Inc. Article Paints Sobering Picture on Preventing Embezzlement in NY
I just came across an article that appears in Inc. Magazine entitled "How to Catch a Thief in Your Midst," which describes, in rather stark and startling terms, the challenges small businesses face in preventing - or recovering from - embezzlement (or breaches of fiduciary duty) by employees.
First, the (really) bad news:
"Unfortunately, your prospects of recovering assets once the crime has been discovered are next to nil, experts say. Part of the reason is that it usually takes a long time to discover what's happened--about 18 months. After that, depending on the complexity of the crime, it can take months or even years to gather enough evidence to prove the crime."
Even worse, according to the article, more than half of these cases end up with no recovery to the business because the money has already been spent.
Now, for some good news. There are proactive steps you can take to help prevent dishonest employees from ripping off your business.
Two of them are as follows:
- Conduct extensive background checks (including criminal history) on your employees before hiring them. On the off chance you find something, you will be saving yourself untold sums of money and headaches.
- Never trust an employee with "everything," particularly with regard to specific bank accounts or clients. Having overlap between employees may reduce efficiency to some degree, but it also assures a system of checks and balances, making it far less likely that anyone can run completely amok without your knowledge.
There is another important takeaway from this: if you suspect something is amiss, call in professional investigative (and legal) help sooner rather than later.
I assure you, the problem won't improve with age.