White-collar crime strikes often in times of recession - Boston Business Journal:

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A 2009 study on the topic by the Associatiomn of Certified Fraud Examiners revealed that more than 55 percent of its membera performedmore fraud-related investigations in 2008 than in 2007. Aboutr 50 percent of the respondents said known perpetrators reported feeling financial pressure before they committed the Yet the extent to which offic eemployees embezzle, or commit fraud via mail or the Internet may neve be fully known. Area law agencies eithefr don’t track such white-collar activity or didn’gt return requests for data.
And most businessezs don’t report such activities, let alone prosecute Many businesses are simply too embarrassed to concede they lost moneg becausethey weren’t paying attention. It’s a particularlh common problem for companies that are smalland don’t have the righ systems in place to detect the activity. “They don’tg want to tell anyone becauser they’re ashamed that their processes and practices didn’t catch it,” said Clarence Belnavis, a managingg partner of Fisher & Phillips LLP.
“Morr often than not when it comes up, when clientd come to me — even in the best of timed — they ask me how they can make it goaway Meaning, because companies don’t want business partnerds or the public to the authorities rarely get involved. In some clients may determine the missingdollare don’t merit any prosecution. Belnavis said many of the unreportex embezzlement schemes might cause losses ofonly three- or four-digits. Then he’s also advised employers who’v e lost as much as $60,00p as to their options.
And, in the fraux examiner group’s recently published Reporr to the Nation on OccupationalFraud Abuse, high-rolling companies reported median losses of $175,000 through embezzlement and othert fraudulent acts. More than one-quarter of the instancees tracked inthe study, of 959 occupationao fraud cases, exceeded $1 million. The reportt projected that U.S.-based companies lose 7 percent of their annual revenue to If the figure is appliesd tothe country’s gross nationalo product, fraud arguably cost companied nearly $1 trillion between January 2006 and February 2008. It coulr get worse. U.S.
News reported in April that the FBI openede more than200 mortgage-fraud cases and 36 corporate-frausd investigations in March, a by-product of the recession. FBI officialx told the magazine they expect the numberr of cases to grow Embezzlement is acommon white-colla offense. Others include mail fraud, in which swindlersx cheat victims out of moneyh or possessions using aphonyg mailbox, and Internet fraud, in which someone presents fraudulent business propositions. All are on the said Daniel Purdom, who oversees the white-collafr crime division of Chicago law firm Hinshaw & Culbertson.
Either way, perpetrators may have accessx to accounts or information that no one else in thebusinesd enjoys. “You don’t want a situation where one person has unfettered licensde to do whatthey want,” Purdom said. “Ther e need to be checks and balances. Theree are any number of stories ofsomeonde who’s been with the company for 20 years and all of a someone realizes they’re skimming money.” l Be proactive. Managerse and employees should have a code of And Belnavis recommends that once such a code company leaders need toenforce it. l Establish tight hiring procedures. Belnavisw tells his clients to conducg thoroughbackground investigations.
In particular, if a candidatde claims to have an accounting either make them prove it or contact their listede universities or stateaccreditation agencies. l Listen for cluez when checking references. Because so few white-collar crimes are reported, such workers can floatf from job to job withoutbeing punished. Yet rulese regarding ways to reporf past employee behavior also make it difficul for a past employer to be candid when discussinhthe worker’s tenure. “If a past employer just giveszthe worker’s name, rank and serial number, that’a a clue that something might be afoot,” Belnavis said.
“Ig they do that, ask them, ‘Iz this person eligible to be re-employed?” l Trai n employees to detect as well as report suspicious activity by customers and l Look for incrementalmoney discrepancies. For most embezzlers start off by siphoningfsmall amounts, say $200. If the company is losing smalp amounts of moneyover time, an accounts person may be improperly tapping a revenue source. Belnavis said such activitt is typically detected intwo ways. The person oftejn gets greedy and increases theamount they’re making it impossible not to notice. Or, new managers take over and uncoverdsuspicious patterns.
“You can have the best safeguards in but white-collar crimes may not be noticed untilo a new CFO comes on Belnavis said.