man in suit using finger to press checkmark

Hiring the wrong person can cost money and put other employees and company funds at risk. Our client failed to perform basic background searches on employees who are primarily responsible for company funds and personnel management. Due to this lack of foresight, the new company Controller managed to steal over $175,000 from the company over a one year period, without detection.

Coincidentally, on a day when the guilty employee was absent from work, our client was alerted to the situation. Because of an error on the part of the bank, a courtesy call to the company’s receptionist began our investigation. When the receptionist began searching for the cancelled checks in question to assist the bank in correcting the error, many checks were found to be missing. The Controller was authorized to sign checks up to $2,000 without additional authority. It was quickly determined that something was wrong and a call was made to Ten-28 Investigations.

Initial inquiries were made of the Controller, who responded that these “missing” checks had not been received from the bank. This employee stated that the checks were not necessary to reconcile the account, so he had not requested them. Our investigation revealed that this individual had been fired from two prior employers due to embezzlement and misrepresentation. These employers had initially filed charges, but had never followed through. These companies were in other parts of the country, and were large enough to “absorb” the loss.

Assets checks were performed on the individual, which revealed no large amounts of funds in any domestic accounts. Our investigators were at a loss as to where the individual had put this money. Copies of the checks revealed that the employee had written checks to cover personal expenses, and entered them into the company ledger as payments to regular company vendors. We spoke to neighbors and landlords and discovered that the employee had done extensive redecoration to the rented apartment that he occupied. He also drove a classic automobile, which he had restored and equipped with expensive stereo and theft deterrents. It was obvious that the money had actually been spent and there was little chance of recovering much of what was stolen from the company. There were reports of drug use, elaborate and expensive parties, and flamboyant shopping sprees. Many neighbors noticed that the individual had many visitors at all times of the day.

Our story takes a tragic turn. Once the police became involved and charges were formally filed, the employee chose to end his life. He was found in his apartment by the a landlord from an apparent drug overdose. He left a note explaining that he wasn’t sorry for stealing the money. He admitted that he had a fatal disease and would rather not spend the remainder of his life in prison.

After the individual’s death, the company began the process of searching for assets in the form of personal possessions now belonging to the estate of the deceased employee. The initial investigation had revealed that the deceased owned expensive audio-video equipment, computer equipment, antiques and art. However, by the time our client was able to contact the landlord, these belongings were no longer in the apartment. Several days had passed after the discovery of the body, a memorial service was conducted and many people had access to the apartment. There was a theory that the landlords and the friends of the deceased had taken these items from the apartment. But investigating everyone who had access to the apartment would have cost our client much more than they could afford to spend.

Our client was able to recover about $15,000 in personal items, including the classic vehicle. However, after calculating the costs associated with the case, our client was far from breaking even. A great amount of resentment resulted from this incident; a lesson learned the hard way.

There are many things that can result from incomplete or lack of background checks on employees. This case represents monetary loss, but other dangers can present themselves such as violence or incompetence. A basic background check can eliminate many factors. Ten-28 Investigations performs these background investigations using information provided by the applicants or employees themselves. Also, public records and historical data can be reviewed for information that can assist in choosing the right person for your company.

If you are trusting someone with your company’s money or reputation, you should perform background checks on all individuals who can harm your firm. Also, as a private employer, hiring domestic help (such as babysitters and housekeeping or maintenance individuals) you must protect yourself against potential disaster. Protect yourself