Preventing Embezzlement: Tips and Strategies for Protecting Your Organization’s Assets
What is Embezzlement?
Embezzlement is the act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have been entrusted. This type of white-collar crime is often committed by employees or fiduciaries who have access to an organization’s financial resources. Embezzlement can be difficult to detect and prosecute, and it can have serious consequences for the individuals and organizations involved.
How to detect embezzlement for your business
Monitor bank account and credit card statements for unauthorized transactions or expenses.
Conduct regular audits of financial records and transactions.
Look for unusual patterns or spikes in expenses or revenues.
Be aware of employees who exhibit excessive control over financial information or who are resistant to scrutiny of their financial activities.
Implement internal controls and policies to prevent and detect embezzlement.
Consider using specialized software to help detect fraudulent activities.
Investigate any reports of suspicious financial activity.
Communicate openly with employees about the consequences of embezzlement and the importance of ethical financial practices.
Real life examples of embezzlement?
One high-profile example of embezzlement occurred at the clothing company Ralph Lauren.
Alexandra Bocon, 32, pleaded guilty to third-degree larceny in Manhattan Supreme Court in return for jail time and community service. She set up two fake businesses to create fraudulent Square submissions and stole their money. The person who used to hold the job at Ralph Lauren has been accused of making unauthorized payments on their corporate card and then pocketing the money. They did this for $25,000 which was discovered by a bean counter after they left.
Another well-known case of embezzlement occurred at the American energy company Enron.
In 2001, the company’s former chief financial officer, Andrew Fastow, was charged with embezzling over $30 million from the company. Fastow had used a series of complex financial transactions and shell companies to hide the embezzled funds. He eventually pleaded guilty and was sentenced to six years in prison.
Embezzlement can also occur on a smaller scale. For example, in 2011, a bookkeeper in Michigan was sentenced to four years in prison for embezzling nearly $200,000 from her employer, a small construction company. She had used the company’s credit cards and checks for personal expenses, such as groceries and clothing, and had also written herself unauthorized paychecks.
The consequences of embezzlement can be severe. In addition to legal penalties, such as fines and imprisonment, individuals who are convicted of embezzlement may also face damage to their reputations and careers. Organizations that are victims of embezzlement can suffer financial losses and damage to their reputations as well.
How to prevent embezzlement
To prevent embezzlement, organizations can implement a number of measures, such as conducting background checks on employees, implementing internal controls and audits, and providing regular training on ethics and financial responsibility. Additionally, organizations can consider using specialized software to help detect fraudulent activities, such as unusual patterns of financial transactions.
In conclusion, embezzlement is a serious crime that can have far-reaching consequences for individuals and organizations. By implementing preventive measures and staying vigilant, organizations can help protect themselves and their assets from this type of financial fraud.
