Employee Theft Warning Signals—Understand What You See

When confronted with a questionable or suspicious situation, will you be familiar with employee theft warning signals enough to recognize something amiss. Sometimes it is easy to overlook employee theft warning signals, especially when the employee is viewed as dedicated and trustworthy. Yet, it is a terrible nightmare for a manager to discover—after the fact—that he or she had ignored these highly visible signs. Take this actual case:

The prosecutor’s 114-page report described a “culture of mismanagement and corruption” that went unnoticed for nearly twenty years inside a city government agency.  Employee theft warning signals were present, but those in position to react—like so many others throughout the business world—didn’t believe or chose to ignore those employee theft warning signals. This case was exposed only after a bank official became suspicious of two questionable money transfers. Once the dust settled, this fraudster pled guilty to embezzling $48 million over a period of 18-years.  Again, employee theft warning signals were everywhere! Even the trial judge showed dismay when asking why those employee theft warning signals went unnoticed.

I use the above case to underscore how easily management can miss those signals or red flags that should cause them to take a closer look. Fraudsters are cunning, and adept at misdirection. So, be alert to employee theft warning signals. However, use caution as not all of these signals indicate wrongdoing, but many do.

Employee theft warning signals come in all sorts of ways; a missing document; an out-of-balance fund or account; poor record-keeping; personal lifestyles; work habits; a manager not taking time to review a critical document for questionable entries; or someone reporting a suspicious transaction. Read about these employee theft warning signals and many more in Chapter 7 of this book, Business Fraud: From Trust to Betrayal.