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Embezzled For Years | Local Dealership Looted for Over $1 Million

 

How well do you know your employees? Background checks and pre employment drug testing can certainly help weed out the majority of potential bad hires, but what about existing employees? Recently right here in Buffalo NY, an unfortunate case of broken trust is haunting a local automotive dealership.

Way back in 2001, a woman began working for the dealership. We can’t know whether or not she was given a background check back then, but she has worked for the company ever since. Even if the dealership had run a background report, and done a drug test during the hiring process, a lot can happen, and change, in 15 years. When someone works with the same company for 15 years, and they do a good job, everyone begins to trust them.

So imagine this, the 55 year old woman who’s been with the company for 15 years, serving as Controller for the last 8, has embezzled over $1,000,000!  This nightmare became a reality for the owners of Towne Automotive in Orchard Park. Apparently the woman had been stealing money since 2012. She went almost 5 years without anyone even batting an eye.

It wasn’t until a credit card company called the dealership inquiring about a credit card that wasn’t being used by the dealership that anyone even asked a question. It’s safe to assume the woman was in contact with the credit card company directly, and must have slipped up in some way. But, that didn’t stop her from taking a 7 figure sum over the course of 4 years, right under the other employees noses.

What’s worse, is that an attorney told WGRZ Channel 2 that in most embezzlement cases, the estimated total of money at the time of discovery is only a third or a half of what the actual total is at the conclusion of a case.

“Usually when you first find out about an embezzlement case, it usually then increases by magnitudes of two or three as to what the final amount is in my experience, so if this is the initial amount by the time they get through all the books and find out if she and or other people were also engaged in further embezzlement, it could be a much higher amount,”

This is cold reminder of the reality of what can happen if you don’t pre-screen all potential employees, and keep a close watch over ALL employees. This is how trust is built, over time and experience. Step one is to establish trust with all new hires through verifying they are who they say they are, and ensuring they are drug free and safe to work alongside your other team members. Step two, especially with employees handling large sums of money, is to pay attention to all the details. Letting someone’s leash out, just because they’ve been with the company for x amount of years can cost you large sums of money. In this case, millions of dollars.

For more information on pre employment background screening and various forms of drug testing for employees, contact Employment Screening Services today. We have worked with companies all over WNY, as well as around the country. With a background in law enforcement, we pride ourselves on being here to protect and serve all employers, to ensure they hire, and retain the most trustworthy candidates to help their business grow.

Small Businesses Hesitant to Report Employee Theft

A recent study on small businesses reporting employee theft to authorities may surprise you.  The research studied surveys of 314 small business owners in the Cincinnati, Ohio region and covered an eclectic mix of industries including manufacturing, service, restaurant, retail and finance/banking.  30 in-person interviews were also included.

The study’s author, Jay Kennedy, published his results as a University of Cincinnati criminal justice doctoral student.  His research shows that most small business owners decline to solicit police involvement when an employee is caught pilfering.  64 percent of small businesses have experienced theft by an employee although just 16 percent opted to report the incident to police. The study sheds light on the downfalls that could occur, should  you not include some sort of background check or pre employment screening in your company’s hiring process.

Four main reasons were offered as to why employers don’t report theft.

Victim-less Crime

Many owners won’t involve authorities because the crime isn’t seen as involving enough victims to be worth the time, trouble and/or resources required to advance through court processes.  Firing the employee is viewed as adequate enough.

Legal Counsel

Legal representation often advises against moving forward premised on required costs outweighing financial outcome.  The study points to one company that lost $200,000.  After the employee was successfully convicted, they were put on probation and required to pay just $50 a month in restitution.  Essentially, the business will never come close to receiving full restitution.

Relationships

Often, an employee that is caught stealing has worked at the business for years and become embedded with the business owner emotionally.  They sometimes are regarded as family or friend and have spent some amount of leisure time together outside work or know each other’s families.  The report claims that owners often want to put the incidence in the rear-view mirror and move forward as soon as possible.

Ineffective Justice System

Small business owners may view the criminal justice system as being incompetent or futile.  The study reports that employee theft often involves complex finances and a typical police officer isn’t viewed as having the skill set to deploy adequate intervention.  Additionally, small business owners often believe police forces are inundated with more stereotypical duties — such as patrolling the streets.

Cash was found to be the most common item stolen — making up 40 percent of small business theft.  Cash thefts involved in the study fell between just $5 up to $2 million with a median amount of $20,000 and Kennedy suggests the more money stolen has a direct relationship to the level of trust in the employee involved — both concurrently increasing.

Furthermore, Kennedy questioned a common theory that employee theft is based on lack of personal financial resources — pressing medical issues or other desperate circumstances.  Instead, he says the crimes are premised in what he calls “lifestyle enhancement,” with the convicted unable to account for how the money had been spent.

Besides cash, other items stolen were products (18 percent), production materials (12 percent), tools (8 percent) and equipment (6 percent).  Most thefts were found to have taken place over time, in lieu of a single occurrence.  61 percent of the thefts ranged from two weeks up to 20 years with the median being 16 months while most schemes were only uncovered by luck.

60 percent of employees identified as most likely to take part in employee theft were general or first-line in nature, meaning personnel at the lower rungs of the business that didn’t hold management or supervisory responsibilities.  Approximately 20 percent were managers/executives while the rest were made up in small numbers of accountants, bookkeepers, receptionists, secretaries and billing professionals.  Kennedy says only 2 percent of cashiers, who typically handle cash, were likely to take part in employee theft.

The damaging repercussions of employee theft is a process no business owner wants to go through.  ESS’s experience in the criminal background check process goes beyond the baseline.  Our reputation for  an advanced background check process can include hair drug tests, license verification or even 5 and 10 panel drug tests and offers employers the transparency to make the right choices.  We can cater to whatever unique safeguards your company requires.  Finding the best employees is a process and ESS is here to help you along the way.