The newsLINK Group - Embezzlement and Employee Theft at Your Dealership

Editorial Library Category: Automobile Topics: Dealership Finance, HR Title: Embezzlement and Employee Theft at Your Dealership Author: newsLINK Staff Synopsis: Embezzlement is a bigger problem for U.S. businesses than you might realize, and it can go on at a dealership, undetected, for a long time. Most companies that are victimized are small or medium sized, and they are usually privately held. Car dealerships are particularly vulnerable because the inventory is expensive, and it tends to move fast. Editorial: Embezzlement and Employee Theft at Your Dealership 4064 South Highland Drive, Millcreek, Utah 84124 │ thenewslinkgroup.com │ (v) 801.676.9722 │ (tf) 855.747.4003 │ (f) 801.742.5803 Editorial Library | © The newsLINK Group LLC 1 The Scope of the Problem Embezzlement is a bigger problem for U.S. businesses than you might realize, and it can go on at a dealership, undetected, for a long time. Most companies that are victimized are small or medium sized, and they are usually privately held. Car dealerships are particularly vulnerable because the inventory is expensive, and it tends to move fast. If an organization has financial abuse, fraud, and waste, then embezzlement —a crime that is usually committed because of plain greed and the desire to live large — is usually going on as well. According to Christopher T. Marquet, the author of a 2011 report on embezzlement, 2010 was a bad year because there was a 17 percent increase in embezzlement crime when compared to the year before. Marquet International, Ltd. is a business located in Boston, Massachusetts that was founded at the beginning of 2006 and specializes in investigations. The company publishes an annual embezzlement report that focuses on new cases where approximately $100,000 or more has been embezzled. The results of the study were published in January 2011 and reported o n www.cashflowaccounting.com . The study analyzed 485 specific cases and offered the following conclusions: The average loss was almost $1 million. Most of the embezzlers took the money by either forging checks or writing unauthorized checks. People whose jobs included finance and accounting responsibilities were the most likely to embezzle funds; they accounted for two-thirds of the cases. Women were more likely to embezzle than men. Again, they were the instigator in two-thirds of the cases. Most embezzlement schemes went on for 4.5 years before anyone noticed that the money was gone, and shouldn’t have been. Almost 20 percent of the businesses that were victimized were financial ones. Prevention Is the Best Remedy Ruth S. Crane, President of Auditors Inc., has a rule about embezzlement called the 10-10-80 rule: ten percent of the people who work for you will never steal; ten percent will always steal; and 80 percent will only steal under specific circumstances. When you hire someone, have civil and criminal background checks done, and consider doing credit checks, as well, since people who are dealing with financial problems are more likely to commit fraud than someone on a firm financial footing. In addition, make sure prospective employees know you are going to monitor bank and accounting records, then follow through. If an employee is going to have anything to do with money, then have that employee bonded. Why is prevention so important? Look at the legal consequences for embezzlement. Marquet International was able to determine the prison sentences for 166 of the cases they analyzed. Some people had no prison sentence at all. The worst sentence was 30 years, but the average sentence was only 46.4 months. The length of the sentence seemed to have a relationship to the amount of money that had been stolen until the amount reaches about a million. Once the money has been spent, the source has dried up, and a sentence has been served, it becomes extremely hard for the person who stole from you to repay the embezzled money. You may get some of the money back, but the chances are good that you won’t get it all, or even all at once. You aren’t going to be able to stop people from embezzling, but you can at least reduce the likelihood of it happening. The best idea is to minimize opportunity. Embezzlement is an opportunistic crime. People are less likely to steal if they think they’ll be caught. Eliminate the opportunity, and you have probably eliminated the crime.

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