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$70,000 AND COUNTING

I talked with a retailer I know a week ago and he told me a terrible story of dishonesty and theft by a trusted employee.

As with all cases like this, there were warning signs, such as reports always late, a lot of excuses why she could not do what needed to be done.  But as is also very usual with an employer, they just do not want to think that their employee would steal from them.

This most likely started three years ago when the retailer was seriously ill and unable to come to the store for three months.  At that time he had a signature stamp made so checks could still be sent out as needed.

For over a year the store had been without a computer system.  Then they installed a new computer system.  The bookkeeper told the retailer that she could not get the Accounts Payable to work correctly so checks could be written by computer.  So, handwritten checks were being written and a manual log kept in the office.  The retailer trusted her word and never followed up with the computer software company to find out what going on with the system.  Instead, he trusted his employee.

Mistake #1:  When the retailer regained his health and was back in the store every day, the signature stamp was not destroyed.

Mistake #2:  The owner never checked the bank statement, including all checks, before giving it to the bookkeeper to reconcile.

Mistake #3:  The owner was using credit cards to pay some vendors (to get an extra 30 days dating) and never checked the credit card statement when it came in.

Mistake #4:  When the owner was given checks to sign he did not require the actual invoice being paid to be paper clipped to the check so he could verify accuracy.

As usual, the bookkeeper’s theft was found out quite by accident.  She was getting ready to go out of town for vacation and got a little careless.  The owner had asked her to prepare a check he needed to mail to a vendor.  She did so and left it on her desk.  When the owner came to get the check, he also picked up some other papers that were on the desk.

One of the papers he had picked up was a credit card statement.  As he was looking through it he started finding ATM cash withdrawals.   This started the alarm bells ringing.  He also started checking other things, mainly the check log and found that on the check log, it would show a check written to a legitimate vendor but when the actual check was pulled from the bank statements it was written out to the bookkeeper!

So far, they have gone back 16 months and have found $70,000 stolen by the bookkeeper.  They have an employee dishonesty policy of $25,000.  She will of course be prosecuted.  However, that does not help this retailer who has lost so much money and may never recover it.  I only hope the company survives this disaster.

Do not let this happen to you!  There are very simple steps you can take to protect yourself as detailed above in the list of mistakes.  To do them does not take very long and it protects your money.


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