Employee Fraud and Theft

Print Date July 26th, 2005

Orange County Business Journal

It's more likely an employee commits a crime and the employer pays. That's why experts say it is important to nip fraud and theft in the bud -- especially seemingly innocuous, but common forms like fudging employee expense accounts. Companies that choose not to prevent fraud are cultivating a culture of criminal activity. "Employees that can justify one type of fraud can justify another," said George Farragher, an accountant and certified public fraud examiner at the Cleveland office of Ernst & Young. Long-term consequences aside, letting any type of theft go unchecked also can prove costly.

Companies nationwide lose $15 billion to $40 billion a year to fraud and employee theft, according to estimates by the Bureau of National Affairs and the U.S. Chamber of Commerce. According to a survey by the same firm, businesses can lose up to 20 percent of every dollar earned. Twenty percent of the employees cited in that study said they were aware of fraud at their companies. Of that 20 percent, 37 percent said they knew about theft of office items; 16 percent knew employees who claimed extra hours worked; and 7 percent said they knew people who inflated their expense accounts.

Another large arena in employee fraud is Worker's Compensation Fraud. Of the 300,000 claims filed in 2003, 30% were suspected fraudulent. The other problem is the insurance companies are not helping. Think about it, insurance companies are not making money off of fraud cases. They lose money with fraud cases. If a case is found fraudulent they have to pay all your extra premiums back to your company. That's why they like to settle. If they settle the case with the worker you still get the bigger bill. 

Gailey Associates is trying to combat employee fraud. Gailey Associates is based in Orange County, CA. They are a licensed insured firm. Their staff has developed ways of skirmishing employee deceit.  Gailey Associates offer the following services:  Surveillance, Pre-Employment Background Checks, Worker's Compensation Investigations, Locating Witnesses, Asset Investigations, Loss Prevention/Theft Investigations, Records Research, Interviewing and Legal Process Serving. For more information about Gailey Associates, contact Justin Hodson at (714) 622-1900 or visit their website at www.InvestigatorForYou.com