The Expert Podcast

corporate fraud and embezzlement are extremely common. here's a perfect example in a case from Oregon where bookkeeper for a landscaping company stole over five hundred thousand dollars from their employer and there's a lot of red flags that could have been observed. they were posting all kinds of high end purchases and lifestyle choices on Instagram. the person was a very long term employee and you'll see that a lot of the red flags for fraud were there. for example they were claiming to have tens of thousands of the hundreds of thousands in equestrian gear on a regular salary. this nursery was a victim of half a million dollars since two thousand fifteen and put significant financial pressure on their company. and as we'll see in the following examples there's a lot of opportunities where they could have been observed. there was not cross references to accounts a lot of the checks that were written were written and deposited two entities other than what was showing on the financial statements. you can use quickbooks or other high end accounting software bookkeeping software to obscure the true payees on checks and deposits you can see on the little slide show of how quickbooks can be used to change checking information and deposit information and a good bookkeeper can do this if there's not second observation of checking accounts bank statements to verify who the checks went to this can go on this one on for four years. and usually common elements for fraud or it's a trusted employee. there are some facts about fraud which any business probably should take a look. at first of all half almost business failures result from embezzlement. they say thirty to fifty percent result from embezzlement. most thieves is the first time they don't have a track record of of stealing or embezzlement or fraud so it may be a trusted employee and somebody who has a good references. the average scheme for fraud two to five years in this last case matches that perfectly at four years. usually their losses more than a hundred thousand dollars in the average lost is over a million dollars. most employees who commit fraud have been in the company for five years. there is a reverse correlation between the fraud and how long they've been there people have been there longer generally steal more short term employees generally still less. so you might wanna look at long term trusted employees to make sure they don't have that opportunity because usually they're good people they just run into an opportunity. the average pay for embezzlement employee is sixteen to twenty five dollars an hour. a thief for a fraudster can take three to five percent of revenue without being caught. so think about your corporate profit margin if it's a eight or nine or ten percent margin half of your net profit can go to a fraudster if not caught usually they still cash but sometimes it's checks incoming checks maybe insurance payments. and usually the identifiable ones our deposits and payables in another case an I. T. executive stole six million dollars from their employer. and you'll see on the complaint that the department of justice filed that this person use some very common techniques. here's a complaint against the defendant and the recitals of their job description. it says it from August two thousand fifteen through two thousand nineteen this company submitted approximately fifty two invoices these invoices were submitted a word document format in the meta data identified kebabs who is the defendant as the author meaning that the person who submitted invoices to the company for payment was actually employee of the company with a fake company name for a vendor. and they collected over six million dollars it identifies employees a senior manager and he's been in charge of data centers. he submitted invoices for hardware for the data center that seems like it would be stuff that the company would buy but in fact he was using an E. I. N. number for his own company. employee went further stated that the company's unlikely to have purchased the manufacture servers as described. once it was investigated it turns out that the employee of the company was legitimate employee found out that this was not something that normally would happened. keep in mind that all of the people referenced in this video there charges are not convicted it's alleged. what do these crimes happen but this is an example of what type of destinations happen here's one payment of five hundred forty thousand by the company. so as corporate fraud is an element that can affect your business it's very simple to look at very easy cross references to make sure that the checks going out are legitimate the companies are going to are correct. and there's things you can do for spend our two a month or some very simple software tools to identify potential fraud potential embezzlement before result in having to lay off employees maybe cut back on advertising or have to close your company because of losses.