Retailers see an increase in Corporate Fraud

October 8, 2010 by Leave a Comment

Most experts agree no company is immune to corporate fraud. Although all companies would love to believe they have the most honest employees, the reality of it is, they don’t.

Corporate Fraud is damaging to both the associates and the reputation of the company. Fraudsters cause millions of dollars in loss every year, and the estimates continue to rise.

I remember an employee working out of the corporate office of a beauty products company I worked for. She got herself into the mix of fraud. Befriending a vendor, the employee had control of a select line of merchandise coming into the company. After building a relationship with the vendor, she decided to push her luck. The vendor and employee partnered up and started their scheme. As the vendor pushed the merchandise, the employee inflated the purchase orders, buying more than what the company expected. The vendor delivered only what the company expected and the employee kept the additional items. These additional items were kept inside of a storage unit, rented by both the employee and vendor. Over the period of about 6 months, the two had enough merchandise to start their business. Initially, they started with a booth at a local swap meet. Realizing the possibilities of the internet, their business quickly left the swap meet scene and their new beauty endeavor started on Ebay.

These two were eventually stopped, but caused a significant loss to the company. The two initiated their scheme prior to the beauty company starting a loss prevention program. Hired as a loss prevention Investigator, I immediately saw huge issues at the store level that led me to investigate the corporate office. Shrink numbers as high as 25% told me the story of theft and inaccurate book keeping. The investigation led me to the buyers, and with the help of an additional loss prevention investigator we were able to uncover the scheme.

Corporate Fraud is damaging, no doubt about it. Having a program in place to combat the inevitable and remain profitable is the solution.

For more information contact us about corporate fraud or call 1.770.426.0547

 

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Corporate Fraud Investigation – Integrity at the highest levels

October 1, 2010 by Leave a Comment

Executive leadership is not exempt from Corporate Fraud Investigation. The Sarbanes-Oxley Act of 2002 details the audit and management procedures of the corporate environment and is a reference used in Corporate Fraud Investigation.

Corporate Fraud can completely decimate a company. One need only look at the early 2000’s and the likes of Enron, WorldCom, MCI and others. These companies dissolved as the result of Corporate Fraud and the Sarbanes-Oxley Act was created.

Corporate Fraud Investigation looks at all aspect of fraud, not just at the executive level, but at all levels. A story that floats around most loss prevention, and investigation firms and organizations is of a lone accounts payable employee that took advantage of a payment opportunity using her husband and his construction business.

This accounts payable employee working out of the corporate office was directed to cut a check for payment of construction services performed at one of the retail locations. She created a check for about $14,000 and mailed off the check to the construction company. Quickly, she saw an opportunity to make some fast cash and decided to send a second check in the amount of $14,000 to the same construction company. She then calls this construction company and tells them that her office “accidentally” sent a second check. She asked the construction company to send the second check back to her attention. Upon receipt of the check, the accounts payable employee had her husband endorse the check and deposit it into his business account. Later they planned on transferring the money to their personal account.

Had it not been for the thorough investigation, this accounts payable employee would have been $14,000 richer. Instead, after a forensic accounting analysis, the employee faced prison time.

Corporate Fraud is a covert business. It can be controlled with a proper oversight committee and a checks and balance system involving Corporate Fraud Investigation.

For more information visit us at corporate fraud investigation or call 1.770.426.0547

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Consider a Corporate Fraud Investigator for your white collar crime dilemmas

October 1, 2010 by Leave a Comment

As a Corporate Fraud Investigator, I’ve spent countless hours looking at journal entries, profit and loss statements, balance sheets, ledgers, investment scenarios and countless other corporate level sales, profit and investment tracking practices. And forensic accounting, a major tool in the Corporate Fraud Investigator toolbox, is a useful asset to have. Understanding how and why a business accounts for their practices is the key to performing a solid fraud investigation.

As an example, let’s say inventory time is coming around. The public company you work for has about 7 stores. Pretty moderate sales volume, your company is growing. Now, as the inventory numbers start coming in, your corporate inventory guy starts to worry about the shrink numbers in one of the stores. He directs the in-store manager to report no more than $30k in losses on a sales volume of $1million. In reality, the store lost $50k in inventory. The manager is told the other losses will be poured into some other (bogus) account. The manager, following direction of the corporate office shows $30k in inventory loss and the corporate office books him for $30k. The other $20k gets put into a gross margin fund at the store level or is dismissed. Either way, bogus!

Now the outside investors see these shrink numbers and think, WOW, great news.

As a Corporate Fraud Investigator, you hear word from the loss prevention agent at a particular location about the inventory process. You start your investigation and the unraveling begins.

A good Corporate Fraud Investigator can be the best friend of the organization. Keeping a watch on fraud, waste and abuse and knowing when to react will ensure your business stays a business for many years to come.

For more information visit us at corporate fraud investigator or call us at 1.770.426.0547

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Employee Fraud – A sample of Loss Prevention in Atlanta

September 28, 2010 by Leave a Comment

Let’s talk a little about corporate fraud , a sometimes underestimated and misunderstood factor of internal theft.

Employee fraud is a very much relevant dishonest trend amongst all levels of employees. From corporate fraud , white collar crime to the store associates ringing on the registers for 8 hours a shift. All subject to it, some fall into it. Now corporate fraud and white collar crime are a true threat, the instances are not as common as the young full time employee ringing on the register. They are not faced with the same daily temptations. Both are equally destructive, yet one stands out as the true indicator of employee fraud.

As an example, we had a cashier. He was a young, part-time man…about 19 years old. He discovered a unique feature of our cash register systems. The system allowed him to use multiple coupons for items he wanted to purchase. On his lunch break, he took a handful of the store’s ads from the front display and went to the Break room. Over the next 45 minutes, he cut out various and multiple coupons of items he thought he could sell at his uncles’ shop in the downtown area.

Using his employee discount along with several coupons, the employee would ring the items for just about free, and at times would get some cash back. He scanned multiple coupons, multiple times. He had discovered competitors coupons with our company’s endorsement and in-house coupons (those created by our corporate office) were not flagged for multiple use in our stores register system. So an electronic toothbrush for $50 retail was sold to him using 5 $10 off coupons. What a deal.

After a loss prevention investigation, I was able to discover the trend of the employee fraud and identified several fraudulent transactions that later caused problems for him and his uncles’ side business.

The retailer subsequently made changes to their register system and advertisements to impose disclaimers on usage.

Employee fraud may not be the easiest to identify, but it is a regular occurrence amongst retailers.

For information on employee fraud or white collar crime in Atlanta please contact us at employee fraud or call 1.770.426.0547

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Are You Paying For Illegal Drugs? Corporate Fraud Investigation In Atlanta

September 26, 2010 by Leave a Comment

In the course of my career as a corporate fraud investigator I have found that when conducting a employee theft investigation approximately 30 % have involved illegal drugs in some form or fashion. The person committing employee theft used the proceeds for the purchase of illegal drugs.

In some cases when an employee has a drug dependence they do not want their spouse, parents or friends to know. They need money because their paycheck goes for the normal things we all pay: housing, car note, food, gas… But a drug habit has to be fed and where is the easiest place to get money? They might get shot robbing a bank, burglarizing a home, or robbing a person on the street. The easiest place in most cases is their employer. You have cash and merchandise on hand and the employee probably has access to all of it.

When we conduct a corporate fraud investigation one of the first things I do is look at is the personnel files and talk to the supervisors. I ask about the employees in question. Do they live with in their means, how is their work record and is there any activity that would suggest illegal drug use?

Spotting a drug user can be a fairly simple matter. Look for physical signs such as radical mood swings, comprehension problem, no call no show for work issues and frequent times that the employee disappears to name a few.

Why should you care if a person is under the influence of illegal drugs at work? Besides the obvious impact to productivity and payroll you should consider that employees like this tend to attract other like themselves. In more than one corporate fraud investigation I have found that several other employees began working at the same company, attracted by drug user #1. Corporate fraud and your assets then become the cash cow for several drug habits.

Generally a corporate fraud investigator does not really care why employee theft is occurring just who and solving it. However, you should learn from this and put a prevention program in place. Are you conducting pre-employment drug screens? Do you have policy in place that allows you to conduct unannounced drug screens?

Corporate fraud has destroyed more businesses than we could probably count. Do not let your business become a victim because an employee theft situation happened as a result of something clearly preventable.  Employee theft and corporate fraud will not go away on its own. YOU must be proactive!

For more information on corporate fraud , corporate fraud investigation and employee theft in Atlanta contact us about corporate fraud investigator or call 1.770.426.0547

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Employee Theft In Atlanta It Cant Happen To Me!?!

September 24, 2010 by Leave a Comment

I conducted an employee theft investigation here in the Atlanta area recently where our client was hit by a long term Assistant Manager (AM) who stole approximately $48,000 in cash. The AM did this by manipulating the clients accounting systems and POS.

Employee theft which is also referred to as internal theft or white collar crime impacted this client very hard. This person was a trusted individual that had been given quite a bit of authority. In fact the client now realizes that the AM was given too much unchecked authority.

It turns out that the AM has a gambling problem. The owners of the company suspected this. What is concerning is that this did not raise a red flag. When we guide the client through a review of the employee theft investigation once we are done and the employee is on his way to jail the response is almost always the same, “why didn’t I see this? It is so clear now”. The reasons they didn’t see it are many:

They include a desire that we all have to see the best in people.

We do not want to think that a person we hired and like could betray us.

We can get blinders on and do not pay attention because we are “busy”.

We also use personal trust instead of business trust (this person is considered a friend).

Employee theft is not an important part of the business decision-making process.

It boils down to this. If you do not have a loss prevention mindset and consider employee theft something that can’t happen to you then you will experience employee theft or internal theft first hand. Wake up and see what is going on around you. This is not personal it is a business. There are a segment of employees (1 in 10) that WILL commit employee theft in your business.

So what are you doing about it? Do you have a business mind set in loss prevention policy and procedure? Are you making hiring decisions with loss prevention as part of the process? Do you have a loss prevention audit in place (loss prevention audits are designed to expose employee fraud , internal theft , corporate fraud and white collar crime )?

You must have check and balance in your business operations otherwise you will be seeing employee theft up front and personal. If you have blinders on or think it cant happen to me, chances are it is happening to you now.

For more information about employee fraud , internal theft , white collar crime or employee theft investigation in Atlanta contact us about employee fraud or call 1.770.426.0547

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New Tools In Employee Theft Investigation – Atlanta

September 20, 2010 by Leave a Comment

Conducting an employee theft investigation is a complicated undertaking best left to professionals. However, in the past several years a new CCTV tool has not only become available but the cost is now very reasonable. This tool is the link between a retailers CCTV system and their POS.

Employee theft at the POS was always time intensive. You had to match up the detail tape to the CCTV recording of the cashier at the POS. Time stamps on both systems never matched up and even when they did it was very difficult to keep going back and forth between the two.

Now imagine this, you are conducting an employee theft investigation of a cashier. But now the POS terminal data show up on the same screen with the video of the cashier and customer.

Now we see in perfectly synchronized clarity both together. As the cashier is ringing up a pack of gum but actually bagging up DVD’s we see it as clear as day. That type of employee theft is as old as theft itself. But now there is no question at all what happened.

The cool thing about this new technology is that many new DVR’s have this great corporate fraud investigation tool built in. A simple connection is made from the POS terminal to the DVR, usually a CAT 5 cable. There is normally a little programming at the DVR as there are so many different POS systems out there that it simply needs a little adjustment.

Employee theft at the POS is now exposed quickly and easily. The best part is that the system is running 24/7. So when you catch onto an employee theft scheme and begin your investigation it is easy to go back and do research. This is another good argument for adequate drive storage on your DVR.

For more information contact us about employee theft investigation in Atlanta or call 1.770.426.0547

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Corporate Fraud…The Worker’s Compensation Nightmare In Atlanta

September 13, 2010 by Leave a Comment

How can people skim money from an Atlanta area corporation? Through corporate fraud involving worker’s compensation claims.  There are three fraud areas that surround worker’s compensation; employee fraud, employer fraud and healthcare provider fraud.  Let’s take a look at each.

Employee fraud usually occurs when an individual working for a company intentionally misrepresents an injury or illness and receives worker’s compensation benefits to which they are not otherwise entitled.  For instance they may claim they have an injury but it either did not occur at the workplace or it never occurred at all.

Employer fraud occurs most often when a business misrepresents information about its work force.  For instance they may under report the number of employees they have in order to receive a lower premium for their workers’ compensation coverage.  Other types of corporate fraud involving the employer can include misrepresenting company ownership or misrepresenting past loss experience.

Healthcare provider fraud is unique in that the provider knowingly and intentionally submits a misrepresentation about medical treatment an employee received in a bill or invoice presented for payment. Corporate fraud of this type also includes billing for exams on patients that never occurred, billing for follow-up exams but listing them as first time exams, or hiding unnecessary services with the necessary ones.

These fraudulent activities cause small businesses to pay a premium for worker’s compensation coverage.  Do you suspect corporate fraud in your business?  Contact us at corporate fraud or call 1.770.426.0547.

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Corporate Fraud And The Relationship To Trust

September 7, 2010 by Leave a Comment

In my over 30 years of corporate fraud investigation I have come to a sad but simple reality. Management uses the wrong kind of trust when dealing with employees, assets, cash and the rest. I have finished the investigation, the employee has confessed and we are filing criminal charges. At that point the manager or owner says something like “I trusted that person”.

They feel guilty, are angry and question their own skills. It is not their skills that they should be questioning. In this world there are two kinds of trust: personal trust and business trust.

Personal trust is the kind you have with your best buddy. They are always there for you and you for them. You would trust them with your house, car, spouse and dog. You know that no mater what they have your best interests in mind.

Business trust is defined in three words: Trust But Verify. That’s it! You do not have the luxury of doing anything else.

Most reasons that we end up doing a corporate fraud investigation is that management uses personal trust in a business environment. This is business not personal and if your management style is to be “friends” with your employees then you should probably change careers.

You are responsible for an incredible amount of assets and liability. In most cases you’re not the owner of the company (but this applies to owners as well). As a professional you realize that you must protect those assets to keep the company profitable, which insures that, your employees have a job.

To do this you must trust but verify. I am not advocating that you are always watching over people’s shoulders. In fact a healthy work environment gives employees the ability to grow and do things in their own style.

That doesn’t mean that we just walk away and let them run wild. People like a structured environment. So what do you do? Here is an example; you receive a shipment. The person who is responsible for checking it in is almost finished. Pull part of the paperwork and audit 10% of it. When they say to you “I just did that” you reply, “ It looks like you did a great job to, it is accurate, thank you and good work”.

As a professional you cannot afford to use personal trust in a business environment unless a frequent corporate fraud investigation is your thing.

For more information: corporate fraud investigation or call 1.770.426.0547

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Atlanta Corporate Fraud Investigators Get Office Manager To Confess To $55,000 In Employee Theft

September 3, 2010 by Leave a Comment

Atlanta based Loss Prevention Systems’  corporate fraud investigator gets confession from Office Manager stating she stole over $55,000 by issuing checks to phony vendors.

The Accounting Department of an Atlanta area company noticed an unusual increase in supply expenses from one of its branch locations. Upon reviewing the payables, we were contacted to investigate the cause of the sudden increase.

Our corporate fraud investigator found a total of 57 company checks made out to two fictitious vendors and deposited to a single account. The checks had been produced by a former Office Manager of the company.

The former manager was located and contacted, and agreed to an interview with our investigator. In the subsequent interview, the former manager admitted to the theft of over $55,000.00 over a period of five months.

She would make out the checks to her own bogus company, then change the payee in the accounting system to a legitimate vendor, making it appear that a true invoice had been paid.

The former employee signed a statement admitting guilt and agreeing to pay the money back.

With this information and the checks as evidence, he employer took a warrant for the arrest of the former manager, charging her with Grand Larceny.

Loss Prevention Systems is an Atlanta area based company offering a very unique  corporate fraud investigation service to businesses, often partnering with CPA’s CFE’s and attorneys.  Our staff are licensed, professionally trained and certified investigators and interrogators who produce written confessions and iron clad cases for criminal and civil prosecution if desired with a 100% conviction rate.

If you suspect you are a victim of corporate fraud, employee theft ( white collar crime, internal theft) or you are a professional working a corporate fraud investigation and would like help getting to the truth, contact Loss Prevention Systems, Inc. in Atlanta here.

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