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Chamber seminar seeks to prevent theft

By JESSICA SIEFF / Niles Daily Star
Thursday, September 18, 2008 11:27 AM EDT

NILES - The Four Flags Area Chamber of Commerce sponsored a seminar Wednesday focusing on employee theft and embezzlement. And it turns out, it might be a subject business owners should be aware of as many face tough, economic times.

Mary Giannakakis greets teachers of Brandywine Community Schools at Prime Table early Tuesday morning. Giannakakis, who owns the restaurant with her husband Nick, treats teachers from Brandywine and Niles to a free breakfast each year in a show of appreciation and support.

Speaking at the event, was Michelle D. McHale-Adams, a senior associate at Plante & Moran in Grand Rapids, in the company's Litigation, Valuation and Investigative Services Group.

McHale-Adams outlined what business owners should look for to ensure their company's money is being handled properly - and offered ways to protect those funds.

"Small businesses tend to suffer the most disproportionate number of loss of dollars," she said. Oftentimes, she explained, in those businesses there is one person controlling the books meaning more opportunity for manipulation.

McHale-Adams presented a study conducted by Plante and Moran, based on 959 different cases. That study showed that companies experience annually a 7 percent loss of revenue due to theft or embezzlement. That comes out to $994 billion lost in fraud each year.

Identifying those who may be responsible for taking what's not theirs - can be tricky.

McHale-Adams said, "there's a motive, a reason to why they do it." Those reasons, she said, include greed, feeling as though something is owed to them and battling gambling addictions.

And the tricky part is -they tend to be trusted employees.

"They've probably reached a pretty high level in their career," McHale-Adams said. And she added that most employees who tangle with embezzlement and theft work long hours and are viewed as likeable and generous - and deceptive.

When committing the crime, McHale-Adams said that employees will rationalize, that what they're doing is okay, telling themselves "it's owed to me," or "I'm only borrowing the money," or "I deserve a raise...."

Such rationalizations can lead to taking advantage of an opportunity to take money that isn't theirs.

Examples presented at the seminar included employees who had created fictitious checks in order to pay for their own personal expenses (in the amounts of thousands), creating fake vendors in order to channel payments and even creating fake invoices and receipts.

"Anyone can manipulate a system," McHale-Adams said.

There are red flags for business owners to keep an eye out for, however.

Keeping an eye on the numbers is one of the keys.

If the numbers don't make sense, she said, or if employees are suddenly living extravagant lifestyles, those business owners may want to take a closer look at the practices going on in house.

Rumors, tips and complaints from other employees are also a big red flag, she said.

Most of the time while employees are busy with their feelings of being owed more than what they're getting, McHale-Adams explained, the work is being left up to other employees, leading to a decrease in morale and even a higher turnover.

Based on the study 71 percent of cases of employee theft and embezzlement were referred to law enforcement.

Not all companies want to turn in their less than honest employees, she said, for fear of bad publicity and loss of client confidence.

Still, she warned that business owners might want to consider the need for seeing those employees who have committed crimes against them - see their day in court. When complaints aren't submitted, she said, companies are "hiring each other's problems."

"Ask questions," McHale-Adams said, in reviewing what business owners can do to protect themselves. "(You want to) set a tone with the bookkeeper that someone is checking."

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