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This article by Kathleen McGinn Spring was prepared for the July 17, 2002 edition of U.S. 1 Newspaper. All rights reserved.
Even the Best Employee Can Be Dangerous
The office manager for a busy group of surgeons parked
her Jaguar two blocks from work, where her employers and co-workers
wouldn’t see it. At her post for 20 years, she wielded power over
the rest of the office staff, earning their enmity even as she basked
in the surgeons’ trust. So dependable was she, so very good at her
job, that even after the doctors discovered that she was stealing
from them, they did not want to fire her.
The office manager — let’s call her Madge — is the typical
thieving employee. "These are not your derelict people,"
Hart, an attorney with a specialty in employee theft, says of the
office manager and her ilk. "These are people who are good at
their jobs, who are trusted."
The better the employee, says Hart, the bigger the risk. No company
is immune from these inside saboteurs. "Medical practices, auto
repair shops, banks, you name it," says Hart. Small companies,
big companies — he has seen employee theft in businesses of all
sizes. Often it is someone like Madge, someone who has complete control
over the books, who is the thief. But he has seen cases where the
thief was in sales, top management, or the warehouse.
"Studies show that one-third of all small business failures occur
because of employee theft," says Hart. He gives a free seminar
on the subject on Wednesday, July 24, at 6 p.m. at the offices of
Stark & Stark, where he has been in practice since 1980. Also speaking
in matters involving white collar crime. Call 609-896-9060 to register.
While Madge is typical in her competence and in her position of confidence,
Hart says her case had some interesting twists. Would her theft —
which amounted to $1.5 million over 10 years — have been uncovered
sooner if the surgeons had brought in an outside accountant?
"They did," Hart says with a chuckle. "That was a wild
one." Turns out that the practice had an accountant, who came
in once a month to check the books. The problem was that he and Madge
were having an affair. Not only did she use the practice’s funds to
purchase a Jaguar for herself, but she also used the surgeons’ money
to put the accountant behind the wheel of a Jaguar of his own.
Madge was tripped up by co-workers, all of whom heartily hated her.
During a lunch break, she left her utility bill lying next to the
company checkbook, from which she was paying it. Spying the evidence,
a co-worker made copies of the bill and the check and mailed them
anonymously to the surgeons.
Their initial response, says Hart, was to give her a warning, keep
her on, and forget about the incident. This, too, he says, is typical.
"Clients ask me if they’ll get their money back," he says.
The answer generally is no. Most thieves quickly spend their ill-gotten
gains. Employers who sue will get a bill from their attorney, and
will spend time on the case, but often will not see their money again.
Despite a typical reluctance to proceed, engendered in part by an
equally typical fear of looking like fools, the surgeons, at Hart’s
urging, did dig deeper. A forensic accountant came in, and discovered
a bank account Madge had set up. The scale of the theft was far greater
than the surgeons initially thought, and they were able to recoup
their losses by quickly seizing the two Jags — and also Madge’s
mortgage-free shore house — and by suing the bank that cashed
her checks for years without adequately investigating the legitimacy
of her account.
Employers who don’t want repeat theft would do well to prosecute any
Madges they uncover, Hart says. Failing to do so sends a strong signal
to other employees that theft will be tolerated. His other strategies
for curtailing employee theft include:
be an out-and-out thief," says Hart. This person will arrive on
the job looking for opportunities. He is a natural thief, and no amount
of fair treatment will turn him into a law abiding citizen. The only
protection against these people? "Don’t hire them," says Hart.
Be diligent about doing background checks and checking references.
Screen the thieves out.
have larcenous tendencies, another one or two employees are statistically
likely to be angels, says Hart. Leave large bills around on counters,
and they will hurry them back to the safe. These folks will not even
use a company pencil to write down a personal message.
In the middle are the six or seven employees who could go either way.
Madge fell into this group. The first time she took money, she fully
expected to return it. This, says Hart, is typical. Soon she realized
she didn’t have to put the money back, because no one missed it. At
that point, she decided to dip into the company funds again. More
vigilance on the part of her employers might have halted repeated
trips to the till.
employees straight is to instill honest values throughout the organization.
Don’t boast of cheating clients and expect employees to follow a higher
road. This is especially important now that a number of corporate
leaders stand accused of malfeasance. An already cynical workforce
can reasonably be expected to react to the scandals by loosening their
own moral standards.
says Hart. The motivation for theft has nothing to do with salary,
but everything to do with respect. Basically honest employees, who
believe that they are being treated fairly and that their complaints
are heard, are unlikely to look for ways to steal from their employers.
accounts payable should not be under the control of the same person.
Giving both responsibilities to one person makes it extremely easy
for him to steal from the company.
accountant, having an outside accountant is a good idea. An even better
idea is to have that accountant pop in unexpectedly. Given a little
notice, crooked employees often are smart enough to cover their tracks.
company do not want anyone else sitting in their office chairs. Fearing
exposure from prying eyes, they often will work year ’round, taking
no time off at all. Insisting that everyone in the office take a vacation
is a good way uncover any wrongdoing.
go quietly are only increasing the chances that someone else’s recycled
thief will land on their doorstep. Prosecution is time consuming,
but Hart says it’s the right thing to do every time.
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