Embezzlement: Firsthand

Editor's note: The names in this story are fictitious. The story is not. And unfortunately it is an all-too-common occurrence in business in the High Country. The story? A trusted employee steals thousands of dollars. And typically the reason is simple - greed and opportunity.



"I should have seen it coming," he says, rubbing his hands together as though he were cold. "But I didn't."

Let's call him Tom.

Tom heads a successful professional company with multiple offices in Summit County. In the past two years he's improved not just the bottom line, but the company's performance.

He says the person who stole from the company was a key to their growth and success. He acknowledges that in many, many ways she was very good at her job.

"That's why I trusted her ... she was privy to all of the executive information ... she was a confidante in a $10 million-a-year business."

Let's call her Mary.

Tom is a confident man. Typically in conversation, he is boisterous. When he talks his eyes dance and his hands stab the air when making a point.

But as he relates how Mary stole more than $25,000 from the company he seems to shrink. It's not an easy conversation for him. He sits quietly in the chair, his hands in his lap.

"I thought I was making all the right business moves and now I feel like I've got this big black eye," he says.

When the theft was discovered, he met with the company's board and offered his resignation.

"It was on my watch. It was my responsibility," he says. Board members quickly dispelled the notion that he would take the fall for the theft. The discussion in the board room moved quickly to what to do. Evidence of the theft was clear. There was a paper trail that detailed how the money was stolen as well as on what the money had been spent.

The company's board chose not to bring criminal charges.

"Should she go to jail? That's a good question. The board decided the company would be best served if she went back to work somewhere and paid us back," explains Tom.

Whether to press charges isn't always clear cut.

Sometimes insurance companies will insist on a criminal investigation, but not always. Law enforcement will not investigate unless a company asks that they do so.

When Mary was confronted and shown the abundance of the evidence, she acknowledged the theft. Tom described her attitude as "cold and dispassionate and then angry."

"She lashed out," he says. She threatened to sue the company. She said the fault wasn't hers but bad management. "She tried to fabricate things about the company trying to mitigate what was happening.

"It finally got to the point of saying, 'Look, if you don't cooperate we have no choice but to call the police.' "

Mary had access to virtually all of the company's financial accounts. What she did was simple. She used one account to cover expenditures in another. She spread the expenses across the company's accounts so no one area looked awry. Each month as the Tom reviewed expenses there was nothing that signaled something was amiss.

"It was total serendipity that we caught her," he says.

An expense on a credit card bill was questioned. The person who normally used that card found a travel expense that he could not recall. When the company's controller inquired, other expenses were discovered and the scam came to an end.

Also discovered was that records were, as Tom puts it, "either conveniently misplaced or destroyed."

"She was by far my most trusted employee," says Tom. "The indicators were there had I looked but we didn't have a reason, or thought we didn't have a reason, to look."

In retrospect, says, the signs were obvious.

Mary had personal money problems - including filing for personal bankruptcy in the past year. Nonetheless, her lifestyle had not changed. With a husband recently changing jobs and an income of less than $45,000 a year, Mary still went on vacations to faraway places and purchased what Tom calls luxury items.

"The boat should have tipped us off. Their lifestyle was well beyond their means," Tom says. "Perhaps I could forgive some of what was done if she was stealing to pay for food or medication or something like that, but she wasn't. It wasn't necessities - it was luxury items, vacations, clothes ...."

Because records are missing, Tom says it's impossible to know exactly how long Mary's been stealing from the company. His guess is that it slowly escalated over time. Her employment dates back several years.

In part Tom blames himself. He describes how he dealt with her before the theft was discovered as more "an indulgent parent than a good boss."

Mary had Tom's trust so he gave her tremendous leeway. Of course, he never expected that trust to be abused.

The company has instituted changes in its office procedure and added new control measures in hopes such a theft can never reoccur. There is now a strict division between those who authorize payments and those who write checks. Payments now require multiple authorizations. The mail is no longer opened by anyone connected with accounts payable.

"We think this will make a difference," Tom says.

As for Mary, she is looking for a new job. To avoid prosecution, she has signed a note and agreed to make restitution.

"If she does not comply, then we will pursue it through the courts," Tom says.

Does he believe she will make good on the promise to repay?

"I hope she does," he says.

Doe he fear that she'll steal again from another employer?

"I think the likelihood is very small," he says. "Am I certain it won't happen again? This has taught me nothing is certain."



Jim Morgan can be reached at (970) 668-3998, ext. 13100, or at jmorgan@summitdaily.com.