Tuesday, January 9, 2024

8 ways to spot a crook inside your business

Between Sept. 2021 and Oct. 2022, Lyle Bigelow, the now-former COO of 1487 Brewery, embezzled approximately $200,000 from his employer. How? He created fake employees in the brewery's payroll system and directed their illegitimate paychecks to his personal bank accounts.

Bigelow was recently sentenced to 30 months in prison and ordered to pay more than $100,000 in restitution to the brewery (the amount not covered by its insurance).

Do you know how to spot an employee who is potentially stealing from your business? Here are 8 possible warning signs that suggest possible internal theft and/or an attempt to cover it up.

1./ Financial Irregularities: Unexplained or inconsistent entries in financial records, missing funds, or unexplained expenses.

2./ Unexplained Discrepancies: Frequent discrepancies between actual inventory counts and recorded amounts.

3./ Sudden Lifestyle Changes: Employees living beyond their means or exhibiting sudden changes in lifestyle, such as buying expensive items or taking lavish vacations.

4./ Unusual Behavior: Employees displaying secretive behavior, working late without reason, or avoiding taking vacations, days off, or time away.

5./ Excessive Secrecy: Employees who are overly protective of their workspace or refuse to share their workspace.

6./ Customer Complaints: Frequent complaints from customers about missing items, overcharges, or billing discrepancies.

7./ Excessive Control or Refusal of Help: Employees who resist sharing workload or resist having others involved in their tasks.

8./ Inconsistent Behavior: Inconsistent behavior, such as excessive eagerness to work alone.

None of these warning signs, alone or in combination, mean that an employee is stealing. Each could have other innocent explanations. Where there is smoke, however, there is often fire. If you suspect that an employee is stealing from you, it’s best to get outside professionals involved, including your lawyer and a forensic accountant. Better to be safe than sorry, and best to turn off the faucet upon confirmation.