No Instruction Book for Dealing With Employee Theft

No matter what your position in business—small business owner, supervisor, manager or president of a Fortune 500 company—if you have employees under you, you undoubtedly will at some point be personally affected by theft or embezzlement by an employee.

There is no book, no instructions to give one a clue of what employee theft will mean to you personally or emotionally; what it will take to rectify the financial liability of your business; the endless hours of personal involvement it will take to begin to set it right.

The fact that your employees have been with you for a long time, or are personal friends or relatives or attend church regularly doesn’t guarantee honesty. In my case, “Jane” was all of the above. She’d been with me for several years and we were personal friends. Our kids played together and went to church together. “Jane” would housesit when my family went on vacation and she managed one of my agencies. (I did wonder, though, how she managed her family responsibilities and the new car and the recent vacations out of state.)

When the agency’s profits began to dwindle I did a cursory check, picked “Jane’s” brain as to possible problems, gave the employees the usual pep talk and tips on how to encourage new business and retain old clients, and … promptly got involved in other things.

Several months went by and “business” never did pick up—the financial situation was getting pretty bleak. I couldn’t ignore it any longer. I “traded” offices with Jane for a couple of days. It didn’t take a CPA to find the problem.

Based on advice from a friend and a fellow agent, I recorded interviews of each employee in that office. I asked about cash handling procedures and other pertinent questions until an uncomfortable pattern of cash discrepancies began to emerge. Finally, I confronted my trusted manager and friend, “Jane.” She couldn’t come up with good answers to my questions, and it didn’t take long before she confessed on tape and in front of her fellow employees.

Then the flood of emotions came. Why did I let this go on so long? Why didn’t I suspect what she was doing? How stupid I must seem to my employees and my peers. I knew I would have to terminate her, but she’s a single mom with children—what’s to become of them?

I couldn’t sleep and food tasted like cardboard. But I felt an obligation to ensure she would not be allowed to victimize her next employer.

I submitted the necessary paperwork to the Department of Insurance and was advised to contact my local district attorney. The D.A. would determine if there was sufficient evidence to present the case to a grand jury, which, in turn, would decide if it warranted prosecution.

Next I had to notify my insurance carrier. Great, what’s that going to do to my premiums?

I was naïve enough, now, to think that all I had to do was wait for the court date.

Not so! Public officials get busy, caseloads are overwhelming, mistakes are made and things fall through the cracks. It was going to be up to me to keep the “show on the road” and to make sure this case didn’t get sidetracked.

I requested a personal meeting with the D.A. Somehow I needed to make him understand that this wasn’t just another case. He, and the judge, needed to know the problems and losses this employee’s actions have caused me, my business and my clients. I learned a sad truth from that meeting. If “Jane” was ever going to face what she did, I would have to compile the evidence and hand the D.A. a case ready for trial!

Performing a full audit to determine the extent of the actual loss and preparing a case for trial is an extremely time-consuming process and an unfortunate learning experience. A little over a year later, “Jane” was finally arrested. Her attorney plea-bargained to keep her out of jail. Probation and restitution were set. Now I was done, right? I wish!!

I called “Jane’s” probation officer and made sure we both understood the terms of her probation. Her freedom is hinged on timely compliance, but that hasn’t stopped her from being late or skipping payments. I monitor payments, and I contact her probation officer whenever her payments are overdue or insufficient.

The biggest mistake an executive can make is to give authority to another without rigorous and constant monitoring. Never allow yourself to be too busy to take the time to check the books and bank accounts, read the mail, audit cash drawers and take inventory. Vary your schedule, trust your instincts and spot check often. In the event you do fall victim to employee theft, don’t just assume the justice system will handle it.

Follow every step, all the way through to the end, until the last penny is paid.

AnMarie Bozick is the owner of four insurance agencies. She also serves as president elect of the Automobile Insurance Agents of Texas Inc.