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Article Explores Embezzlement Trends and Statistics

A well-written article recently appearing in the online version of The Post and Courier of Charleston, South Carolina provides an excellent overview of embezzlement trends and statistics. The article also attempts to explain why embezzlement cases are skyrocketing and offers strategies to deter and catch embezzlers.

The article first notes that embezzlement cases have surged in recent years. For example, in 1994, 38 people were charged with embezzlement in South Carolina. By 2003, that number had climbed to 442. Nationally, embezzlement cases increased by 39 percent between 1990 and 2000, according to U.S. Department of Justice statistics.

According to the article, small businesses and nonprofits are hit the hardest. Almost half of all fraud occurs at organizations with fewer than 100 employees, according to a 2004 report by the Association of Certified Fraud Examiners.

Another interesting statistic: only a very small percentage of embezzlers are hardened criminals. In 20 years of investigating white-collar crime as a forensic accountant at Charleston-based Pratt-Thomas Gumb & Co. P.A., Ron Strickland came across only one individual who intended to steal when he took the job, and that person's theft was paying his restitution in another state.

About half of those who commit fraud earn less than $50,000 a year, and most have worked for the victim organization at least five years, according to the Association of Certified Fraud Examiners. Almost half of them are women.

The article offers these tips from experts to deter embezzlement:

  • Require two signatures on each check.
  • Make sure the employee who writes or deposits checks does not balance the bank statements.
  • Review bank statements, in particular checks issued.
  • Be familiar with the company's suppliers.
  • Require employees to take a one- week vacation every year.
  • Set a good example and stress business ethics.

Here are some red flags identified by experts that could signal embezzlement:

  • Unusual drop in profit
  • Disorganized records
  • Missing documents
  • Duplicate payments
  • An employee rewriting records for the sake of "neatness"
  • An employee refusing to take vacations and working excessive overtime
  • An employee refusing a promotion

Read the full article here (note: registration may be required).


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