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Old 20th February 2008, 03:50 PM   #1
sannwood
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Default Embezzlement Rampant In Small Businesses

Recently, on the Small Business Trends Radio Show we had a very interesting guest and I thought the show was very insightful as it was on the topic of embezzlement.

What surprised me about this interview was the alarming rate at which it is taking place within small businesses, which are 10x's more likely to become victims of this white-collar crime. Additionally, statistics state that approximately 1 out of every 3 businesses will be victimized.

And the guest has an interesting backstory with regards to his expertise in this area as he was once convicted of embezzling over $1 million dollars himself over a 4 year period. He has since reformed and is now assisting businesses in prevention of this crime.

Quote:
Who is the embezzler? Surprisingly, itís your ideal employee. . . .

The average embezzlement scheme usually nets the embezzler about $150,000 and, typically, many feel that theyíll never get caught. . . .
I have my own experiences with this topic as I was once previously employed by a family owned small business and it was found that the controller, a childhood friend of the owner, was embezzling funds and subsequently terminated.

Think it canít happen to you? Think again and educate yourself on what to look for by visiting: Confessions of an Embezzler - Is Your Business At Risk?

You can read more on the topic and also listen to the full audio interview by downloading to an iPod for later listening or clicking the player for immediate listening over the computer.

I'd also be interested to hear of anyone else's experiences with this topic. Has it happened to your business? Has it happened anywhere you were employed? Have you been tempted to do this or have done this yourself?

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Old 20th February 2008, 07:38 PM   #2
EJMalyn
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The Ideal Employee did not surprise me. They seem to gain your trust then do you in. Great Post!

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Old 20th February 2008, 08:00 PM   #3
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It is very common, I would say the 1-3 ratio is pretty accurate. My last 2 employers were embezzled from, one from two different employees, one of which had been doing it for 4 years before the found her out.

I work with a lot of small businesses and I hear stories all the time of how they have been embezzled from. That's why it is so important for the owners to keep a tight watch on the bank accounts and credit cards, it is usually the employee that they trusted the most that is the one doing it.

The bad thing is that a lot of the employers just fire the person, without ever taking legal action because they either don't think they will recoup the monies lost and/or they don't want to lose more money on legal fees trying to go after them. Therefore, the employee goes on to swindle another employer because there is nothing on their record to prevent them from getting another similar type job.


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Old 21st February 2008, 03:18 PM   #4
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I wouldn't be surprised if it was higher than 1/3. I believe under reporting can be hard to overcome when it comes to accuracy.

I've crossed paths with the ideal type as well. Many years ago I was providing services to a family owned small business. They had been around for a long time and had grown a lot. The owner was a good guy who was busy as can be. As I began providing services to them I was mostly working with his personal assistant. She was an older lady who handled a lot of his stuff day to day. We worked together for a long period of time on a regular basis. A couple years later I read in the paper she was arrested for taking 250k from the owners accounts.

I think trust is a main component, often these scenarios are masked because of the legitimate work the person is doing.

I never heard the outcome of her prosecution, and I would be interested in learning of the estimated 1/3 businesses who experience this what percentage are prosecuted and of those what percentage receive punishment. I'm guessing drastically lower percentages each step.

A big issue that usually goes unnoticed.

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Old 21st February 2008, 04:02 PM   #5
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I thought this interview was really informative with views on how to spot and avoid embezzlment. Every business owner should take a listen. I did find it interesting that he was so candid with his own experience of embezzling from his employer. Very interesting how it can become a slippery slope. A little here, a little there and then you get addicted.

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