To Catch an Office Thief: Stopping Theft and Employee Embezzlement

Just the other day, I got a call about a suspected employee embezzlement situation, in which a doctor had just discovered that $5,000 in cash was missing. Now, seven days later, the amount missing has turned out to be more like $80,000 – so I decided I’d write this quick missive.

My expertise in counseling our members on how to detect and deal with embezzlement is the unfortunate result of past and present personal experience. For many years, I owned a business in an industry where employee theft is common. The restaurant and bar industry is fraught with ways in which people can take money outright and/or give stuff away until it’s damn near impossible to make a decent living. Much closer to the present, as I began to work with dentists and medical professionals about eight years ago, it didn’t take long to recognize the same familiar patterns in our industry.

Currently, our team takes about one call per week that involves some sort of theft. The flavors include:

  • Insurance theft;
  • Precious metals;
  • Cash;
  • Supplies;
  • Time;
  • and Payroll.

Now, preventing someone who is determined to steal from stealing from you is almost impossible. The trick is to detect the theft and make it stop. So the key to prevention is really detection, which prevents them from continuing to steal. I know! Seems bass-ackwards.

There’s a difference between detection and immediate revelation, though. Far too many of the calls that come in to us go along these lines: “I discovered there is a problem, we asked the employee about it, and they denied it.” Or, “When we started asking questions, the employee figured out they might be in trouble, so now they know there is a problem.” Once you figure out that there is something going on, consider, whenever possible, running your initial investigation in secret, without letting the cat out of the bag.

Cats in Bags: Your Best Offense!

I know, there is nothing more upsetting than to realize you are being embezzled from. And I also know that the need to vent and to let someone, anyone, know that you are not an easy mark is tempting! But when you let the cat of the bag too soon or handle other aspects of the investigation improperly, you miss out on all kinds of opportunities to figure out exactly how much is missing, exactly how the employee is stealing, and on the possibility of catching them in the act.

Controls, whatever form they might take, may in some ways prevent or deter theft and embezzlement. But I have to tell you, short of locking your business behind a bulletproof window and exercising constant and extraordinary effort and expense, it is damn near impossible to stop or prevent someone who wants to steal, from stealing. They will find a way. And so detection, and the ability to swiftly react, stop, and possibly convict the thief, is the key. And if some of the preventive measures you adopt makes it that much easier to detect and ferret out the theft and the person committing it, all the better!

What Can You Do to Catch the Thief?

It is not always possible to keep your suspicions and investigation secret, but if you can, here’s what you gain. You may be able to shadow the employee’s activity in a number of ways that could pay off big in the long run. And in many instances, while you are following them down the twisty path to their bear-hole, they will lead you to ways in which they are stealing that you might have never figured out. We call that the honey pot.

By the way, almost every investigation starts with: “There seems to be a problem and a few dollars have gone missing.” They all too often end with tens, if not hundreds, of thousands of dollars missing.

There’s another common factor, as well: the question, “How could this employee ever imagine they would not get caught one day?” The secret, as told to me by David Harris of Prosperident, a leading fraud investigator in the dental industry, is that the money is often just a payoff, a reward that takes second seat to the rush of taking something and not getting caught.

Knowledge is powerful. Armed with enough facts, you may be able to recover some or all of the missing funds.

And keep in mind that NO embezzler I’ve come in contact with has ever confessed right out of the gate. Even faced with no other possible explanation, they have stuck to their guns and denied they had anything to do with it. It’s as if they’re all pathological liars, too. Imagine that.

Jun 13, 2014

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance based on applicable local, state and/or federal U.S. employment law that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.

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