How Do You Spot The Thief Inside Your Company?

Insider fraud costs $3,500,000,000,000 (t-r-i-l-l-i-o-n) and your company is a target.

Some facts from this recommended article for security officers:

  • Businesses, on a global basis, experience losses of about 5% each year from schemes executed by and with employees.
  • The median loss was about $400,000, and in one-fifth of businesses that were surveyed in the ACFE study, the loss was at least $1,000,000.
  • In the least costly forms of fraud, the cost to business was about $120,000.
  • In about 87% of the cases the appropriation of assets was the leading cause of losses.
  • While financial statement fraud accounted for only about eight percent of all cases, it had the highest median loss of about $1,000,000 for each occurrence.
  • Corruption and various phony billing schemes made up about one third of all cases but more than fifty percent of the dollar losses, for an average of $250,000. This type of fraud was shown to pose the greatest overall risk on a global basis.
  • Workers are able to become thieves and engage in frauds as a result of four primary conditions: (note: could also be true for those who commit espionage)
    • Lack of controls (35% of cases in large businesses and 45% in small businesses)
    • The ability to override existing controls
    • A lack of high-level review
    • A poor ethical tone being set for the operation of the business from owners and management.

How Do You Spot The Thief Inside Your Company?

(Forbes/Marc Weber Tobias) The vast majority of annual losses that result from criminal activity in business and government entities are not caused by shoplifters or burglars in the United States. It is employee-thieves cloaked in many forms who commit their crimes, which are often discovered long after their various schemes begin.. . . .

. . . . Based upon the Gross World Product, the ACFE estimates that global losses from fraud may be $3.5 trillion.

In my career in both the public and private sectors, my colleagues and I have been involved in thousands of criminal and civil investigations involving thieving employees, vendors, contractors and suppliers.

We’ve caught perpetrators trying to steal, defraud, and convert assets that included anything from cash to precious metals, and trade secrets and intellectual property.

No entity is exempt and, in our world, just about everyone can be engaged in some form of fraudulent activity and theft, be it office supplies, time, gasoline, telephone calls, cash, assets, food, liquor, pictures hanging on the wall, bed sheets, dishes, narcotics, credit cards, checks, information, and whatever else is available for the taking or diversion.

They pad time sheets and expense reports, submit false medical claims, forge mortgage documents, submit phony bills to clients and customers, and anything else that can be imagined.

Our rule and mantra: “If it can be stolen, it will be, and often.”

No one is exempt.

We have worked cases in businesses, retail stores, banks, factories, hospitals, clinics, nursing homes, cruise ships, copper mines, construction sites, car dealerships, restaurants, bars, casinos and literally hundreds of other venues.

Any entity can and has been a target, even law enforcement agencies and jails and prisons, where inmates, correctional officers, teachers and senior staff have been caught in a variety of schemes to steal, corrupt, defraud, extort and improperly obtain or divert assets and use their influence for personal gain. . . .

. . . . The message for every reader: any entity can be the subject of losses.

Sometimes you may not even know it for many months, years, or ever, with the average scheme taking eighteen months to discover.

Companies, governments, and other entities must understand how to mitigate or reduce losses from a multitude of criminal schemes designed to siphon assets, in many forms, which ultimately destroy many enterprises.

The best protection against fraud is to prevent it before it can occur.

If your entity or enterprise is operating without the proper controls and anti-fraud programs in place then you likely have been, are, or will be a victim.

There are fraudsters everywhere and they are often destroying productivity, profitability, morale, and ultimately many businesses.

They are able to get away with their crimes because the operation of almost all business is based upon trusting employees with resources and responsibility. . . .

. . . . I decided that this article should profile the company thief and the companies that are most at risk, and then talk about one of the most effective means to stop people we work with from engaging in illegal activities in the workplace.

So in this article I will look at who and what the looters are. . . . [read the rest]



Threats are Out There