corporate embezzlement-removed names

RUNNING HEAD: UNDERSTANDING EMBEZZLEMENT

Understanding Embezzlement:

The Phenomenon That Changed Business Forever

Michael Vlk

Tarleton State University

2UNDERSTANDING EMBEZZLEMENT

Abstract

This article examines a mixture of real world examples and in depth research on the nature of

embezzlement and why it is one of the biggest problems businesses face today. The gargantuan

size of some embezzlement cases guaranties their coverage in the news, but it is important to

note the implications of smaller infractions as well. In-depth examples include news stories about

the Enron financial scandal, Bernie Madoff’s Ponzi scheme, and the smaller embezzlement cases

in our city. This article also details how to successfully embezzle from a company and what

measures a manger should take if they suspect embezzlement. For those who are starting a

business or already own a business, the insight this paper contains on embezzlement merits the

attention and self-reflection of the reader.


Defining Embezzlement

Embezzlement is defined as an act of dishonestly withholding a company’s assets for the

purpose of theft or conversion of such assets by one or more individuals to whom such assets

have been entrusted, to be held and/or used for other purpose (Embezzlement, 2007). Classified

as a type of financial fraud, Embezzlement can range from small amounts (using a company gas

card for personal use) to large sums of money that have been funneled and rerouted through

various channels. These actions can go on for months, and even years without anyone noticing

since the perpetrator’s main goal is to extract as much money as possible without raising any

suspicion. In legal situations embezzlement can often be confused with larceny or simple theft,

but the key difference is a matter of ownership and rights to the stolen assets. Since the

individual committing the act is already entrusted with the assets they are taking the law

considers this embezzlement instead of larceny.

There are many ways an employee can embezzle from their company or organization that

can be hard to trace unless an audit of the company is performed, or a whistleblower comes

forward. Robert Grossman categorizes the five types of embezzlement as:

1. Billing: where fraud is committed by an individual submitting an invoice for fake

goods, services, or personal purchases.

2. Payroll: when false claims are made for compensation by creating ghost employees or

awarding unauthorized salary increases and bonuses.

3. Expense Reimbursement: claims that are made for reimbursements of fictitious or

inflated business expenses.


4. Check Tampering: any forgeries or alterations of an employer’s check, or the theft of a

check that has been written for someone else.

5. Cash Register Disbursement: false entries that are made to conceal fraudulent removal

of currency. (Grossman, 2005, p. 47)

Ponzi schemes are an example of a more sophisticated form of embezzlement involving

investment banking, and operate by paying its investors from the next wave of new investors

who have been promised high returns. The high returns for the first wave of investors encourage

others to give their money to the company and for the initial investors to leave their money in the

scheme. By simply sending statements of their “earnings” to investors and discouraging

withdrawals by freezing money in exchange for higher returns, the individual running the Ponzi

scheme can continue to falsify the report of profits and attract more investors which perpetuates

the scheme.

Famous Cases of Embezzlement

From lavish suits to black and white striped jumpsuits…

“Margaret Mills, former longtime executive director of Downtown Waco Inc.” (Gately,

Ross, & Williams, 2010, p. 1) was forced to retire after a six month plus investigation that

resulted in an arrest warrant affidavit that accused Mills of “taking $268,458 by misusing agency

checks and debit and credit cards and by diverting members’ dues checks to her personal bank

account. The affidavit says other questionable expenses could push the total as high as $500,000”

(Smith & Quinn, 2007, p. 2).

In the affidavit, Waco Police “obtained records by subpoena for several banks where

Mills and Downtown Waco Inc. did business. The investigation found:


Mills wrote 121checks from Downtown Waco Inc. to herself, cashing some and putting

some into her account at First National Bank of Central Texas. Other Downtown Waco

Inc. checks were deposited into the account of her son, Richard Coke Mills III, at Bank of

America.

Mills diverted into her private account at least 10 checks intended for Downtown Waco

Inc., worth $19,939. That included checks of several thousand dollars from Kelly

Realtors, Waco Independent School District, the Tribune – Herald, McLennan

Community College, and Baylor University.

Mills wrote $40,800 in checks to herself from an account with RiverCity Corp., a

Downtown Waco Inc. fundraising arm that board members thought was inactive.

Mills used credit and debit cards that she had created in the name of Downtown Waco

Inc. but never told the board about.

Mills spent Downtown Waco Inc. money on personal items such as her Zeta Phi Beta

sorority contributions, personal storage space, and a gardener and maid at her West Waco

home” (Smith & Quinn, 2007, p. 1).

The Downtown Waco Inc. internal investigation found “more than a half – million dollars

of questionable financial transactions” (Smith & Quinn, 2007, p. 2). The internal analysis

showed at least “410,575 in questioned check activity” over a four year, nine month time frame

with more irregularities making the total more than $500,000. There is speculation that her

irregular patterns go back more than six years. The Waco Mayor at the time stated “she wasn’t

surprised by the results of the investigation” (Smith & Quinn, 2007, p. 2). The Mayor said, “We

knew what was coming. We knew the police department was working very hard to be thorough.

The investigation could have gone on further, but there was enough information to know very


clearly what had gone on” (Smith & Quinn, 2007, p. 2). “Mills alleged misappropriation of funds

continued right up until her resignation” (Smith & Quinn, 2007, p. 3). Mills deposited a check

for “$2,031 that Waco Independent School District mailed to the agency” three days before she

retired. The Downtown Waco Board officers cut her off her spending privileges which ultimately

forced her retirement four months later (The Washington Times, 2008, p. 1).

In a letter to board officers, Mills acknowledged taking “liberties” with checks and debit

cards and promised to try and reimburse them. Several months after her retirement, Downtown

Waco Inc. received a $70,000 check from Mills husband (The Washington Times, 2008, p. 1)

When police issued an arrest warrant, it took Mills “four days to turn herself in to the

McLennan County Jail and quickly posted bond” (Gietzen, n.d., p. 1). It was less than a week

later that the McLennan County District Attorney released a statement “recusing” himself from

this case due to personal ties to her family (Gietzen, n.d., p. 1). Margaret Mills was arrested

approximately nine months after her forced retirement.

Margaret Mills pleaded guilty to “aggregated theft of about $99,500,” and will ask

McLennan County jury to place her on probation at a sentencing trial. Before the pretrial

hearing, both Mills’ attorneys and state attorneys met with the judge. After this 10 minute

meeting, the state judge announced that “he was prepared to abandon 63 counts in the 116-

countindictment, effectively slicing the amount that had been alleged that Mills misappropriated

from Downtown Waco Inc. funds from $211,000 to less than $100,000. That also dropped the

felony charges from first-degree, punishable by up to life in prison, to third-degree, with a

maximum penalty of 10 years in prison” (Witherspoon, 2008, p. 1).

The sentencing proceeding lasted all of two minutes where Margaret Mills plead “guilty

to reduced charges and agreed to pay $237,968.99 in restitution, including $100,000” that was


due three day prior ("Led from Courtroom," 2008, p. 1). “Four longtime friends of the Mills

family contributed $25,000 each so Mills could make the required $100,000 payment” ("Led

From Courtroom," 2008, p. 1). As noted earlier, her husband sent a $70,000 restitution check

back when she was first arrested.

The night before her sentencing, Mills told reporters via phone interview that she spent

her last days as a free woman with her family. She complained that she never got to tell her story

in court, that it’s been hard, her family doesn’t deserve it, how her husband is devastated, and

how she lived a two-year nightmare ("Led From Courtroom," 2008, p. 1). Her lawyer also stated

in an interview that “she is hugely humiliated, ashamed, sorrowful that instead of people

remembering what she has done that has been good and productive and helpful for the city, that

unfortunately she will be collared with some actions she’s not proud of” (Witherspoon, 2008, p.

2).

Margaret Mills was sentenced in 2008 and was released from the Gatesville prison after

serving only 17 months of her nine – year sentence in 2010. She will remain on parole until

November 8, 2017 (Gately et al., 2010, p. 1).

Mary Helen Lane, 58, is the former Vice President of the First National Bank of Whitney,

Texas. Lane retired from the bank after working there for 27 years. She has been accused of

embezzling $6 million over a 10 year period (Elizondo, 2013, p. 1).

She has been accused of taking amounts of money from the bank vault and creating false

outages, vault and transfer tickets. She is also accused of creating fraudulent cashier’s checks

(Elizondo, 2013, p. 1). She would then “create false bank documents to hide her thefts and to

‘fool bank employees and bank auditors’” (Witherspoon, 2013, p. 1).


It has been reported that Lane spent most of the embezzled money on Gambling and

Casinos. She evidently had quite a gambling faddish. She has been accused of giving co-workers

$100 bills when she would return from trips claiming she’d won big time. She also bought sports

cars with the money she stole (Elizondo, 2013, p. 1).

One of Lane’s former neighbors described her as being a very down to earth person and

never flaunted her money. They did say however that they noticed a new Corvette and Camaro in

her driveway (Elizondo, 2013, p. 1). A co-worker told FBI that Lane kept so much cash on hand

that when the bank would run out of $100 bills she would go home to retrieve $100 bills and take

them back to the bank in exchange for smaller bills (Witherspoon, 2013, p. 1). The same co-

worker told investigators that “approximately two weeks after resigning, Lane cashed ten checks

for $2000 each, playable to her sister, and had them deposited into her own account. Then two

months later she had $11,000 cash put into her account, and again told the employee not to file a

Currency Transaction Report” (Elizondo, 2013, p. 1). This report is required by law.

With all this, Lane has been charged with embezzling $6 million from First National

Bank of Whitney over a 10 year period. The judge considered her to be a “flight risk” because of

the amount she allegedly stole, but the U.S. attorney prosecuting the case disagreed and didn’t

consider her to be such. So, she was released on personal recognizance, or unsecured bond,

meaning her word was good enough for the court and she would be required to show up for her

court date, otherwise she would be liable for $100,000. Lane was not arrested but made

arrangements to be in court (Witherspoon, 2013, p. 1).

Mary Helen Lane pleaded guilty and was sentenced to seven years in federal prison,

followed by five years on supervised release. She was ordered to pay $6,090,784.31 in restitution

and a $100 special assessment to the court (Gately, 2013, p. 1). She was allowed to remain free


on bond until the Bureau of Prisons determines where to place her. Lane was given an

opportunity to speak in court. She took that opportunity to apologize to bank officials for

betraying the trust they bestowed on her. “I’d like to ask for forgiveness, but I actually

understand if that is not possible,” she said (Witherspoon, 2013, p. 1).

Lane’s attorney stated to reporters that his client had an “insidious addiction” to

gambling. He also stated that Lane is financially ruined and intends for “every dime she has”

from the $47,000 she made from selling her home to go towards restitution payments to the

bank. Other officials had reported that in one year, Lane “left $20 million behind at the WinStar

World Casino in Thackerville, OK.” That amount included millions of dollars of winnings as

Lane occasionally won big (Witherspoon, 2013, p. 1).

Day in and day out it seems like embezzlement is a constant on the news. Some people

blame the state of the economy for people embezzling; in reality, they often start when the

economy is doing well because it is easier to hide from business owners. The following two

stories are from the 2011 Marquet International report of the top 10 embezzlement cases in

modern US history: Over a three year period during the late 1970s, Wells Fargo Bank in San

Francisco, California was used to embezzle $21.3 million by Lloyd Benjamin Lewis. Lloyd

Benjamin Lewis was employed by Wells Fargo Bank for more than 10 years before he started

taking money from Wells Fargo due to a flaw in the internal control alarm system in order to

clear checks at bank branches back in 1977. Lewis had become a board member of Mohammed

Ali Professional Sports, Inc. aka “MAPS.” MAPS was considered a local customer of Wells

Fargo since it had 13 accounts at different branches around Los Angeles. At the time there was

no prohibition against such conspicuous conflict of interest at the bank. Since MAPS was run by

former Wells Fargo banker Sammie Marshall and Harold Rossfields Smith, a boxing promoter,


nobody thought anything of this at the time because Marshall worked for the bank. During this

time Lewis was able to take advantage of the five day grace period between a check being

credited at one bank branch and a debit being made at the account’s branch; he did this by

continuously making fraudulent credits and debits on the company’s accounts. Lewis reported

that he only received $300,000 in kickbacks in exchange for his embezzlement on behalf of

MAPS. Smith even paid for part of Lewis’ honeymoon using the embezzled money. Gene

Kawakami, who was a third party that worked for Wells Fargo, was also involved in helping

cover up the fraud that Lewis had committed. In the end, Kawakami was convicted on one count

of falsifying loan documents. Lewis pleaded guilty to one count of conspiracy and two counts of

embezzlement and agreed to cooperate with the prosecution on their case against Smith; he was

to testify at trial. Lewis was sentenced to five years in prison. During February of 1982, Harold

Smith was convicted on 29 felony counts including fraud, embezzlement, conspiracy and

interstate transportation of stolen securities; at sentencing he received ten years in prison but only

served a little over five years.

Next, the victim organization was Koss Corporation in Milwaukee, Wisconsin to the

amount of $34.5 million by CFO Sujata “Sue” Sachdeva. The duration of this embezzlement was

for 12 years long from 1997 to 2009. On January 20th of 2010, 46 year old Sujata “Sue”

Sachdeva was convicted by a grand jury due to her six counts of wire fraud for allegedly

embezzling of as much as $31.5 million from Koss Corporation, a publicly traded head phone

manufacturer. She had been employed as Vice President of Finance, Secretary, and Principal

Accounting Officer. When she was arrested on December 21st of 2009, the amount of money

embezzled was thought to be as much as $4.5 million, and however, an investigation determined

that the theft was much larger. She was fired by Koss in early 2010 when the loss was estimated


at about $20 million. Since she was convicted, the loss has been put at $34.5 million. According

to reports Sachdeva authorized at least 206 wire transfers of funds from Koss’ bank accounts in

order to pay for her American Express credit card bills and issued more than 500 cashier’s

checks from company accounts to pay for her personal expenses. In order to conceal her fraud

she had other Koss employees make numerous fraudulent entries in Koss’ book records. The

embezzlement was discovered when American Express notified Koss about unusually large

transactions to make payments on Sachdeva’s personal credit card accounts. She pleaded guilty

to six counts of wire fraud on July 16th of 2010 and in a plea agreement was required to make full

restitution of about $34 million. Julie Mulvaney, who was Koss’ senior accountant and

subordinate, allegedly helped her cover up the embezzlement. They both were brought in front of

the Securities and Exchange Commission on September 2, 2010. The SEC complaint alleged that

these two women caused Koss to submit false and misleading financial statements for a public

company causing shareholders to filed civil suits for fraud, misleading financials and

mismanagement. Koss Corporation, in turn, then filed a suit against Sachdeva, Grant Thornton,

the outside auditing firm, and American Express. During her criminal case, Sachdeva blamed

Grant Thornton for their poor auditing and Michael Koss, her boss, for not noticing what was

going on. Ultimately, due to Sachdeva’s embezzlement, Koss nearly went bankrupt. On

November 17th of 2010, Sachdeva was sentenced to 11 years in prison. (Marquet, 2011)

Bernard “Bernie” Madoff is the former non-executive Chairman of the NASDAQ stock

market, and the admitted operator of a Ponzi scheme that is considered to be the largest financial

fraud in US history. Biography.com recently examined the Madoff scandal and gave an account

on the history of his Ponzi scheme: On December 10th of 2008, Madoff was arrested for fraud.

Madoff informed his sons that he had planned to give out millions of dollars in bonuses two


months before they were due to go out. They wanted to know where this money had come from

and Madoff admitted that a branch in his firm was actually an elaborate Ponzi scheme. His sons

then blew the whistle on their father by alerting the federal authorities. Madoff pled guilty to 11

felony count, and he also admitted to the fact that he had lost billions of his investors’ money.

The felonies that he was guilty of were securities fraud, investment adviser fraud, mail fraud,

wire fraud, three counts of money laundering, false statements, perjury, false filings with the

United States Securities and Exchange Commission and theft from an employee benefit plan.

Prosecutors are still trying to figure out how much money he has embezzled but they say that

$170 billion has been moved through his accounts. In the end, Madoff was imprisoned and

sentenced to 150 years in prison. (Bernard Madoff Biography, 2013)

Finally, one of the biggest scandals in American history was the 2001 revelation of

Enron’s financial practices following their filing for Chapter 11 bankruptcy. This story is from

an article entitled “The Enron Collapse: A Look Back” that was published on Investopedia.com:

Enron was formed in 1985 after merger between Houston Natural Gas and Omaha-based

InterNorth. Kenneth Lay was CEO of Houston Natural Gas and when they merged he became

Enron’s CEO and chairman. He quickly rebranded Enron into an energy trader and supplier. At

this time deregulation of the energy markets allowed companies to place bets on future prices

and Enron was ready to take advantage of this. By 1993, Enron had set up a number of limited

liabilities specially purposed to allow Enron to hide its liabilities while growing its stock price.

Analysts were already finding out that Enron was swimming in debt but the company continued

to grow a developing large network of natural gas pipelines, and eventually moved into the pulp

and paper and water sectors. The company was named “America’s Most Innovative Company”

by Fortune for six consecutive years between 1996 and 2001. Enron used creative accounting to


allow them to appear more powerful on paper than they really were. Enron also used special

purpose entities or subsidiaries to hide risky investment activities and financial losses. Forensic

accounting later determined that many of Enron’s recorded assets and profits were inflated, and

in some cases, completely fraudulent and nonexistent. Some of Enron’s debts and losses were

recorded in offshore entities. They were absent from Enron’s financial statement. More and more

special purpose vehicles were created during the late 1990s and early 2000s, in order to allow the

company to keep debts off the books and inflate assets. These entities, along with other

accounting loopholes and poor financial reporting let the company hide billions of debt from

everyone. Shortly after the company achieved $100 billion in revenues, then-CEO Jeff Skilling

unexpectedly resigned, prompting Wall Street to question the health of the company. Kenneth

Lay became CEO again, both Lay and Skilling, in addition to other Enron executives, started to

sell large amounts of Enron stock even as the price continued to drop to less than a dollar. Less

than a week after a bid from Dynegy was called off, Enron filed for bankruptcy. Enron had more

than $38 billion in debts that were outstanding. Following the months after the bankruptcy, the

US Justice Department started to investigate Enron’s bankruptcy. Several of Enron’s executives

and their auditor firm, Arthur Andersen, have been indicted for a variety of charges including

obstruction of justice since they decided to shred documents and conspiracy to commit wire and

securities fraud, and some have even been sentenced to prison (Folger, 2011).

Actions for Embezzlement

Embezzlement is embarrassing for everyone involved, often more so for the embezzled

business owner than the culprit responsible. Like most issues regarding ethics, there are many

different viewpoints to consider when dealing with embezzlement: whether they are from the

perspective of the ethical violation itself, or from the management’s perspective of how to


ethically handle the situation. There is an interesting article about these points of view titled

“Embezzlement 101 — How to Embezzle From Your Employer and Not Get Caught”. Although

the article’s purpose was to teach employers how to keep employees from embezzling, it

explained it from the embezzler’s point of view and gave step-by-step instructions on the best

ways to embezzle (Auditors Inc., 2006). The article was straightforward in the way it explained

how to get away with stealing; it was highly informative and yet thoroughly entertaining to read.

It systematically covered the “tried and true” methods for getting away with embezzlement and

provided a catchy acronym for the reader to remember their concepts by: KISS — Keep It

Simple Stupid. According to this article, many other sources, and common logic, the best way to

embezzle is to keep the methods simple so as to not trip up. An added benefit of its simplicity is

that it reduces the suspicions of others.

One simple way to embezzle is to set up a bank account under the same name as a

company that one’s employer frequently uses (Auditors Inc., 2006). For example, if the

establishment an employee works for frequently buys from Office Depot, they could set up a

bank account under the name “Office Depot” and then write themself checks that appear to be

for the business. Setting up fake accounts might seem like a daunting task but the article’s author

provides a simple step-by-step process of how to properly set up the account, forge signatures if

necessary, and a list of several pitfalls to avoid. The flip side of this technique is to create an

account under the same name as the company you work for. This way you can easily deposit

customer checks into your own account without suspicion. Assuming you are the accountant in

charge of the checks, you can post the invoice as paid while pocketing the cash for yourself. The

simplicity of these schemes is what makes it so hard for an employer to detect. The author’s

consistent “advice” throughout the article is “Do not do anything that will call attention to you.”


This includes, but is not limited to: embezzling more than a company can afford to lose,

embezzling money at a time when a company’s profits are not substantial enough to hide the

embezzlement, and of course, publicly living above one’s means.

It is amazing how many different ways there are to embezzle. Like most things

nowadays, they can all be found on the internet. Besides the few schemes mentioned above, there

are dozens of “How to embezzle” articles on different ways to get away with fraudulent schemes.

The most interesting thing to take away from this is how simple it can be. Sure, the intellectual

crowd is more likely to get away with astronomically large embezzlement schemes, but it’s easy

to see that the average, everyday worker are the ones who most frequently embezzle. The reason

it can be so hard to detect is because the people you least suspect are the ones doing it.

After explaining the inner workings of a few large scale embezzlement schemes, it is

important to clarify some less invasive forms of embezzlement. These types are more common

and the average person may have committed them without even knowing.

The first one is stealing cash. This happens frequently in businesses that are cash based

like bars or restaurants, where it’s not uncommon for servers to pocket tips without reporting

them to their employers. They are usually motivated to do this to save on taxes for extra

compensation, but whatever the reason, it’s a form of fraud. A recent audit of four restaurants by

the Canadian Revenue Agency found that in a two year span, $1.7 million worth of tips had gone

unreported. For the 145 servers investigated, that averaged out to $12,000 per person, per year

(The Canadian Press, 2012). Another form of this type of fraud would be when a bar tender

purposefully pockets the cash for people’s drinks. Both of these are hard for employers to catch

and easy for the employees to get away with.


Another simple form of embezzlement is undercharging friends or family. This one is

especially common in restaurants. It might not seem like a big issue for a server to give free

drinks to their family or “forget” to charge them for the extra breadsticks they ordered, but once

again, it is still embezzlement. In the retail environment, it is not uncommon for employee’s

friends or family to hear about upcoming specials early and take unfair advantage of them. And

this goes for all types of businesses. When friends or family are given an unfair advantage over

normal customers — that is not management approved — it is considered embezzlement.

A third simple form of embezzlement is stealing office supplies. This is possibly the most

common one. Most employees who engage in this probably have not stopped to think that what

they were really doing, is stealing. Employees frequently use company resources for personal

uses whether it is making photocopies at work, accidentally taking pens home from work, or

blatantly using company time for personal use. The main issue with these forms of

embezzlement is that they are frequently committed out of ignorance from naive employees who

do not even realize they are stealing in the first place. Even though, most of these forms involve

small losses for the company, these small losses add up to extremely large losses, especially if

lots of employees are contributing to the problem.

Hopefully the different types of embezzlement are painting a clearer picture of what

embezzlement is and why it is so common. Knowledge is power, and for many, researching this

topic has changed the way they perceive embezzlement and has drastically affected the way they

handle business. As more and more studies are being conducted, researchers are starting to

realize just how wide spread the problem is. Most embezzlers never get caught, and even the

ones that are caught are rarely prosecuted because the costs of prosecuting are higher than the


money the company would be able to recover. Due to the complexity of recovering embezzled

wealth, many have come to realize how crucial it is to prevent it before it happens.

Preventing Embezzlement

There are many steps that big corporations and small businesses alike can take to

potentially avoid internal embezzlement; they range from closely monitoring the primary

accountant, to not letting the average employee take their work home with them. Embezzlement

is a very hard thing to predict, because it usually is done by some of the most trusted employees

that would never be suspected of foul play. However, there are multiple scenarios to consider in

order to prevent such occurrences from happening. Companies first need to understand that theft

or fraud normally begins with the best of intentions. Employees see an opportunity and they take

it with the narrow mindset that they are simply “borrowing” from the company, and they have

every intention of paying the money back. It’s a common thing that happens all the time and for

the most part probably goes unnoticed. Big corporations just have to accept that this kind of

thing is going on all the time. Once they accept that fact, they can begin to take preventive

measures to ensure that embezzlement within the company is virtually impossible. The following

paragraphs explain various ways that a company could possibly prevent the theft of funds from

inside their business, and they include the dividing of duties, “walk-around” management, not

allowing employees to take their work home, and making daily deposits.

Division of duties in the work place is crucial to preventing embezzlement. Many

companies from all walks of business have fallen victim to theft because they didn’t have an

effective system of checks and balances. Everybody is constantly searching for a way to get

ahead and beat the system. People are always looking for that extra dollar to fulfill their needs


and wants, but no one can ever be sure who will actually act on those desires. “No one person

should have control of any one accounting process, nor should one employee handle all aspects

of a transaction” (Murray, 2013). Companies need to actively cross-train their employees, and

that means that there will always be several people that know what’s going on. A business

cannot let a single person have complete control of the accounting process. By using the “checks

and balances” system, a company can greatly reduce the risk of embezzlement. Duties within a

company being equally divided will lift a little weigh off the shoulders of management, however;

there’s always got to be a ‘walk-around”.

Protecting the company’s interest should be the top priority of any employer, and one

technique that can be used is “walk-around” management. The last thing an employee wants is

trouble at the workplace. It is embarrassing and could possibly lead to threatening their

livelihood. If employees are aware that they are under constant surveillance, the chance they will

attempt to embezzle from the company is greatly reduced. This design will also make it easier

for employers to spot out people that are more likely to steal from the company. Management

will notice tell-tell signs of resentment and irritation from employees that might have a hidden

financial agenda. Specifically: “If someone expresses resentment against a company’s

watchfulness, they might wonder why this person is so resentful, and it could be because he or

she has something to hide” (Murray, 2013). Another issue to consider is the daily policies and

procedures that are implemented and get some specific employees under the microscope in an

attempt to reveal what they are really up to. Regarding signs of misdeed, Worrell comments that:

“If a company has suspicion regarding a certain department, they must find the concentrations of

power and break them up” (2011). By uncovering any wrong-doing, the company is not only

condemning and punishing the wrong-doer, it is also making an example of them and


discouraging any other employees that were thinking of doing the same thing. People have drive

and initiative, and that can be both instrumental and detrimental to a business, because

sometimes that drive can lead them to places like, for example, their own home.

There will always be deadlines and quotas that employees have to meet, and sometimes

they can’t get that work accomplished in an eight hour shift. Many times they opt to take their

work home with them in hopes they can reach those ever encroaching make-it or break-it limits.

For the most part these are some of the best and brightest employees, because they go above and

beyond the call of work. There are only so many objectives that a person can achieve within the

confines of a cubical. Regardless, there will always be those that will try and take advantage of

the system and bend it to their will. Most of the time it is the high-up employees that are

entrusted with the greatest amount of sensitive information that are the culprit. According to

Vincent Ruocco’s article Embezzlement Prevention & Detection: “While over two-thirds of all

embezzlers are between 31 and 50 years old, those in their 60s caused the largest loss per

incident” (2007). It’s mainly the older folks that know the ends and outs of a business that will

be tempted to embezzle from the company. They have worked their way so high up the corporate

ladder that they are free from being routinely monitored, and they are completely conscious of

that fact so they engage in the scheme. If there is one way to deter these would-be bandits, it is to

let them know that the numbers just won’t add up at the end of the day. A business can do that by

making deposits to the bank on a daily basis.

Any smart embezzler is constantly trying to cover up their paper trail, however; if the

company plays their cards right, the banks will always have every statement and audit on record,

which will create the necessary obstacles needed to get the “rabbit” out of the “rabbit-hole”.

“The bank is a business’s partner in avoiding and uncovering theft, and revealing all the people


that played a part in the scheme” (Worrell, 2011). Making daily deposits is an excellent way to

practice and perfect “showing attention to detail”. When these employees that have a mind for

robbing the company see the carefully examined procedures that the company has taken in order

to prevent such things from happening, they may think twice. In many cases the accountant is the

one who is actually committing the crime, so it would be wise to have a trustworthy person

overseeing the accountant’s day to day activities to ensure that any reckless behavior will not go

unnoticed. Also, a main accountant is not only a person in a position of power, but also in a

position of respect. “Employees watch what the boss does and are prone to imitate his or her

habits - good or bad. An employee who dips into petty cash, fudges on an expense account, uses

company funds for personal items, or sets other examples of loose business behavior will find

other employees rationalizing dishonest actions with the attitude "if it's good enough for the boss,

its good enough for me” ( Liraz, 2012). These ideas and attitudes must be eliminated so as not to

be carried on by other employees. Examples must be made and expectations must be met. The

key to minimize the possibility of embezzlement is a strong, solid core within a company that

stresses the importance of being honest with every action, while closely monitoring every aspect

of the business and paying close attention to detail.

Conclusion

In order to gain a complete understanding of embezzlement’s effect on a company and its

long term ability to succeed, it is necessary to explore all aspects of embezzlement and the

different forms it manifests itself as. Sometimes all the facts regarding embezzlement cases

never surface and so the full extent of its damages may never be known. In response to this,

companies should make a direct effort to prevent future embezzlements. If they cannot, unethical

employees will continue to exploit and steal from their companies.


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