Employee theft: From paperclips to intellectual property, businesses lose billions of dollars a year to unethical employees. The cause may be substance abuse or work dissatisfaction, but the result is the same: a strong hit to your bottom line. Internal investigations and interviews can identify the causes of shrinkage. Careful analysis of time cards or employee lifestyles may uncover suspicious activity. Undercover investigators can document specific acts of theft.
- Identify weaknesses in internal controls
- Recover stolen monies or property
Administer discipline fairly, based on reasonable conclusions
(Case study): A contractor noticed that his inventory of fiberoptic cable was shrinking. He arranged to have surveillance cameras installed surreptitiously through the warehouse. One evening, an employee was digitally recorded removing a large amount of cable and placing it into his personal vehicle. The next morning, the employee was confronted by an investigator hired by the contractor. A written admission of guilt was obtained by the investigator, and the employee implicated a competitor, who had hired the employee to assist him on several jobs using the fiber opticcable, along with other materials stolen by the dishonest employee. The employee returned some of the unused materials he had stolen, and armed with the admission, the contractor’s attorney was able to secure a cash settlement from the competitor. The dishonest employee was terminated without recourse.
Embezzlement: Those who have access to the company checkbook have a variety of ways to siphon off money and avoid detection. Bookkeepers set up dummy companies and pay phony invoices to themselves. Managers negotiate favorable terms with a friendly vendor and receive a kickback. Accounts receivable clerks forge incoming checks for deposit to their personal accounts. Our certified fraud examiners (CFE’s) can review vendor lists to identify questionable entries, and our forensic accountants can determine the extent of misappropriated funds.
- Identify questionable or “ghost” vendors
- Implement proper controls, separation of duties
- Reduce opportunities to commit fraud
(Case study): A trusted employee, who handled all financial matters in a closely held company, embezzled over $900,000 in just three years. Her thefts were uncovered when another employee began reviewing some cancelled company checks. The employee wrote checks to herself and to friends for personal expenses, and to petty cash. She set up phony vendor accounts for supplies, which she obtained herself through mail-order, and had delivered at a significant mark-up. The company owner failed to review the monthly bank statements carefully and did not notice the personal checks written by the employee, which she had removed from the bank statement when it arrived in the mail. After the embezzlement was exposed, the company owner established procedures that separated duties, so that accounts payable and receivables were not handled by a single employee.
Harassment: There’s nothing funny about inappropriate jokes aimed at co-workers or subordinates, but is it harassment? Is a female employee being pressured by a supervisor for an intimate relationship? Is a foreman taking wrongful action against a particular worker for whom he has a grudge? Careful interviews and complete documentation can help you avoid a costly and damaging lawsuit.
- Impartial third-party investigation protects against litigation
- Document inappropriate activity and violations of policy
- Determine extent of actual problem
(Case study): A female employee complained about a manager who was making sexual jokes about her in small gatherings of other employees. She felt the problem began when she rebuffed the manager’s efforts to renew a relationship. The problem had become so difficult for her that she had threatened to hire an attorney. Concerned about potential claims of bias, her employer hired an outside investigator to conduct interviews with the female employee and her co-workers. The interviews disclosed that this was an ongoing pattern of behavior for the manager, and the investigation expanded to a former employee, who claimed she left the company after the male manager made threats against her to comply with his sexual requests. The manager’s computer was examined after the office had closed one evening (the company had the required authorization to conduct such an examination,) and an analysis disclosed files of pornographic images and video clips, some violent in nature. The manager was interviewed and provided a written admission to the knowing violation of company policies pertaining to the pornography on his computer. He denied the allegations of harassment, but did admit to making sexually explicit comments about his direct report to her co-workers, also in violation of written company policy. He was terminated without further incident.