounts for 22% of cases. Other, less common forms of embezzlement include theft of property or merchandise, expense fraud, payroll fraud (“paying” fictitious employees and diverting the money to their own bank accounts), and loan fraud (taking out a loan in the company’s name and depositing the funds in their own accounts).
Jay Myers learned his lesson the hard way.
All rights reserved. Myers took his eyes off the ball for a bit. Use the information you uncover in your investigation to change your company’s policies. That’s a huge hit for a small business—one that your company may not survive. I know you have a lot of options when it comes to legal planning. To report other types of fraud committed in New York State, see Additional Fraud Reporting Resources below. We made it easy for you to exercise your right to vote!
The study found that the median loss for a single incident of embezzlement for small businesses is nearly $290,000—which could prove fatal for some companies. Copyright © 2020 Davidek Law, PLLC. But according to a study by insurance company Hiscox, the majority (55%) of embezzlement takes place at companies with fewer than 100 employees.
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