Imagine that you bank with National Credit Union. Over time you begin to notice funds slowly dissipating from your account, almost unnoticeably. When you analyze your bank statements it is clear that unauthorized transactions have been taking place. You panic and immediately begin to believe that you are the latest victim of identity theft. Not knowing how to approach the problem, you contact the Credit Union, who is of no help. Unbeknownst to you and the credit union, there is a criminal among them who has helped themselves to your hard-earned money. You are not a victim of identity theft but you are, however, a victim of embezzlement.
Embezzlement is defined by Cornell University as “the fraudulent taking of personal property by someone to whom it was entrusted”. Embezzlement transactions may be so small that it goes unnoticed by most people; the offender takes a minimal amount out of each client’s account (often referred to as “skim off the top”) and ends up with a huge score without raising any red flags. How is this scheme possible? The scenario given above is an actual case. The Federal Bureau of Investigation (FBI) of Pittsburgh has reported a female Corporate Executive Officer (CEO) of the National Credit Union in West Virginia was taking money out of user accounts to pay family members’ credit cards, personal expenses, and purchase luxuries. She was also using the bank’s status to forge checks from the Valley Credit Union. As of January 2010, she has pled guilty to embezzlement and money laundering in the amount of $8,989,484.00.
The Business Journals Serving the Greater Milwaukee Area states that the average embezzlement case in 2009 was in the amount of $1 million; whereas, in 2008 the average reported case of embezzlement was $2.2 million. This drastic drop could be due to the lack of reporting or the lack of catching the perpetrator taking money from a business. The Business Journal also reports that 63% of embezzlement perpetrators are women, but men tend to embezzle two times more money when they commit this crime. Reports also indicate that most perpetrators are in their 40’s when they develop an embezzlement scheme. Reasons for this age group committing embezzlement are not described in detail but it could be attributed to a mid- life crisis or the falling economy.
The problem with embezzlement is that we entrust someone with our property and/or monies. When someone abuses that trust on such high levels, it is hard to come to terms that we misjudged the source and handed them everything of value to us. The person can be a friend, employee, spouse, co-worker, professor, or virtually anyone with status. Many people see discrepancies in the work place or in personal accounts and chose to create their own theory as to how it happened. White collar offenses are ruled out all together because we choose to believe that we have been victimized by a stranger rather than a friend or acquaintance.
According to lawyershop.com there are four points that must be proven in order to create a case against embezzlement:” 1) The relationship between the defendant and the aggrieved party was a fiduciary one, 2) The lost property came into the defendant’s possession through that relationship, 3) The defendant fraudulently assumed ownership of the property or transferred it into the ownership of another,
4) The defendant’s misappropriation of the property was intentional.” In many embezzlement cases it is difficult to prove all four of these points. Lawyershop.com lists certain signs that may help detect if a person is embezzling funds: “missing documents, holes in accounting records, a large drop in profits, a jump in business with one particular customer, customers complaining about double billing, repeated duplicate payments, numerous outstanding checks or bills, disparity between accounts payable and receivable, [and the] disappearance of petty cash.” Smaller indicators that may give the perpetrator away are: “they go out of their way to work overtime, spend more lavishly than their salary might indicate, [or] has the same address as a vendor” (lawyershop.com).
Many of the businesses that have filed claims against employees for embezzlement have been investigated by the Internal Revenue Service (IRS) before they even suspected that there was an inside source involved in missing monies. In other cases the business was in the process of being liquidated due to a large deficit acquired as a result of the embezzled funds Much of the prosecution of embezzlement depends on the findings of the employer. If an employer suspects that embezzlement is going on within their business it is up to them to report it to the FBI or the IRS so that a thorough investigation can be carried out immediately. The employer has the responsibility of locating which employees are suspects in the crime, who had access to the missing funds, and evidence to back up their claims, such as discrepancies in accounts or logs. Embezzlement is one of the most overlooked crimes because it is a crime of opportunity and is usually carried out by a trusted source. It is impossible for businesses to avoid hiring someone that has the capability to slowly swindle victims; it is a very undetectable trait. Those that commit embezzlement do not plan on getting caught, and many do get away with this crime. As long as people are greedy and conning, embezzlement is here to stay.
Works Cited
Embezzlement. (2010). Retrieved August 3, 2010, from LawyerShop.com: http://www.lawyershop.com/practice-areas/criminal-law/white-collar-crimes/embezzlement/
Institute, L. I. (2010). Embezzlement. Retrieved August 3, 2010, from Cornell University Law School: http://topics.law.cornell.edu/wex/embezzlement
Justice, D. o. (2010, January 4). Former Credit Union CEO Pleads Guilty to Embezzlement and Money Laundering. Retrieved August 3, 2010, from Department of Justice Pittsburgh: http://pittsburgh.fbi.gov/dojpressrel/pressrel10/pt010410.htm
Kirchen, R. (2010, January 15). Koss victim of top 2009 embezzlement case. Retrieved August 3, 2010, from The Business Journal Serving the Greater Milwaukee Area: http://milwaukee.bizjournals.com/milwaukee/stories/2010/01/11/daily58.html
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