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Examples and Warning Signs of Embezzlement

June 25, 2020 Federal Criminal Attorneys

The issue of embezzlement is a difficult one for many businesses to prove because of the many different forms this crime can take. The basics of embezzlement are the theft of money from a business by one of the employees who usually have some form of fiscal responsibility. Different forms of embezzlement take place throughout the life of a business from a payroll clerk who does not pay the correct amount of taxes to the retail store employee who takes stock in what the industry calls shrinkage.

What is Embezzlement?

The act of embezzlement is also known as employee theft and usually takes place in the workplace where funds or items are stolen. Embezzlement usually takes place in the workplace, but can also take place offsite by those who are given some form of fiscal authority by the owners of a business or organization.

Embezzlement can be a simple act of theft when a cash transaction is not recorded into the records and is not handed to the owner of the business by an employee. In other cases, an accountant can spend their time responsible for keeping records for a company that can falsify records to hide the fact they are keeping money for themselves.

How an Embezzlement Case can play out

A business owner or larger company has two forms of recourse if they feel they have been the subject of a case of embezzlement. The first step is usually to contact law enforcement when an embezzlement case is suspected to give prosecutors the chance to make a case. If a criminal case is proven the convicted person will often be required to pay a fine, serve jail time, and pay back the money they stole.

The second option for a business leader to explore if they do not see a return of the funds that were embezzled is to pursue a civil case against the person proven to have stolen from them. This usually leads to a decision being made by a judge that includes the return of a certain amount of the money taken from the business by the individual.

What are the Different Types of Embezzlement?

There are many ways for an act of embezzlement to take place by those within and outside an organization or business. Shrinkage in the retail industry is a major problem for most business leaders who often try to identify those who have been stealing products from the shelves. In other areas of the retail industry, many cash transactions are not pushed through a register with many companies now requiring every transaction to be recorded for accuracy.

The most common areas for an embezzlement case to take place is among those who have some form of responsibility for financial issues. For the majority of those who are in financial positions of power, the option is there for an individual to take advantage of their roles.

Cases of embezzlement have taken place in the financial sector when payroll clerks have often created fake employees for their employers. The role of the embezzler is then to keep the funds that are paid to these fake employees for themselves.

Spotting the Warning Signs of Embezzlement

There are many ways to spot the issue of embezzlement when it is taking place in a business environment. The first warning sign to look for is to make sure that all financial records are up to date with no missing information. Any business that has missing paperwork is at risk of embezzlement because these missing documents can be used as an excuse for missing funds.

The irregularities that can be seen in a business when funds are being embezzled include vendors stating they were not paid when records state they were. Similarly, customers will often state they have paid their bills when notices of non-payment are sent out making it difficult for a business to keep accurate financial records.

One of the most common warning signs that something is not right financially with a company is the loss of profit. A company that is seeming to perform well will find its profits are shrinking leading to the potential for a business being lost despite money coming into the company.

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