Forensic Accounting Issues

Attention all Embezzlers, this is a Must Read!

 

For those of you who have chosen to steal from your company, welcome to a world where you may be in over your head.  You’re on a path promising rewards and  lifestyle improvements that you really, really deserve. Why cook at home when you can eat out whenever you like? How about expensive vacations? Maybe a second home, new cars, or a new boat? Want to gamble? Go for it!  Your company has insurance and have already paid taxes on the money, so no one gets hurt, right?  Besides, you tell yourself that you’re just re-distributing the profits of the company a little bit.

Many of you will start with pilfering small amounts of cash.  We get it. Stealing cash can be easy pickings in a careless business environment, especially in a business with drippy controls.  Who’s going to miss a little cash you might ask yourself. Well, nobody you say, business is good and nobody really cares.  You tell yourself that you need it more than them, anyway.  Your internal voice is offering encouragement.  You might be saying, well cash is everywhere, I know where the real and fake cameras are, but I can still do itYou plan on paying it back, you tell yourself.  You just need to plug some numbers in the cash counts and no one will know. You will start with small amounts and if no one finds out, you’ll just keep going.

Some of you will have access to the company checkbook and figure that you will write checks to pay the regular bills, but will write a check to yourself for your hard work. When the checks come back from the bank, you will just throw away the copy, or phony up a new check to place in the files.  Maybe you just bang the company credit card with your personal expenses.  Better yet, you get new credit cards in your name (parasite cards) from the same business credit card company, live large, and pay the bills through the company. Sure you know it’s wrong, but you always intended to pay it back, right?

If you can’t take more cash out, will that stop you?  Not a chance.   You learn how to form a phony company, enter your company as an authorized vendor and write-up fictitious invoices.  Your bank will not open a business account without incorporation paperwork so you feed the bank whatever paperwork they need to open accounts.  So you try a phony invoice or two and ask that the payments be made to your company.   Maybe you may want to think about billing for something that nobody can see, you tell yourself.  Hey, how about consulting or something like that?  Sounds terrific so let’s try it!

To stay out of sight of any pesky auditors,  you learn when the auditors arrive, the preliminary audit scope, the number of auditors, the experience level of the auditors, the audit budget, threshold limits, and deadlines. You will want to monitor the questions they ask and the documents they want to see during the audit. You will lay low for a time being just to be safe, and you will plug up any accounting gaps to cover your tracks. After the auditors leave and you haven’t been caught, you will steal even more.

Most of you know the point in time when you steal more than you can repay.  So you make a decision to either play it safe and stop, or soldier-on with your schemes.  Of course you continue because you deserved that raise given to some undeserving person who is not as smart as you.  Besides, it’s fun, a challenge, you still want the money, and will probably hit the jackpot at the boats someday.

Some of you don’t care how much you steal and don’t care if you get caught.  You will steal from Day 1 to Day End by whatever means necessary. After being fired, you will steal from the next employer.  Maybe you will alter your name, use a middle name, a married name, or change a number in your birthdate or Social Security Number to pass a background check. .

If anyone starts to question your actions, you will confidently explain things away.  You will have practiced your stories in advance.  You will offer to resign and walk away if they agree not to prosecute you and even offer to throw some dollars at them to settle up.  Of course, this is money you have already stolen.

Well, my friends, you may be one of the lucky ones who don’t get caught. But if you do get caught, you will look at the mountain of evidence against you and entertain the idea of a plea bargain, just like on TV, right?

If you do get prosecuted, how bad can it be? Surely a sympathetic Judge will see you as a really a good person who just made mistakes. You will have a very expensive lawyer to convince everyone that you are remorseful and it will never happen again. This always works, right? Surely financial crimes are not worthy of prison.  Besides, you will educate the Judge about how you cannot repay the loss if you’re in jail.

If you decide to plead out to reduced charges, go ahead and Google the word “allocution”.  You will learn that this is the point in time where you stand before a Judge and admit you committed a crime, and you intended to commit a crime.  You will have a chance to plead for mercy, cry a little if you feel the need (and you will), and repeatedly say that you are sorry and this will never happen again.  Hint: To prepare for this, you might want to identify the person or persons in your life whom you love the most, and practice your allocution in front of them.  You may want to try this as you are stealing to see how it works.

Just so you know, there are hundreds, if not thousands, of people out there who have dedicated their professional lives to learn about people like you to hold you accountable for your thefts.  They are smart, dedicated, and will likely listen to your excuses as they build cases against you.  They will silently thank you for the financial and digital trail you left behind to conceal your cleverness.  They will pity your families while they clean out your bank accounts, seize your investment accounts, retirement funds, hidden cash, houses, boats, cars, toys and anything else you bought with stolen money.

When you first meet one or more of these people, you will tell yourself that this is the worst day of your life, and you will be wrong.  You will be having many more terrible  days.