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RUNNING HEAD: UNDERSTANDING EMBEZZLEMENT

Understanding Embezzlement:
The Phenomenon That Changed Business Forever
Michael Vlk
Tarleton State University















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UNDERSTANDING EMBEZZLEMENT
Abstract
This article examines a mixture of real world examples and in depth research on the nature of
embezzlement and why it is one of the biggest problems businesses face today. The gargantuan
size of some embezzlement cases guaranties their coverage in the news, but it is important to
note the implications of smaller infractions as well. In-depth examples include news stories about
the Enron financial scandal, Bernie Madoffs Ponzi scheme, and the smaller embezzlement cases
in our city. This article also details how to successfully embezzle from a company and what
measures a manger should take if they suspect embezzlement. For those who are starting a
business or already own a business, the insight this paper contains on embezzlement merits the
attention and self-reflection of the reader.













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Defining Embezzlement
Embezzlement is defined as an act of dishonestly withholding a companys assets for the
purpose of theft or conversion of such assets by one or more individuals to whom such assets
have been entrusted, to be held and/or used for other purpose (Embezzlement, 2007). Classified
as a type of financial fraud, Embezzlement can range from small amounts (using a company gas
card for personal use) to large sums of money that have been funneled and rerouted through
various channels. These actions can go on for months, and even years without anyone noticing
since the perpetrators main goal is to extract as much money as possible without raising any
suspicion. In legal situations embezzlement can often be confused with larceny or simple theft,
but the key difference is a matter of ownership and rights to the stolen assets. Since the
individual committing the act is already entrusted with the assets they are taking the law
considers this embezzlement instead of larceny.
There are many ways an employee can embezzle from their company or organization that
can be hard to trace unless an audit of the company is performed, or a whistleblower comes
forward. Robert Grossman categorizes the five types of embezzlement as:
1. Billing: where fraud is committed by an individual submitting an invoice for fake
goods, services, or personal purchases.
2. Payroll: when false claims are made for compensation by creating ghost employees or
awarding unauthorized salary increases and bonuses.
3. Expense Reimbursement: claims that are made for reimbursements of fictitious or
inflated business expenses.
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4. Check Tampering: any forgeries or alterations of an employers check, or the theft of a
check that has been written for someone else.
5. Cash Register Disbursement: false entries that are made to conceal fraudulent removal
of currency. (Grossman, 2005, p. 47)
Ponzi schemes are an example of a more sophisticated form of embezzlement involving
investment banking, and operate by paying its investors from the next wave of new investors
who have been promised high returns. The high returns for the first wave of investors encourage
others to give their money to the company and for the initial investors to leave their money in the
scheme. By simply sending statements of their earnings to investors and discouraging
withdrawals by freezing money in exchange for higher returns, the individual running the Ponzi
scheme can continue to falsify the report of profits and attract more investors which perpetuates
the scheme.
Famous Cases of Embezzlement
From lavish suits to black and white striped jumpsuits
Margaret Mills, former longtime executive director of Downtown Waco Inc. (Gately,
Ross, & Williams, 2010, p. 1) was forced to retire after a six month plus investigation that
resulted in an arrest warrant affidavit that accused Mills of taking $268,458 by misusing agency
checks and debit and credit cards and by diverting members dues checks to her personal bank
account. The affidavit says other questionable expenses could push the total as high as $500,000
(Smith & Quinn, 2007, p. 2).
In the affidavit, Waco Police obtained records by subpoena for several banks where
Mills and Downtown Waco Inc. did business. The investigation found:
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Mills wrote 121checks from Downtown Waco Inc. to herself, cashing some and putting
some into her account at First National Bank of Central Texas. Other Downtown Waco
Inc. checks were deposited into the account of her son, Richard Coke Mills III, at Bank of
America.
Mills diverted into her private account at least 10 checks intended for Downtown Waco
Inc., worth $19,939. That included checks of several thousand dollars from Kelly
Realtors, Waco Independent School District, the Tribune Herald, McLennan
Community College, and Baylor University.
Mills wrote $40,800 in checks to herself from an account with RiverCity Corp., a
Downtown Waco Inc. fundraising arm that board members thought was inactive.
Mills used credit and debit cards that she had created in the name of Downtown Waco
Inc. but never told the board about.
Mills spent Downtown Waco Inc. money on personal items such as her Zeta Phi Beta
sorority contributions, personal storage space, and a gardener and maid at her West Waco
home (Smith & Quinn, 2007, p. 1).
The Downtown Waco Inc. internal investigation found more than a half million dollars
of questionable financial transactions (Smith & Quinn, 2007, p. 2). The internal analysis
showed at least 410,575 in questioned check activity over a four year, nine month time frame
with more irregularities making the total more than $500,000. There is speculation that her
irregular patterns go back more than six years. The Waco Mayor at the time stated she wasnt
surprised by the results of the investigation (Smith & Quinn, 2007, p. 2). The Mayor said, We
knew what was coming. We knew the police department was working very hard to be thorough.
The investigation could have gone on further, but there was enough information to know very
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clearly what had gone on (Smith & Quinn, 2007, p. 2). Mills alleged misappropriation of funds
continued right up until her resignation (Smith & Quinn, 2007, p. 3). Mills deposited a check
for $2,031 that Waco Independent School District mailed to the agency three days before she
retired. The Downtown Waco Board officers cut her off her spending privileges which ultimately
forced her retirement four months later (The Washington Times, 2008, p. 1).
In a letter to board officers, Mills acknowledged taking liberties with checks and debit
cards and promised to try and reimburse them. Several months after her retirement, Downtown
Waco Inc. received a $70,000 check from Mills husband (The Washington Times, 2008, p. 1)
When police issued an arrest warrant, it took Mills four days to turn herself in to the
McLennan County Jail and quickly posted bond (Gietzen, n.d., p. 1). It was less than a week
later that the McLennan County District Attorney released a statement recusing himself from
this case due to personal ties to her family (Gietzen, n.d., p. 1). Margaret Mills was arrested
approximately nine months after her forced retirement.
Margaret Mills pleaded guilty to aggregated theft of about $99,500, and will ask
McLennan County jury to place her on probation at a sentencing trial. Before the pretrial
hearing, both Mills attorneys and state attorneys met with the judge. After this 10 minute
meeting, the state judge announced that he was prepared to abandon 63 counts in the 116-
countindictment, effectively slicing the amount that had been alleged that Mills misappropriated
from Downtown Waco Inc. funds from $211,000 to less than $100,000. That also dropped the
felony charges from first-degree, punishable by up to life in prison, to third-degree, with a
maximum penalty of 10 years in prison (Witherspoon, 2008, p. 1).
The sentencing proceeding lasted all of two minutes where Margaret Mills plead guilty
to reduced charges and agreed to pay $237,968.99 in restitution, including $100,000 that was
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due three day prior ("Led from Courtroom," 2008, p. 1). Four longtime friends of the Mills
family contributed $25,000 each so Mills could make the required $100,000 payment ("Led
From Courtroom," 2008, p. 1). As noted earlier, her husband sent a $70,000 restitution check
back when she was first arrested.
The night before her sentencing, Mills told reporters via phone interview that she spent
her last days as a free woman with her family. She complained that she never got to tell her story
in court, that its been hard, her family doesnt deserve it, how her husband is devastated, and
how she lived a two-year nightmare ("Led From Courtroom," 2008, p. 1). Her lawyer also stated
in an interview that she is hugely humiliated, ashamed, sorrowful that instead of people
remembering what she has done that has been good and productive and helpful for the city, that
unfortunately she will be collared with some actions shes not proud of (Witherspoon, 2008, p.
2).
Margaret Mills was sentenced in 2008 and was released from the Gatesville prison after
serving only 17 months of her nine year sentence in 2010. She will remain on parole until
November 8, 2017 (Gately et al., 2010, p. 1).
Mary Helen Lane, 58, is the former Vice President of the First National Bank of Whitney,
Texas. Lane retired from the bank after working there for 27 years. She has been accused of
embezzling $6 million over a 10 year period (Elizondo, 2013, p. 1).
She has been accused of taking amounts of money from the bank vault and creating false
outages, vault and transfer tickets. She is also accused of creating fraudulent cashiers checks
(Elizondo, 2013, p. 1). She would then create false bank documents to hide her thefts and to
fool bank employees and bank auditors (Witherspoon, 2013, p. 1).
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It has been reported that Lane spent most of the embezzled money on Gambling and
Casinos. She evidently had quite a gambling faddish. She has been accused of giving co-workers
$100 bills when she would return from trips claiming shed won big time. She also bought sports
cars with the money she stole (Elizondo, 2013, p. 1).
One of Lanes former neighbors described her as being a very down to earth person and
never flaunted her money. They did say however that they noticed a new Corvette and Camaro in
her driveway (Elizondo, 2013, p. 1). A co-worker told FBI that Lane kept so much cash on hand
that when the bank would run out of $100 bills she would go home to retrieve $100 bills and take
them back to the bank in exchange for smaller bills (Witherspoon, 2013, p. 1). The same co-
worker told investigators that approximately two weeks after resigning, Lane cashed ten checks
for $2000 each, playable to her sister, and had them deposited into her own account. Then two
months later she had $11,000 cash put into her account, and again told the employee not to file a
Currency Transaction Report (Elizondo, 2013, p. 1). This report is required by law.
With all this, Lane has been charged with embezzling $6 million from First National
Bank of Whitney over a 10 year period. The judge considered her to be a flight risk because of
the amount she allegedly stole, but the U.S. attorney prosecuting the case disagreed and didnt
consider her to be such. So, she was released on personal recognizance, or unsecured bond,
meaning her word was good enough for the court and she would be required to show up for her
court date, otherwise she would be liable for $100,000. Lane was not arrested but made
arrangements to be in court (Witherspoon, 2013, p. 1).
Mary Helen Lane pleaded guilty and was sentenced to seven years in federal prison,
followed by five years on supervised release. She was ordered to pay $6,090,784.31 in restitution
and a $100 special assessment to the court (Gately, 2013, p. 1). She was allowed to remain free
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on bond until the Bureau of Prisons determines where to place her. Lane was given an
opportunity to speak in court. She took that opportunity to apologize to bank officials for
betraying the trust they bestowed on her. Id like to ask for forgiveness, but I actually
understand if that is not possible, she said (Witherspoon, 2013, p. 1).
Lanes attorney stated to reporters that his client had an insidious addiction to
gambling. He also stated that Lane is financially ruined and intends for every dime she has
from the $47,000 she made from selling her home to go towards restitution payments to the
bank. Other officials had reported that in one year, Lane left $20 million behind at the WinStar
World Casino in Thackerville, OK. That amount included millions of dollars of winnings as
Lane occasionally won big (Witherspoon, 2013, p. 1).
Day in and day out it seems like embezzlement is a constant on the news. Some people
blame the state of the economy for people embezzling; in reality, they often start when the
economy is doing well because it is easier to hide from business owners. The following two
stories are from the 2011 Marquet International report of the top 10 embezzlement cases in
modern US history: Over a three year period during the late 1970s, Wells Fargo Bank in San
Francisco, California was used to embezzle $21.3 million by Lloyd Benjamin Lewis. Lloyd
Benjamin Lewis was employed by Wells Fargo Bank for more than 10 years before he started
taking money from Wells Fargo due to a flaw in the internal control alarm system in order to
clear checks at bank branches back in 1977. Lewis had become a board member of Mohammed
Ali Professional Sports, Inc. aka MAPS. MAPS was considered a local customer of Wells
Fargo since it had 13 accounts at different branches around Los Angeles. At the time there was
no prohibition against such conspicuous conflict of interest at the bank. Since MAPS was run by
former Wells Fargo banker Sammie Marshall and Harold Rossfields Smith, a boxing promoter,
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nobody thought anything of this at the time because Marshall worked for the bank. During this
time Lewis was able to take advantage of the five day grace period between a check being
credited at one bank branch and a debit being made at the accounts branch; he did this by
continuously making fraudulent credits and debits on the companys accounts. Lewis reported
that he only received $300,000 in kickbacks in exchange for his embezzlement on behalf of
MAPS. Smith even paid for part of Lewis honeymoon using the embezzled money. Gene
Kawakami, who was a third party that worked for Wells Fargo, was also involved in helping
cover up the fraud that Lewis had committed. In the end, Kawakami was convicted on one count
of falsifying loan documents. Lewis pleaded guilty to one count of conspiracy and two counts of
embezzlement and agreed to cooperate with the prosecution on their case against Smith; he was
to testify at trial. Lewis was sentenced to five years in prison. During February of 1982, Harold
Smith was convicted on 29 felony counts including fraud, embezzlement, conspiracy and
interstate transportation of stolen securities; at sentencing he received ten years in prison but only
served a little over five years.
Next, the victim organization was Koss Corporation in Milwaukee, Wisconsin to the
amount of $34.5 million by CFO Sujata Sue Sachdeva. The duration of this embezzlement was
for 12 years long from 1997 to 2009. On January 20
th
of 2010, 46 year old Sujata Sue
Sachdeva was convicted by a grand jury due to her six counts of wire fraud for allegedly
embezzling of as much as $31.5 million from Koss Corporation, a publicly traded head phone
manufacturer. She had been employed as Vice President of Finance, Secretary, and Principal
Accounting Officer. When she was arrested on December 21
st
of 2009, the amount of money
embezzled was thought to be as much as $4.5 million, and however, an investigation determined
that the theft was much larger. She was fired by Koss in early 2010 when the loss was estimated
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at about $20 million. Since she was convicted, the loss has been put at $34.5 million. According
to reports Sachdeva authorized at least 206 wire transfers of funds from Koss bank accounts in
order to pay for her American Express credit card bills and issued more than 500 cashiers
checks from company accounts to pay for her personal expenses. In order to conceal her fraud
she had other Koss employees make numerous fraudulent entries in Koss book records. The
embezzlement was discovered when American Express notified Koss about unusually large
transactions to make payments on Sachdevas personal credit card accounts. She pleaded guilty
to six counts of wire fraud on July 16
th
of 2010 and in a plea agreement was required to make
full restitution of about $34 million. Julie Mulvaney, who was Koss senior accountant and
subordinate, allegedly helped her cover up the embezzlement. They both were brought in front of
the Securities and Exchange Commission on September 2, 2010. The SEC complaint alleged that
these two women caused Koss to submit false and misleading financial statements for a public
company causing shareholders to filed civil suits for fraud, misleading financials and
mismanagement. Koss Corporation, in turn, then filed a suit against Sachdeva, Grant Thornton,
the outside auditing firm, and American Express. During her criminal case, Sachdeva blamed
Grant Thornton for their poor auditing and Michael Koss, her boss, for not noticing what was
going on. Ultimately, due to Sachdevas embezzlement, Koss nearly went bankrupt. On
November 17
th
of 2010, Sachdeva was sentenced to 11 years in prison. (Marquet, 2011)
Bernard Bernie Madoff is the former non-executive Chairman of the NASDAQ stock
market, and the admitted operator of a Ponzi scheme that is considered to be the largest financial
fraud in US history. Biography.com recently examined the Madoff scandal and gave an account
on the history of his Ponzi scheme: On December 10
th
of 2008, Madoff was arrested for fraud.
Madoff informed his sons that he had planned to give out millions of dollars in bonuses two
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months before they were due to go out. They wanted to know where this money had come from
and Madoff admitted that a branch in his firm was actually an elaborate Ponzi scheme. His sons
then blew the whistle on their father by alerting the federal authorities. Madoff pled guilty to 11
felony count, and he also admitted to the fact that he had lost billions of his investors money.
The felonies that he was guilty of were securities fraud, investment adviser fraud, mail fraud,
wire fraud, three counts of money laundering, false statements, perjury, false filings with the
United States Securities and Exchange Commission and theft from an employee benefit plan.
Prosecutors are still trying to figure out how much money he has embezzled but they say that
$170 billion has been moved through his accounts. In the end, Madoff was imprisoned and
sentenced to 150 years in prison. (Bernard Madoff Biography, 2013)
Finally, one of the biggest scandals in American history was the 2001 revelation of
Enrons financial practices following their filing for Chapter 11 bankruptcy. This story is from
an article entitled The Enron Collapse: A Look Back that was published on Investopedia.com:
Enron was formed in 1985 after merger between Houston Natural Gas and Omaha-based
InterNorth. Kenneth Lay was CEO of Houston Natural Gas and when they merged he became
Enrons CEO and chairman. He quickly rebranded Enron into an energy trader and supplier. At
this time deregulation of the energy markets allowed companies to place bets on future prices
and Enron was ready to take advantage of this. By 1993, Enron had set up a number of limited
liabilities specially purposed to allow Enron to hide its liabilities while growing its stock price.
Analysts were already finding out that Enron was swimming in debt but the company continued
to grow a developing large network of natural gas pipelines, and eventually moved into the pulp
and paper and water sectors. The company was named Americas Most Innovative Company
by Fortune for six consecutive years between 1996 and 2001. Enron used creative accounting to
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allow them to appear more powerful on paper than they really were. Enron also used special
purpose entities or subsidiaries to hide risky investment activities and financial losses. Forensic
accounting later determined that many of Enrons recorded assets and profits were inflated, and
in some cases, completely fraudulent and nonexistent. Some of Enrons debts and losses were
recorded in offshore entities. They were absent from Enrons financial statement. More and more
special purpose vehicles were created during the late 1990s and early 2000s, in order to allow the
company to keep debts off the books and inflate assets. These entities, along with other
accounting loopholes and poor financial reporting let the company hide billions of debt from
everyone. Shortly after the company achieved $100 billion in revenues, then-CEO Jeff Skilling
unexpectedly resigned, prompting Wall Street to question the health of the company. Kenneth
Lay became CEO again, both Lay and Skilling, in addition to other Enron executives, started to
sell large amounts of Enron stock even as the price continued to drop to less than a dollar. Less
than a week after a bid from Dynegy was called off, Enron filed for bankruptcy. Enron had more
than $38 billion in debts that were outstanding. Following the months after the bankruptcy, the
US Justice Department started to investigate Enrons bankruptcy. Several of Enrons executives
and their auditor firm, Arthur Andersen, have been indicted for a variety of charges including
obstruction of justice since they decided to shred documents and conspiracy to commit wire and
securities fraud, and some have even been sentenced to prison (Folger, 2011).
Actions for Embezzlement
Embezzlement is embarrassing for everyone involved, often more so for the embezzled
business owner than the culprit responsible. Like most issues regarding ethics, there are many
different viewpoints to consider when dealing with embezzlement: whether they are from the
perspective of the ethical violation itself, or from the managements perspective of how to
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ethically handle the situation. There is an interesting article about these points of view titled
Embezzlement 101 How to Embezzle From Your Employer and Not Get Caught. Although
the articles purpose was to teach employers how to keep employees from embezzling, it
explained it from the embezzlers point of view and gave step-by-step instructions on the best
ways to embezzle (Auditors Inc., 2006). The article was straightforward in the way it explained
how to get away with stealing; it was highly informative and yet thoroughly entertaining to read.
It systematically covered the tried and true methods for getting away with embezzlement and
provided a catchy acronym for the reader to remember their concepts by: KISS Keep It
Simple Stupid. According to this article, many other sources, and common logic, the best way to
embezzle is to keep the methods simple so as to not trip up. An added benefit of its simplicity is
that it reduces the suspicions of others.
One simple way to embezzle is to set up a bank account under the same name as a
company that ones employer frequently uses (Auditors Inc., 2006). For example, if the
establishment an employee works for frequently buys from Office Depot, they could set up a
bank account under the name Office Depot and then write themself checks that appear to be
for the business. Setting up fake accounts might seem like a daunting task but the articles author
provides a simple step-by-step process of how to properly set up the account, forge signatures if
necessary, and a list of several pitfalls to avoid. The flip side of this technique is to create an
account under the same name as the company you work for. This way you can easily deposit
customer checks into your own account without suspicion. Assuming you are the accountant in
charge of the checks, you can post the invoice as paid while pocketing the cash for yourself. The
simplicity of these schemes is what makes it so hard for an employer to detect. The authors
consistent advice throughout the article is Do not do anything that will call attention to you.
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This includes, but is not limited to: embezzling more than a company can afford to lose,
embezzling money at a time when a companys profits are not substantial enough to hide the
embezzlement, and of course, publicly living above ones means.
It is amazing how many different ways there are to embezzle. Like most things
nowadays, they can all be found on the internet. Besides the few schemes mentioned above, there
are dozens of How to embezzle articles on different ways to get away with fraudulent schemes.
The most interesting thing to take away from this is how simple it can be. Sure, the intellectual
crowd is more likely to get away with astronomically large embezzlement schemes, but its easy
to see that the average, everyday worker are the ones who most frequently embezzle. The reason
it can be so hard to detect is because the people you least suspect are the ones doing it.
After explaining the inner workings of a few large scale embezzlement schemes, it is
important to clarify some less invasive forms of embezzlement. These types are more common
and the average person may have committed them without even knowing.
The first one is stealing cash. This happens frequently in businesses that are cash based
like bars or restaurants, where its not uncommon for servers to pocket tips without reporting
them to their employers. They are usually motivated to do this to save on taxes for extra
compensation, but whatever the reason, its a form of fraud. A recent audit of four restaurants by
the Canadian Revenue Agency found that in a two year span, $1.7 million worth of tips had gone
unreported. For the 145 servers investigated, that averaged out to $12,000 per person, per year
(The Canadian Press, 2012). Another form of this type of fraud would be when a bar tender
purposefully pockets the cash for peoples drinks. Both of these are hard for employers to catch
and easy for the employees to get away with.
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UNDERSTANDING EMBEZZLEMENT
Another simple form of embezzlement is undercharging friends or family. This one is
especially common in restaurants. It might not seem like a big issue for a server to give free
drinks to their family or forget to charge them for the extra breadsticks they ordered, but once
again, it is still embezzlement. In the retail environment, it is not uncommon for employees
friends or family to hear about upcoming specials early and take unfair advantage of them. And
this goes for all types of businesses. When friends or family are given an unfair advantage over
normal customers that is not management approved it is considered embezzlement.
A third simple form of embezzlement is stealing office supplies. This is possibly the most
common one. Most employees who engage in this probably have not stopped to think that what
they were really doing, is stealing. Employees frequently use company resources for personal
uses whether it is making photocopies at work, accidentally taking pens home from work, or
blatantly using company time for personal use. The main issue with these forms of
embezzlement is that they are frequently committed out of ignorance from naive employees who
do not even realize they are stealing in the first place. Even though, most of these forms involve
small losses for the company, these small losses add up to extremely large losses, especially if
lots of employees are contributing to the problem.
Hopefully the different types of embezzlement are painting a clearer picture of what
embezzlement is and why it is so common. Knowledge is power, and for many, researching this
topic has changed the way they perceive embezzlement and has drastically affected the way they
handle business. As more and more studies are being conducted, researchers are starting to
realize just how wide spread the problem is. Most embezzlers never get caught, and even the
ones that are caught are rarely prosecuted because the costs of prosecuting are higher than the
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money the company would be able to recover. Due to the complexity of recovering embezzled
wealth, many have come to realize how crucial it is to prevent it before it happens.

Preventing Embezzlement
There are many steps that big corporations and small businesses alike can take to
potentially avoid internal embezzlement; they range from closely monitoring the primary
accountant, to not letting the average employee take their work home with them. Embezzlement
is a very hard thing to predict, because it usually is done by some of the most trusted employees
that would never be suspected of foul play. However, there are multiple scenarios to consider in
order to prevent such occurrences from happening. Companies first need to understand that theft
or fraud normally begins with the best of intentions. Employees see an opportunity and they take
it with the narrow mindset that they are simply borrowing from the company, and they have
every intention of paying the money back. Its a common thing that happens all the time and for
the most part probably goes unnoticed. Big corporations just have to accept that this kind of
thing is going on all the time. Once they accept that fact, they can begin to take preventive
measures to ensure that embezzlement within the company is virtually impossible. The following
paragraphs explain various ways that a company could possibly prevent the theft of funds from
inside their business, and they include the dividing of duties, walk-around management, not
allowing employees to take their work home, and making daily deposits.
Division of duties in the work place is crucial to preventing embezzlement. Many
companies from all walks of business have fallen victim to theft because they didnt have an
effective system of checks and balances. Everybody is constantly searching for a way to get
ahead and beat the system. People are always looking for that extra dollar to fulfill their needs
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and wants, but no one can ever be sure who will actually act on those desires. No one person
should have control of any one accounting process, nor should one employee handle all aspects
of a transaction (Murray, 2013). Companies need to actively cross-train their employees, and
that means that there will always be several people that know whats going on. A business
cannot let a single person have complete control of the accounting process. By using the checks
and balances system, a company can greatly reduce the risk of embezzlement. Duties within a
company being equally divided will lift a little weigh off the shoulders of management, however;
theres always got to be a walk-around.
Protecting the companys interest should be the top priority of any employer, and one
technique that can be used is walk-around management. The last thing an employee wants is
trouble at the workplace. It is embarrassing and could possibly lead to threatening their
livelihood. If employees are aware that they are under constant surveillance, the chance they will
attempt to embezzle from the company is greatly reduced. This design will also make it easier
for employers to spot out people that are more likely to steal from the company. Management
will notice tell-tell signs of resentment and irritation from employees that might have a hidden
financial agenda. Specifically: If someone expresses resentment against a companys
watchfulness, they might wonder why this person is so resentful, and it could be because he or
she has something to hide (Murray, 2013). Another issue to consider is the daily policies and
procedures that are implemented and get some specific employees under the microscope in an
attempt to reveal what they are really up to. Regarding signs of misdeed, Worrell comments that:
If a company has suspicion regarding a certain department, they must find the concentrations of
power and break them up (2011). By uncovering any wrong-doing, the company is not only
condemning and punishing the wrong-doer, it is also making an example of them and
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discouraging any other employees that were thinking of doing the same thing. People have drive
and initiative, and that can be both instrumental and detrimental to a business, because
sometimes that drive can lead them to places like, for example, their own home.
There will always be deadlines and quotas that employees have to meet, and sometimes
they cant get that work accomplished in an eight hour shift. Many times they opt to take their
work home with them in hopes they can reach those ever encroaching make-it or break-it limits.
For the most part these are some of the best and brightest employees, because they go above and
beyond the call of work. There are only so many objectives that a person can achieve within the
confines of a cubical. Regardless, there will always be those that will try and take advantage of
the system and bend it to their will. Most of the time it is the high-up employees that are
entrusted with the greatest amount of sensitive information that are the culprit. According to
Vincent Ruoccos article Embezzlement Prevention & Detection: While over two-thirds of all
embezzlers are between 31 and 50 years old, those in their 60s caused the largest loss per
incident (2007). Its mainly the older folks that know the ends and outs of a business that will
be tempted to embezzle from the company. They have worked their way so high up the corporate
ladder that they are free from being routinely monitored, and they are completely conscious of
that fact so they engage in the scheme. If there is one way to deter these would-be bandits, it is to
let them know that the numbers just wont add up at the end of the day. A business can do that by
making deposits to the bank on a daily basis.
Any smart embezzler is constantly trying to cover up their paper trail, however; if the
company plays their cards right, the banks will always have every statement and audit on record,
which will create the necessary obstacles needed to get the rabbit out of the rabbit-hole.
The bank is a businesss partner in avoiding and uncovering theft, and revealing all the people
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that played a part in the scheme (Worrell, 2011). Making daily deposits is an excellent way to
practice and perfect showing attention to detail. When these employees that have a mind for
robbing the company see the carefully examined procedures that the company has taken in order
to prevent such things from happening, they may think twice. In many cases the accountant is the
one who is actually committing the crime, so it would be wise to have a trustworthy person
overseeing the accountants day to day activities to ensure that any reckless behavior will not go
unnoticed. Also, a main accountant is not only a person in a position of power, but also in a
position of respect. Employees watch what the boss does and are prone to imitate his or her
habits - good or bad. An employee who dips into petty cash, fudges on an expense account, uses
company funds for personal items, or sets other examples of loose business behavior will find
other employees rationalizing dishonest actions with the attitude "if it's good enough for the boss,
its good enough for me ( Liraz, 2012). These ideas and attitudes must be eliminated so as not to
be carried on by other employees. Examples must be made and expectations must be met. The
key to minimize the possibility of embezzlement is a strong, solid core within a company that
stresses the importance of being honest with every action, while closely monitoring every aspect
of the business and paying close attention to detail.
Conclusion
In order to gain a complete understanding of embezzlements effect on a company and its
long term ability to succeed, it is necessary to explore all aspects of embezzlement and the
different forms it manifests itself as. Sometimes all the facts regarding embezzlement cases
never surface and so the full extent of its damages may never be known. In response to this,
companies should make a direct effort to prevent future embezzlements. If they cannot, unethical
employees will continue to exploit and steal from their companies.
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UNDERSTANDING EMBEZZLEMENT
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