Unfortunately, trusted employees to whom you have given responsibility and authority to manage finances, sometimes choose to embezzle funds. They often have what they feel to be good reasons for their actions and even intend to pay the money back, eventually. It may have started small, a twenty from petty cash here to cover their lunch, and twenty there to pay for their child’s school supplies. Often, by the time their actions are discovered, it is no longer petty cash but significant funds that are being diverted.
The easiest way to avoid embezzlement is to stay closely on top of your business finances, but short of doing the bookkeeping yourself, which many business owners are not inclined to do, employess may still find creative ways to move funds from your business into their pockets. Caught early, this could result in a wrist-slap, taking the funds from their pay, or even be grounds to fire the individual. Left unchecked, it can create serious cashflow problems and result in civil and criminal legal actions.
Investigating the Situation
Before you make accusations, you want to first quickly investigate the situation. Bring in outside help in the form of a business and employment attorney, auditor, computer forensic expert, and possibly the person’s manager to review the situation and gather the facts. You want to confirm that there is money missing and that the person in question is the one who took the funds.
Only once you are very clear on the facts of the situation should you move forward. Your attorney, and, if you have one, your corporate risk officer, can review the situation and come up with a plan to confront the employee (possibly with police presence). You may need to wait for the employee to get a lawyer before getting the other side of the story or they may be willing to tell you outright. Sometimes employee confession is how the embezzlement is discovered in the first place.
What Happens Next?
Depending on the facts of the situation, you may want to work with the employee to return the funds (whether they remain in your employ or not). This is generally the path most likely to result in your money being returned. A civil lawsuit may result in a judgment, but someone embezzling funds is unlikely to have significant assets of worth that could be liquidated to pay a judgment. A criminal lawsuit, meanwhile, comes with criminal punishments including community service and jail time, but often not return of funds.
If you’ve run into a problem with an employee and suspect they may be embezzling funds, the experienced team of litigators at the Dunn Law Firm can help you review the situation and determine the best next steps. We understand business litigation, employee rights, and how to handle tricky situations. To learn more, reach out to the Dunn Law Firm by calling (435) 628-5405 and set up a free consultation today.