TIPS ON CLEANING UP EMPLOYEE THEFT TO INCREASE COMPANY REVENUES

“In today’s economy people think they are ‘entitled to take’ since their salaries or benefits have been cut. Most companies are victims of every day fraud, theft, or embezzlement. This is the reality today, coming from our investigators who are street smart and in corporations every day. The truth doesn’t lie,” said private investigator and former federal agent Thomas G. Martin, the firm’s founder. “Common scams include employees stealing time, products or money by way of phantom employees, fraudulent workers’ compensation claims, and spying via Internet-bought audio bugs or video equipment.” Martin adds that most of the common scams can be easily fixed by hiring the right private investigative firm and once cleaned up, employee theft is preventable.

According to the 2012 Report to the Nations from the Association of Certified Fraud Examiners (ACFE) the median loss caused by the occupational fraud cases was $140,000, and more than one-fifth of the cases caused losses of at least $1 million, and lasted a median of 18 months before being detected. The U.S. Chamber of Commerce reports approximately 75 percent of all employees steal from work in some way, half of them steal repeatedly, and one of every three business failures is the direct result of employee theft. The U.S. Department of Commerce estimates that employee dishonesty costs American business in excess of $50 billion annually. From 1969 to the third quarter of 2006, the theft rate in corporate America was at about 16 percent of employees stealing. By 2012 the rate has skyrocketed to 75 percent of people stealing. The percent of all business bankruptcies caused by employee theft is at 33 percent. Demographically, 59.1 percent who steal are men, and 40.9 percent are women.

Challenged by economic times today businesses are less able to maintain business as usual when they sustain losses, therefore company investigations are becoming a necessity. Common scams include employees stealing time, products or money by way of phantom employees, fraudulent workers’ compensation claims, and spying via Internet-bought audio bugs or video equipment. The question becomes how companies can mitigate these losses today. Martin says that most of these issues can be easily fixed if you hire the right private investigative team. In addition, before a company hires key personnel, he recommends doing a simple background check so a company does not end up hiring someone who has been convicted of a crime.

Other fixes involve making sure that there are proper security procedures, systems and personnel in place. This includes reviewing shipping and receiving policies and procedures, and listening to professionals such as corporate legal counsel and private investigators. Martin also recommends against hiring an undercover employee, calling this a waste of time and money. He believes a better approach involves inviting professional investigators to interview employees and ask the right questions.

“We had one corporate theft case revealing that all 45 employees were stealing. Most of these problems can be avoided or circumvented altogether but typically management is unaware that these are actually happening within their organization. The truth is, once you get one rat, they all start to jump ship,” said Martin.

Economic factors aside, the Federal Bureau of Investigation (FBI) sites the primary reasons for workplace theft are financial need, dissatisfaction with a coworkers or a job, allegiance to another company, the thrill of potentially being caught, ego, desire to win approval, addictions, family problems and peer pressure and revenge.

Martin recommends that companies conduct an objective security evaluation overseen by an independent private investigative team to review the overall structure of a company’s security systems and safeguard any assets. Once this takes place the investigative team can then offer specific solutions that can be implemented in both the short and long-term to prevent employee theft in the future. In short these might include:

• Conducting background checks on employees to help reduce the risk of embezzlement, fraud, substance abuse or criminal activities. This is critical for new businesses that are more vulnerable.
• Red flags include major lifestyle changes with an employee. If a company’s margins are shrinking, look for possible accounting misconduct, petty theft, or falsified records. And if the business is family owned and run, make sure to audit relatives.
• The best method involves a professional investigator conducting a series of interviews to interrogate employees as opposed to planting an undercover agent, which takes too long and is not as effective.

He also recommends that corporations and or company owners do their homework, interview potential candidates and never pay for a consultation with an investigative firm, noting his consultations are free.

About Martin Investigative Services, Inc. (https://www.martinpi.com/)

Martin Investigative Services has been in business for 30 years, and provides full-service private and corporate investigation services, bug sweeps, background checks, fraud investigation, finding missing persons and surveillance services.

President Thomas G. Martin, a former supervisory federal agent and one of America’s most respected private investigators, is called upon as an expert in the media regularly. His high profile clients include numerous entertainment and sports celebrities and major corporations throughout the U.S. The cases he has solved include everything from corporate espionage and theft to drug cases, cheating spouses and child abduction.

Headquartered in Newport Beach with offices in Los Angeles, San Diego, and Mission Viejo, California, Martin’s corporate security and private investigation firm operates a network of former DEA, FBI, IRS and Secret Service agents. For more information, please call 1-800-588-1080 or visit https://www.martinpi.com/.

Sources:
2013 LexisNexis® True Cost of FraudSM Study; U.S. Chamber of Commerce; U.S. Department of Commerce; The 2013 Identity Fraud Report from Javelin Strategy and Research; Association of Certified Fraud Examiners’ 2012 Report to the Nations; The 25th Annual Retail Theft Survey by Jack L. Hayes International, 2013; and the Federal Bureau of Investigation (FBI).