Employee theft is an epidemic which threatens businesses of all sizes. It affects for profit companies as well as charities. It affects government entities as well as private companies. Annual losses from employee theft are hard to accurately calculate but are estimated to be tens of billions of dollars a year. The largest embezzlement cases reported in the last couple of years include a $43,000,000 theft from a union and a $65,000,000 theft from an electronics retailer. Recent cases in Arizona run the gamut from a woman in Payson who stole $116,000 from a veterinary clinic where she was employed as an office manager to a retired Army colonel who embezzled $2,700,000 from the Arizona National Guard.
Usually, the thief or embezzler is someone who is in a management position with his or her employer who has access to company bank accounts or the authority to direct payments from these accounts. Surprisingly, the motivation is usually that of “wants” not “needs.” The typical embezzler is motivated to sustain or attain a lifestyle, not necessarily to put food on the table.
A recent case out of Texas is typical. An attorney who was in-house counsel for a company created a fake law firm to which $9,000,000 was paid by the company in legal fees over several years. The in-house attorney created a law firm corporation with the Texas Secretary of State’s office. It listed a business address which was actually a retail store where post office mail boxes can be rented. The stolen money was spent on art, comic books and other memorabilia.
The lawyers of Titus Brueckner & Levine PLC have represented businesses in dozens of embezzlement cases over the last few years with thefts ranging from hundreds of thousands of dollars to several millions of dollars. No company can be completely safe from employee embezzlement, but there are some procedures which can help a company prevent or detect an embezzler. Among the signals which should put a business on alert are apparent gambling habits, possible drug use or a lifestyle which appears to exceed the employee’s salary. We also recommend regular reviews of internal controls and procuring appropriate indemnity insurance.
The attorneys of Titus Brueckner & Levine PLC are experienced in assisting businesses to prevent or detect employee theft and to recover losses from these thefts. If you have any questions on this topic, please contact Jon A. Titus of Titus Brueckner & Levine PLC at 480‑483-9600 or jtitus@tbl-law.com.
