How to tell if your identity has been stolen

Trust Issues

By: Dorothy Riggs, CFE

The basic definition of trust is placing confidence in your belief that a person or thing is authentic, truthful, able and stable.  Each individual or entity is the sole owner of his or her trust. Thus, the decision regarding whether or not to extend trust is left totally to the issuer’s discretion.  However, that decision can be influenced by several factors such as:  intuition, resumes, recommendations, commendations, references, experience, credentials, reports, analytics and etc.

 Mishandled Trust can be Costly

Time and time again I’ve been involved in cases where trusted employees, who were loyal to companies for significant periods of time, took a turn at some point and began using one or more methods to misappropriate employer assets in order to obtain personal gain.  Most victims in the cases I’ve investigated have been relatively smaller businesses. The most recent case involves a bookkeeper who had been with the victim company for years.  This past February it was discovered that she had converted funds from thousands of checks to her personal use by depositing them into her personal accounts, even though they were not made payable to her.  How or why her bank allowed her to successfully continue this activity from 2008 through 2015 is a mystery to me.  The additional checks were discovered after she admitted to depositing a smaller number of checks, which totaled $65,000.00.  The investigation is still ongoing.  The final embezzlement figure has yet to be determined.  However, it is significantly more than the $65,000.00 she has admitted to.

A few months ago I read about a case in Daily News New York in which a 57 year old Manhattan bookkeeper embezzled $800,000.oo from 2006 through 2012, using $80,000.00 of the stolen loot to pay her penalty for stealing from her previous employer.

A case reported by Cherokee One Feather references embezzlement and theft charges brought against the former executive director of the Sequoyah Fund in December 2015.  The indictment alleges that she used a corporate credit card to cover personal purchases and expenses from 2010 to 2013 to the tune of $900,000.00.  She was hired in 2006 and resigned in 2013.

What Statistics Say About Embezzlers

I was under the impression that men were more likely to commit embezzlement, but, not so.  According to  The 2016 Hiscox Embezzlement Study:  A report on white collar crime in America, women commit more embezzlement crimes at 56.3%.  Reportedly, men aren’t far behind.  $807,443.00 is the average loss amount, due to embezzlers.  The average age of those who commit white collar crime is 49. More than 40% of white collar thefts were committed by those who worked in finance or accounting.  Embezzlers are often the most trusted and least expected.  In most instances the trusted employee falls into desperate times, which they feel calls for desperate measures.  Otherwise they would never steal from the company.  They rationalize the activity by telling themselves it’s a loan. Yet unauthorized, they feel its okay because they plan to pay it back.  However, once the initial crisis which led to the desperate act of stealing has been averted, the activity continues and the unauthorized loan amount gets greater.  At this point the trusted employee feels more comfortable because they’ve gotten away with it.  They’re thinking, so far; so good….until the theft is finally uncovered.

Steps you can Take to Sure-up Trust Issues in Your Company

Fraud incidents like those described in the previously mentioned cases occur daily, sometimes on a smaller scale and sometimes on an even larger scale.  The distressing matter is that they do occur.  And even more distressing is the fact that the victim companies could have cut loss amounts dramatically by implementing controls.  It’s okay to extend trust.  Let’s face it, to some degree; you have to in order for the business process to flow. However, the practice of extending trust and turning your back must come to an end.  It is imperative that businesses continually monitor the trustworthiness of those on the receiving end of that trust.  Life events, attitudes, social status and the like change periodically, which can also change the actions and trustworthiness of employees and colleagues. However, without proper controls to monitor activities and attitudes most businesses don’t realize that the trustworthiness of an individual has changed until it’s too late.  Here are some suggestions that may help sure-up potential trust issues:

• Implement mandatory vacations for every team member, at most annually.
• Cross-train where possible and rotate job duties periodically.
• Implement separation of duties.
• Only allow employees access to areas needed to perform required tasks for their individual positions.
• Perform regular audits of inventory, accounting and etc.
• Create an open-door-policy or anonymous reporting method so that employees feel comfortable reporting problems or concerns.