Desperate Times Are Breeding Ground for Insider Fraud
By Cina Wong, CDE
Published April 27, 2008
It’s after dark. The office has been closed for hours. A man
sits at the computer he usually operates between 8 a.m. and
5 p.m. The man can’t stop looking over his shoulder, nervously
surveying the office for threats. The office suddenly fills
with blinding lights and shouting voices. Police officers
overrun the room and order the man to get on the floor. Caught,
he complies. Handcuffs appear and an officer tells the employee
he is under arrest for forgery. Another officer begins reading
the employee his Miranda Rights.
If this sounds like a scene from a movie, think again. With
business fraud and forgery on the rise, businesses that do
not stay vigilant during the current downturn in the economy
could be losing money on two fronts.
One is obvious and occurs naturally: Consumer uncertainty
climbs, often causing even faithful clientele to moderate
The other and often overlooked loss of capital is more nefarious,
harder to detect, and may even go unnoticed. And it seems
to happen more often when the economy takes a nosedive. Rather
than getting another job to help make ends meet, or dialing
back their spending, a worker seeks creative ways to siphon
money from an employer.
The biggest mistake business owners and managers make is thinking
it will not happen to them. When you first meet a “fraudster,”
he or she doesn’t exactly say, “Just give me the chance, Boss,
and I’ll steal you blind.” To be fair, most “fraudsters” have
no intention of committing crimes when they are hired. These
particular types of “fraudsters” are born of desperation.
Often an unexpected circumstance changes his or her situation.
Maybe their mother needs a life-saving operation; or recent
divorce hits them hard. Out of desperation and fear, these
“fraudsters” quietly steal from company funds by taking checks
from the back of the checkbook. By the time the company discovers
the missing checks the person has vanished.
Recognizing on going fraud is difficult at best. However,
by knowing the three most common ways fraud and forgery occur
in the workplace, and by following five simple checks and
balances to keep it from happening in the first place, even
the boldest of dishonest employees with think twice before
attempting business fraud.
The three most common ways people dupe their companies are
stealing and forging company checks, submitting false invoices
that are paid and sent to a PO Box or spurious address and
altering financial books or bank deposit slips
To prevent internal robbery or forgery:
• Keep your business checks under lock and key.
Armed with a genuine signature, employees can steal on many
levels. From forging loan co-signers to signing for payment
of personal goods, the burden of proving forgery always falls
to the boss or supposed co-signer.
• Do not authorize one person to handle accounts receivables,
accounts payable and to sign company checks.
• Have all potential employees fill out employment applications
by hand. You’ll then have a sample of a suspect’s handwriting
for comparison purposes if a handwriting-related crime is
• If you use a rubber-stamped signature for your checks, keep
the rubber stamp in a locked location where only one to two
people have the key.
• Keep a copy of every document signed by the owner of the
According the FBI, more than 1,400,000 checks are forged every
day. Employee fraud now costs businesses $400 billion in annual
In the end, only you can determine whether your business is
successful or merely a statistic by keeping informed with updated
information, along with constant vigilance.
You can reach the writer at (757) 536-3454 or CinaWongFDE@aol.com.