Portland Policed Bureau detectives have noticed a spike in investigations of embezzlement from both small and large businesses. Below, Detective Cheryl Waddell offers businesses the following guidelines and encourages them to take preventative measures to avoid this crime.
The Portland Police White Collar Crime Detail has seen a significant increase in Embezzlement cases over the past year and would like to send this reminder along to help businesses protect themselves.
It all comes down to the “Fraud Triangle”:
Most individuals do not take a job for the sole purpose of committing fraud related crimes. These individuals are usually first time offenders and are influenced by these three elements known as the Fraud Triangle.
All three elements must be present for fraud to occur.
Opportunity to commit fraud usually falls under the following circumstances: This is the greatest area a business has influence over.
- Weak internal controls
- Poor management oversight
- Employee doesn’t think they will be caught
Incentive / Pressure
An individual may feel pressure in the form of addictions such as gambling, drugs, shopping and drinking.
Pressure doesn’t always have to come from an addiction, it can also come from a personal or family crisis such as medical bills, home foreclosure or job loss.
An individual may rationalize their actions by:
- Saying it’s justified due to family circumstance
- I am just “borrowing” the money
- Job dissatisfaction – this is owed to me
- No concept of integrity and trust
- Don’t owe the company anything
Detection of Fraud (Red Flags)
- Is there a lack of segregation of duties?
- Is there a sudden, unexplained change in business profits (shifting cash position)?
- Is a key employee experiencing financial, family or medical problems?
- Do you find accounting irregularities in your business?
- Do you internally control weakness?
- Does an employee have an extravagant lifestyle?
- Does a key employee have addictions or personal problems?
- Are there anomalies or discrepancies in product returns, inventory, or purchases?
- Has a key employee become secretive about their work?
- Does a key employee refuse advancement and/or doesn’t take vacations?
- Don’t be complacent if something seems wrong- Investigate!
- If you determine that you have been a victim, organize your evidence and notify the police.
Call your police non-emergency number (503) 823-3333 (for Portland) to report the initial theft. You should report the crime in the jurisdiction of occurrence. Have spreadsheets, copes of checks (front & back) and other financial documents ready for the detective who is taking the case. Be sure to request the officer come to your business location to take the report, do not report embezzlements over the phone. Do not expect the officer to arrest the suspect on the spot. These are complex thorough investigations that are data laden and the Multnomah County District Attorney needs time to review the evidence before going forward on the case.
If you have and question please don’t hesitate to contact PPB White Collar Crime detail at (503) 823-0456.