Punishing Those Who Commit Fraud
       By: David S Roberts
Posted: 2008-04-19 02:39:59
It is a rare occurrence that someone who commits fraud on a business owner gets punished for their actions. Why? Because 90% of the fraud perpetrated on a small business owner is done so by a close friend, relative, or trusted employee. The small business owner entrusts them with what they appear to know, accounting. Many times the fraud occurs over years of time leading to the statistic which shows that the amount of loss by small businesses is greater than that of all the Enron type corporations combined. One man started his business, trusting that his brother in law would take good care of his finances. He expected the first year to be slow, but when he continued to bring in the money and still seemed behind suspicion didn't enter his mind for a long time that something wasn't right. His brother in law was stealing from him, and even had the audacity to loan him some of his own money when the business "needed" it.In another case, a man's God-mother, over a period of four years, stole over $900,000 from his business. He decided not to press charges and is still recovering from the loss. In yet another case, a close friend took advantage of being promoted to manager and used company funds for everything from paying for his child's day care to paying off relative's credit cards and vehicles. The owner has been hurt, but is of such a good heart, that pressing charges was a very difficult decision for him to make.In one county here in Florida, the county commissioner decided to put his friend, previously convicted of stealing money from a private school foundation, in charge of the finances for the county schools. Several million dollars later, he sees his decision as 'unfortunate'. The fact is that as it becomes easier and easier for the fraudster to commit his or her crimes, the conscience is dulled and they tend to repeat their actions elsewhere. In Orlando, the mayor gave a multi-million dollar project to a friend who had been experiencing financial difficulties, and now Orlando has several vacant uncompleted buildings in downtown. The mayor's friend has just recently declared bankruptcy for his business and himself.No one forced these 'criminals' to do what they did. And no matter how sad the story, the result is the same, they were embezzling or stealing from someone else. Some business owners have insurance that will cover fraud, but the insurance company will insist on pressing charges, or the loss will not be covered. And sadly, some business owners walk away from that in an effort to feel better about not putting a friend or relative through the horrors of prosecution and imprisonment.Believe it or not, some business owners keep the fraudster on in another capacity so that they can 'repay' what they have taken. As a small business owner, you have to understand that chances are, the fraudster will repeat his actions elsewhere if allowed to go free. If the previous business owner had pressed charges perhaps you would not be facing the loss you have. Do a favor for the NEXT business owner, punish the criminal, for while forgiveness of wrong actions is admirable, there is still the fact of personal responsibility that must be applied to those who have broken the law. Forgive them after the barred door shuts behind them.David Roberts, CFE, CQBPA, MBA, lives in Kissimmee, Florida with four girls, three dogs, two snakes and one wife. He has been a member of the ACFE for four years and has been studying fraud for longer than that. He is the owner of Homesoon Accounting Services which specializes in Quickbooks Consultations and Fraud Prevention and Detection.
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