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Business Fraud in the Workplace

Unfortunately, business fraud in the workplace is not all that uncommon. Employee theft and dishonesty affects all types of businesses and yes, even law firms. Often, the violating party is a well regarded employee who has been with the company or firm for many years. That trusted employee is often the company bookkeeper. Besides limiting check signing authority, there are many practical steps a business can take to prevent employee dishonesty. Most of the steps are obvious, but unfortunately, often are not followed. For example, bank statements should be reviewed each month, whether they are paper statements or online statements. All cancelled checks should be reviewed and validated. All credit card charges should be reviewed each month and validated.

In the event you, as the owner of the business, determine there may be employee dishonesty occurring with regard to either funds received, bills paid or credit charges, the company accountant should be contacted immediately. Ideally, a forensic accounting firm should be utilized without the suspected employee’s knowledge. In the event the investigation determines employee theft and/or fraud has occurred, the State’s Attorney for the county in which your business is located should be contacted. Most, if not all, counties have a fraud division within the department.

In addition to the steps referenced above, each business should maintain appropriate insurance coverage for employee theft. The proper coverage will provide some protection after the usual deductible is met. Contact your insurance agent for coverage recommendations. All of us have heard the horror stories of legitimate businesses being severely damaged as a result of a well thought of employee effectively stealing for their own personal use hundreds of thousands of dollars usually over a long period of time. The crafty employees often take smaller amounts in anticipation of the employer failing to thoroughly check the records. If the criminal complaint has merit, prosecutors, at least in Baltimore County, will aggressively pursue charges against the wrongdoing individual. In addition to possible incarceration, the Court may also enter a judgment of restitution in favor of the victim and against the wrongdoer for the amount stolen. Repayment plans may even be worked out during the proceedings. Sadly though, the money usually has long been spent.

If you have any questions about business fraud in the workplace, The Law Office of J. Neil Lanzi is happy to provide you with answers. Please call or email at 410-296-0686 or nlanzi@lanzilaw.com.

 

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