MISSING IN ACTION: BAD ECONOMY FUELS RISE IN EMPLOYEE THEFT

Missing in action: Bad economy fuels rise in employee theft

By Kevin Smith

It happens at virtually every business.

Sometimes it’s nothing more than a missing stapler or a box of paperclips – items many employers would assume have been misplaced.

But employee theft can ramp up quickly. And it can run far deeper as well – an extra hour at lunch, a stereo taken off the backroom shelf or an extra errand run in the company-owned vehicle.

Viewed individually, these “entitled” perks might not seem like much. But collectively, they add up to millions of lost dollars each year.

In the current down economy many companies can no longer afford to offer the kinds of incentives they used to provide to keep employees happy. And it’s taking a toll.

Thomas Martin, president of Martin Investigative Services in Newport Beach, can tell you all about it.

“Employees feel a sense of entitlement when paychecks are being cut, benefits reduced and tasks increased,” Martin said. “It all boils down to the fact that people in this country feel entitled to more than they are being given. Maybe they haven’t had a raise in two or three years, or they’re maybe not getting holidays off.”

That can quickly lead to disgruntled employees – employees who sometimes opt to create their own set of perks.

“People will say, `OK, I’m going to get my pound of flesh,”‘ Martin said. “They’ll just work six hours a day, they’ll punch the timecard for someone else … or they’ll even take money right out of the till.”

Martin knows of what he speaks. And he has the statistics to back it up.

Martin and his team of former federal agents are one of a select group in the United States tasked with ferreting out company thieves and saving businesses millions of dollars.

“We’re known for picking and choosing people from the FBI, the DEA and the IRS,” he said. “I get my pick of all the guys who want to retire or transfer. And it takes skill to be able to interview and interrogate someone. I taught this at the FBI academy.”

From March 1981 until September 2006, the percentage of workers who stole from U.S. companies staffed by 50 or more employees was relatively small.

“You’d have about 15 percent of employees stealing either time, money or products,” Martin said. “That was actually pretty consistent throughout the `80s, `90s and 2000s. But in the third quarter of 2006 it started to go up, and not by a little. It spiked up by another 10 to 15 percent. Today we’re looking at a theft rate of 75 percent.”

Think about that for a minute.

That means that three quarters of the employees who work at those companies are stealing something.

The statistics may have shot up, but employee theft has been around for a long time, experts say.

Chris Vigil, owner of Chris Vigil Real Estate in Whittier, says he saw it first-hand when he worked at an Albertsons supermarket during his college years.

“There were people who would steal cases of cigarettes when they were loading in things in the back of the store at night,” he said. “We only had about six or seven employees around when the store was closing. I just think a person’s DNA comes out when they’re that close to money.”

Albertsons didn’t have nearly as many cameras back then, Vigil said. But they did have one thing that likely curtailed some of the theft – an anonymous hotline.

That allowed employees to discreetly report on the misdeeds of their co-workers without having to confront them.

Another former Petco supervisor, who declined to be identified, spoke of a far more egregious incident that occurred at his Newport Beach store.

“One of my fellow supervisors at the store was arrested on suspicion of embezzling thousands of dollars from the company,” he said. “As supervisors, we had keys to the safe and the registers and were responsible for counting all of the money at the end of the night.”

The details were never explained, he said, but one day loss prevention and Newport Beach police officers showed up and led the thief out of the store.

“We never saw her again or heard anything more about it,” he said.

Louise Vance-Wasilchin, a former Covina Police Department civilian records clerk, was sentenced last month to two years and eight months in prison for embezzlement.

She admitted the theft amounted to $309,032.

Martin said the most common kind of internal theft is the theft of time – employees taking credit for more hours than they actually worked.

The biggest industries affected by this increasing “employee entitlement” mentality are the beverage, manufacturing and transportation industries, he said.

But big name companies aren’t the only ones feeling the effects. Any business where an employee can remove products or money is susceptible.

Martin said his agents typically hone in quickly on anomalies. And through employee interviews they can quickly pinpoint the source of the thefts. Most investigations, he said, take only a day or two.

“Our guys come in dressed in suits and looking like FBI agents,” he said. “In some cases, once we get in there and start looking people in the eye … they’ll crack.”

Martin has more than 40 years of professional experience as a corporate security consultant and as a private investigator. He has worked with Fortune 500 and large private companies on matters of fraud, electronic eavesdropping and security risk analysis.

Martin offers some common sense tips to help businesses and organizations avoid employee theft.

“First you need to have an awareness of what’s going on in your company,” he said. “If you have 100 employees and you’re just barely scraping by and the CEO can’t give you a good reason, you should probably see what’s going on.”

Martin also advises employers to conduct thorough background checks on workers.

“You should check to see if someone has been sued, and you should run a criminal check to look for felonies, misdemeanors and public filings,” he said. “You can look for judgments, tax liens, IRS problems … all of that.”