Call The Police! Vickie L. Mickey, CT,CLHRP

White Collar Crime Edwin Sutherland coined this phrase in the late 1930’s. Usually non-violent crimes Commercial crimes that result in financial gain for criminal Monetary sums involved quite large Crime extends over time Crime often diffused with legitimate behavior.

Some Types of White Collar Crime Credit card fraud Telemarketing fraud Mail fraud Income tax fraud Healthcare fraud Trade secret theft Anti-trust violations Bankruptcy fraud Embezzlement

Federal Bureaus Report: FBI report $300 billion annual cost to U.S. for white-collar crime Federal Sentencing Commission reports: 1. Sentencing usually light 2. Usually fines of $5,000 or less 3. Jail time or prison time almost nonexistent

Fraud Statistics 75% of inventory loss is due to employee theft 5-6% of gross revenue is lost to fraud yearly 15% rate increase in employee theft yearly 30% of employees steal from employer 74% of internal theft is never detected

Profile of White Color Criminal Most are college educated Typically 1 st time offenders Men commit 70% of all offenses Women in 40’s with children at home

Profile of Perfect Employee Never takes a day off work! Never sick! Never takes a vacation unless you do! Loyal to the core! Does not delegate work well! Oh, so loyal! Been with the employer years

Employee Background Check Financially all employees must be sound Check credit bureau report Major companies will not hire an employee with bad debt Other detrimental information on history Conduct aptitude testing - some will identify propensity of someone to defraud the company

Watch For Major Changes In Employee Behavior Beware of employees relationships Spouse loss of job Making major purchases Drug or substance abuse Greed Employee will defuse behavior with other concerns

Three types of Employee Bonds Name Schedule Fidelity Bond Blanket Position Bond Primary commercial Blanket Bond

Name Schedule Fidelity Bond A. You designate amount of coverage B. You list employees to be covered C. Must add new employees D. Collection hinges on absolute proof of employee theft.

Blanket Position Bond A. Specify coverage for position rather than individual. B. Coverage is offered for each employee up to a maximum set in policy C. New employees added automatically D. Does not require proof or the individual responsible for the theft

Primary Commercial Blanket Bond A. Covers each employee in company B. Treats all employees as one unit C. It doesn’t matter if one or five employees were involved in the crime, you are able to claim same amount

Bond Employee The bond is an insurance contract that guarantees employer payment in the event of financial loss. Bond from the onset of employment Usually employees with prior conviction cannot be bonded.

Business Insurance Coverage Check your policy as to extent of coverage Policies often have limitations on time frame of discovery of theft State laws may require different coverage than policy offers Most business insurance companies can offer bond coverage

Delegation of RESPONSIBLITES 1.Checks & balances 2.Daily report to CEO 3.Monthly Report to CEO 4.Review all monthly bank statements 5.Review all charge statements 6.Accounting firm audit - Unplanned 7.Signatures on checking accounts 8.Install trust & protection

WATCH YOUR BOTTOM LINE 1.When your business is not making a profit start looking for the cause of the loss!! 2.Never be too busy to watch your numbers 3. Keep only one set of books

So It Happen - Check List Call the Police! Call the Insurance Company Call your attorney Written statements from employees

Wait - Processing Wheels of justice move very slow: Keep in touch with detective – follow up with phone calls Many first time offenders get off with probation Don’t expect to recoup your loss Civil suits can be filed; may not result in recovery of loss

White Collar Crime Until recently most of the white collar crime was pushed under the rug Ohio within the last 5 years has taken it more seriously