Fraud Happens Everywhere

Tweet

National news programs report financial crimes from all around the world, every day. As we listen to these stories in our homes across Western and Central Michigan, it’s hard to imagine embezzlement or fraud happening in our small business. But, it does happen more frequently, and goes on for perhaps longer than we think.

In August, Mlive reported that Eileen Louis Dove, a 6-year employee of Viking Tool & Engineering Inc., was charged with embezzling $31,000 (some speculate that figure is actually closer to $280,000).  The alleged forged check-cashing scheme occurred from late 2011 through May of 2012. Checks were allegedly forged and cashed at banks right here in West Michigan (in Muskegon and Newaygo counties).

In March, the 9&10 News reported that Jason Artnz, of Union Township, allegedly embezzled over $500,000 in electronics, appliances and tools from his employer, Auto Owners Insurance.  Artnz is accused of padding customers’ insurance claims and then keeping the excess for himself.

So why do people embezzle from their employers? In many cases, you may be dealing with an otherwise loyal and very good employee. It’s not uncommon for me to hear people say, “I never thought {embezzler} would steal from us!” It’s important to note that good people can do bad things. Many things could be going on in your employees’ personal lives that could trigger them to take desperate measures, such as, extraordinary medical expenses or gambling problems.

It’s crucial to be on the look out for behavioral red flags. You also need to be especially careful to monitor the following:

• Journal entries affecting cash
• Receipts and revenues being less than your expectations
• Bank reconciliations noting outstanding deposits or checks
• Notices of payroll taxes due from governmental authorities
• Questions from customers regarding their accounts receivable balances

There are many steps you can take to prevent fraud from happening. It’s imperative to have the proper controls in place. A fraud assessment conducted by H&S Fraud Division can identify weaknesses in your system and put controls in place to help prevent fraud.

To learn more about preventing fraud in your business, contact Kit Powell.

Kit Powell
Certified Fraud Examiner
616.735.3104
kitp@hscompanies.com