DennisBeaverSeptember 3, 2016 • By Dennis Beaver

“I would never have believed it! She didn’t look like an embezzler!”

With those few words — often heard by police officers, private investigators and insurance adjusters — a Central California dentist who we will call “Roger” began to describe how his dental practice had lost “an enormous amount of money” from embezzlement by “Beth,” a “trusted, long-time employee.”

“From the day we opened our office, Beth was office manager, and our families attended the same church,” he explained, adding, “It is the rule and not the exception for health care professionals in rural areas to put in long hours, but the past few months, she was almost living at the office, explaining that she had so much work.”

“Recently, her parents both became very ill and she had to care for them when our taxes were due. We brought in an outside accountant, who discovered that she had been stealing cash and checks, for years!

“Trust is important in our profession. I don’t want to become paranoid, but could I have prevented this?” Roger asked.

For an answer, You and the Law turned to a friend of this column, Southern Florida-based Peter. J. Crosa. As both a private investigator and independent insurance claims adjuster, he is in a unique position to explain those factors leading someone to embezzle and steps employers should to reduce the chances of becoming a victim.

Crosa begins by answering these questions:

• What does an embezzler look like?
• When does it happen?
• What leads someone to embezzle?

“Embezzlers, just like child molesters, do not look like their mug shots we see on television. They appear to be nice, friendly people, like the boy or girl next door. They do not have a tattoo on their forehead that reads, ‘I am a bad person — stay away!’

“You must assume that everyone has the potential to commit a breach of trust. It is part of being human. It will be the person you are least likely to expect and could easily be your aunt, grandmother, or the daughter of your lifelong friend working in your company who has suddenly fallen upon hard times.

“The reality is that an embezzler could be anyone and everyone,” Crosa underscores, adding, “The typical embezzler did not come onto your staff with the intention of ripping you off. It happens when personal financial crisis meets opportunity.”

We asked Crosa if it is possible for an employer to foster a positive work environment while guarding against theft of money or property without becoming, as our reader stated, ‘paranoid.’

His answer took us way back to the Reagan presidency at a time when the world faced nuclear holocaust. Negotiating an arms treaty with Soviet Union President Gorbachev, with a smile, Reagan said that we must trust each other, “But verify,” which of course, meant inspections. His smile was matched with a nod and laugh from Gorbachev, as Reagan had just used an old Russian saying. It worked — the treaty was signed.
“Employers should operate in an environment of trust, working together as a team. At the same time, you cannot be blind for the potential areas where assets can be lost. Your entire staff must see that no one is beyond verification. Nobody gets a pass.”

As we learned from Crosa, theft prevention requires specific procedures in place which must be respected. Topping the list is an auditing process for every income and expenditure, requiring:

(1) Follow-up and verification of all cash or assets which comes into the business.

(2) No cash or assets goes out without a means of verification and audit.

(3) Components of the audit must be spread out among different individuals. For example, you cannot have the person who writes the checks also balance the bank statements.

Warning Signs for Employers – We Are All Susceptible

To Crosa, temptation is the result of “crisis meeting opportunity,” and he outlined a common warning sign employers must be alert to:

“Most can resist the temptation to steal, but desperation leads to becoming susceptible, so when an employee who has access to money asks for an advance on a paycheck, or to borrow money, you need to become a little paranoid!

“While not a hardened criminal, your trusted employee is vulnerable to ‘borrowing’ money from the kitty, intending to pay it back on Monday. When Monday comes around they may not be able to pay it back. Eventually, more is ‘borrowed’ and before you notice, $50,000 is missing.”

Concluding our interview, Crosa observes that:

“The potential for rationalizing dishonesty or extreme anti-social behavior is the darker part of the human condition.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.