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Her boss trusted her with the company bank accounts for nearly 20 years.

And for most of her career, she was an honest employee.Suddenly her life situation changed: She was divorced and met a new boyfriend. She wanted material things. Right now. So she stole from her employer by altering his bank deposits.

By the time she was caught, she had stolen hundreds of thousands of dollars. "I can't believe this happened," her boss said. "She was my most trusted employee."

Experts agree most Utah fraud and embezzlement crimes could be prevented if business owners and executives didn't trust so much.

W. Steve Albrecht, director of the School of Accountancy and Information Systems at Brigham Young University, said in a recent interview that fraud and embezzlement crimes are more likely to occur in Utah than elsewhere because of the trusting nature of most executives and the great financial demands on large families.

Three factors must come into play for fraud to occur: pressure; opportunity and a means of rationalizing the behavior.

The financial demands on some Utah families are great, particularly those that rely on a single income to meet the needs of several children.

"The financial demands are very high. There are large families and in many cases, a single-wage earner. So, I think the pressures are greater," Albrecht said.

Other pressures that drive people to steal from their employers include health or substance abuse problems, gambling debts, peer or family pressure or a desire to get even with the the boss.

Salt Lake police detective George Clegg, who has investigated financial crimes for 12 years, said he believes most fraud and embezzlement crimes stem from greed.

"Most of it's the need for material things. Usually it's not that they're starving or barely making ends meet. It's just that they want more," Clegg said.

Businesses that lack tight financial controls are a ripe environment for embezzlement and fraud. Opportunity is the second leg of the fraud triangle.

Said Mark Stevens, president of the Utah Association of Certified Public Accountants: "No one should have control of a transaction from start to finish."

But in many small companies, only one person handles the books and there are no checks and balances to warn an executive that something may be wrong with the company finances. In those instances, Stevens advises that employers should review their own books regularly.

The third component of the fraud triangle is rationalization.

By in large, people who commit fraud and embezzlement likely would never be involved in any other type of crime. "You're dealing with the average everyday person to extremely above average people. It's not the low end of society, it's people who are doing OK in their lives," Clegg said.

Yet, law-abiding citizens find themselves tempted by the lure of easy money.

"The people who embezzle money in Utah intend to pay the money back. They say `I'm taking it for a good purpose. I'm supporting a son or a daughter on a mission.' Most of them I've talked to don't think they're doing anything wrong. `I'm fulfilling the greater good,' " Albrecht said.

Others rationalize taking money or diverting funds because they do not believe they are paid enough. Others take the money as a temporary loan, fully intending to pay it back.

"A lot of people who get involved in this tell themselves `As soon as things improve, I'll pay it back.' But they never do," said Stevens.

Although some embezzlement schemes span a number of years, most people get caught. For some, it's a relief.

"I think in the back of their minds they all realize it's going to happen. In 95 percent of my cases they come in and confess. These people are not really criminals. They're very remorseful," Clegg said. "When they get caught, they're thankful. They're like addicts. They need someone to stop them."



How businesses can protect themselves from employee theft and fraud:

- Separate duties to ensure no one person has control of a transaction from start to finish: Keep recordkeeping responsibilities separate from actual assets. Rotate jobs occasionally. Use an accounting system that requires constant checks and balances.

"The best control is that the owner is involved in the process," said Mark Stevens, president of the Utah Association of Certified Public Accountants, and a CPA for the accounting firm of Deloitte and Touche.

- Assist employees in reducing or dealing with pressures: Offer financial counseling, offer substance abuse treatment, practice open-door policies to promote communication and create a more positive work environment.

"Prevention is where the big payoff is. Once you have a fraud, everyone is a big loser," said W. Steve Albrecht, director of the School of Accountancy and Information Systems at Brigham Young University.

- Reduce opportunities for committing fraud: Install fraud hotlines as a deterrent and to facilitate fraud reporting by employees; develop and enforce an aggressive prosecution and termination policy.

"If the employee does anything questionable, how it's handled can really send a message to employees. That sends a message. That's kind of a negative incentive, but it lets employees know management's view of dishonesty," Stevens said.

- Learn to recognize rationalization: Train managers and employees to listen for complaints about being underpaid, overworked or abused. Carefully screen new employees to hire individuals with high integrity.

"You can protect yourself very well at the front end if you do reference checks. Some companies hire companies that do nothing but background checks. That's a huge way to solve problems before they get started," Stevens said.



Fraud statistics

-Employee fraud is estimated to cost American businesses and organizations $200 billion per year, far outshadowing the $11 billion cost of violent crime.

-In banks, 95% of the losses are from employees, while onle 5% are caused by bank robbery or customer fraud.

-In retail establishments, employees cause 70% of the losses, while shoplifters and customers account for only 30% of the losses.

-One out of three new businesses that fail does so because of fraud, and more than one-third of the approximately 600 savings and loans that failed last year involved significant amounts of fraud.

$200 billion Fraud

$11 billion Violent crime