Guarding Against Embezzlement
From contributor T:
As a one-person cabinet shop, I wonder how long I would have to be in business before I had amassed $9.9 million dollars that I could then embezzle from myself. I guess you would have to convert a bedroom into a closet if you have a collection of shoes that cost more than the average house in the US. I wonder if she bought her cabinets from Quality Woodworks?
From contributor R:
This is a classic case of American greed! This is what got us all in this mess we're in. I feel sorry for the good employees of this company. I hope this company can survive.
From contributor S:
There's something fishy in this. That's too much money to go missing without anyone noticing. I don't believe that this is the way it was portrayed.
From contributor O:
Stealing large from the very source of your livelihood requires something beyond greed (and I don't mean stupidity, that's a given!). There has to be an issue or incident around which one can build some sort of twisted justification, no matter how irrational it may be to the sane working person.
I know a very hard working guy in another trade who did work for me, three kids in high school/college, working two jobs to get by, etc. His wife worked for a small company and managed to pilfer $400k over several years. He knew nothing. She claimed her pay was cut when the company changed ownership, or some such. She'll almost certainly go to jail, divorce to save what little they can - several ruined lives from any angle you look at it. There's been a rash of these in the news in my area over the last couple years, 8 or 10 at least. I said the same thing: Has to be more to it, right? (Drugs, controlling lover, gambling.) But apparently you can blow a really, really lot of dough when it belongs to someone else and have absolutely nothing to show for it.
If someone steals from my small company, they're stealing directly from my pocket, which is the same as stealing from my family, the people I work for, my daughters, their education, etc. That kind of betrayal is just about up there with child abuse and deserves seriously harsh penalties.
From contributor A:
I know of a Bay Area developer a few years ago whose controller skimmed 25 million over a few years. She always took Fridays off to take her daughter to the cancer center. One day the daughter shows up to work looking for mom - daughter healthy and on a college sport team, wanted her mom to come watch. CEO started looking into it. Mom was in Reno gambling.
Embezzlement is pretty common. The justification varies from drugs, divorce, gambling, they think they deserve more... They start out borrowing.
There are some basic procedures you can put in place to prevent this.
Don't put yourself in a position where you have to trust an employee to take care of your money without any oversight. If you can't do all of the above, ask your accountant for procedures for checking so you can catch theft. We have a company we sell to and every 3 months the AP person changes based on the vendor's letter of the alphabet to further try and stop collusion.
Watch the money coming in and out the door. If you really want to tighten it up, ask your insurance company what you have to have in place to be able to buy employee dishonesty coverage. It only takes one embezzler to kill your business.
From contributor Y:
The protection has to be in the system. All the trouble going on right now, the mortgage mess, Bernie Madoff, Stanford, etc. is because the system allows it. If a person wants to steal or cheat, and if he or she can find a crack in the armor, then it will be done. Even in your own business needs a system to prevent abuse. I have a new awareness of a certain type of person - sociopath - who doesn't feel guilt or take responsibility for their actions. I believe that many in prison, many CEOs, many who have been able to become very wealthy, are in fact sociopaths.
From contributor H:
Add to the list politicians, judges, and lawyers (pronounced liars).
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