Business Vermont interviewed Gravel & Shea Associate David Boyd last month about ways employers can protect themselves from embezzlement after he partnered with the Lake Champlain Regional Chamber of Commerce to present a fraud prevention seminar for business owners and operators. Since a recent high profile case in the area, the issue has been top of mind for many Vermont businesses.
David, who has handled a number of fraud cases and recognized the need for education among employers, focuses on two stages of prevention: (1) early steps to limit the potential for employee fraud and (2) actions to take if employee fraud is suspected that may reduce the negative impact.
David recommends that companies take a hard look at their assets, either financial or equipment-related, and determine which are most vulnerable. Companies should ask themselves a number of questions: What is our most difficult asset to track? What asset would be easiest for someone to take without our quickly realizing? Those assets need regular tracking and monitoring, which can sometimes seem challenging for smaller businesses. David points out that preventative measures don’t have to be complex. For instance, a business owner could make a habit of reconciling bank statements themselves or could have different employees perform spot checks of financial documents.
In many instances, cases that end up in litigation could have been avoided by instituting separate functions so that a single person within the company was not receiving funds, creating invoices, and paying balances. “Consolidation of functions gives one person a lot of room to be creative,” says David.
For an employer who suspects that embezzlement has occurred, the key is a quick and thorough investigatory process. David, who began his career in the white collar and regulatory investigations practice group at a large New York law firm, encourages business owners to immediately ask themselves a number of questions: What documents would be helpful to me? Which employees should I interview? Does the fraud I suspect raise criminal or regulatory concerns?
Bringing in an attorney may be the first step for any company dealing with employee fraud. An attorney can help a company facing criminal or regulatory exposure understand the risks it is facing and conduct a thorough investigation. An attorney can also provide credibility for a company attempting to resolve issues raised by government agencies.
For those who want to bring an action against a bank or financial institution that handled embezzled funds, the legal framework is complicated and often provides extremely short time frames for bringing suit. “When it happens, everyone just wants to put it behind them,” David says. No one wants to believe their company could be susceptible, but a few simple steps can help reduce the odds of a potentially disastrous outcome for employers.