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Joined: Feb 2006
Posts: 138
After a carefull year of not taking on too much job risk, I found out my office manager was embezzelling.

Not making the IRS payments (although I signed these checks), writing checks to herself while entering them in Quickbooks as vendor payments and cashing checks from the service techs at some other bank, and paying personnel bills with the company credit card.

I checked a couple of times a week on quickbooks for accounts receivable and payable, cash on hand, etc. Everything looked ok (I think she'd done this before). Then the credit card was refused one Saturday. Went to the office and couldn't find any statements, then went on-line and sure enough I'd exceeded my limit. Looking at the expenses, she'd been paying personnal bills with it. This was the tip of the iceberg. No need to go a lot further, as I think you get the gist.

1. Get and Open ALL your mail personnally.
2. Don't have a stamp with your signature.
3. Get weekly listings of sequential invoice numbers, with amounts. Every 'missing' sequential number needs an explanation and entry in the books.
4. Don't pay bills online.
5. Don't believe what the computer says, "figures don't lie but liars figure".
6. Make your own bank deposits.
7. Don't use your CPA brother-in-law for your books.
7. Beware of an employee who brings donuts on Friday's.

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Joined: Jan 2005
Posts: 5,445
Likes: 3
Cat Servant
I'm sorry for your bad experience. Alas, you have plenty of compan frown

For example, until last year one man owned every McDonald's (nearly 20) in the Reno area. Due to the activities of his office manager (not worth detailing here), he wound up losing every franchise, and his corporation was fragmented. Today he's trying to get a single restaurant up and running.

Yet, you cannot do it all yourself; that's why you hire people. There are controls you can put in place.

One of the most common is .... are you ready for this? .... a generous amount of company-paid vacation, to be taken in one-week increments. Why? Because the temp will likely identify any irregularities during that time. (Uh, Mr. Smith ... I don't understand this ...) Another is to split the activities among several parties.

It's probably worth it to have a CPA set up your bookkeeping system, with some of these controls built in. This ought to free you to do your job, and reduce the things you need to monitor.

Finally, there's a role for prosecution. Having the entire crew send a birthday card to the perp in prison will get the message across!

Joined: May 2005
Posts: 984
Likes: 1
Reno's on the money with the vacation idea.
Once upon a time I was told that bank employees had to take a mimimum vacation of a week at a time.
If it was only a day or two at once they could keep cooking the books and nobody would be any the wiser. But their doctoring would be discovered if they were gone enough days in a row.
You might also want to try to find a way to let your friends and contacts unofficially 'know' what went on so that they don't hire the same crook and they get ripped off as well. Unfortunately, crooks like these moving from job to job is all too common.

If you get bigger and have more than 1 person in charge of the money...moving them around works wonders. If they're cooking the payroll books, when they get swapped to Receivables next quarter it will be easy for their replacement to catch the problem. Be sure to let your employees know that your door is always open if they have a question or see something that doesn't look quite Kosher.

Joined: Aug 2002
Posts: 402
I hope you filed charges with the cops.

Joined: May 2005
Posts: 984
Likes: 1
I agree. Even if the cops don't do anything about it, at least you'll have a police report and the creep will have to worry about it biting them in the butt when they're trying to get their next job to rip someone else off.

Joined: Oct 2006
Posts: 745
This happened to me not once, but twice. I know, I know, it should have never happened a second time.

I did get the cops involved and they did prosecute. The guy ended up doing time and was ordered to make restitution, but we'll never know exactly how much he stole. Because he was doing the same things, like paying personal bills with company funds, etc., it was deemed to be cheaper to just rebuild as quickly as possible. The costs for attorneys, tax people and accountants, interest, etc. will never be repaid since the courts only require restitution for what was taken.

There is no doubt that I'll never have the IRS paid off. I've been paying them whatever they want since 1999 and am still having to pay an attorney to keep their mitts out of my personal accounts and my wife's. Not only did a crook take a bunch of money, but an entire government agency of crooks is making sure to rub salt in the wound.

A friend of mine's wife did his books for years. The men in black showed up at his door last year seeking over a million in unpaid payroll taxes. Yep, she had been using company funds to pay medical bills for her ex's niece instead of making tax deposits. He'll never be able to come close to paying them and will likely lose everything. This just goes to show that you really cannot trust anyone except yourself when it comes to money.


"But the guy at Home Depot said it would work."
Joined: Jan 2003
Posts: 1,429
LK Offline
We see one of these cases just about every month in the local paper, and the county throws them the in the lock up, and when the case goes to court, they end up having to pay everything back, and then spend more time in jail, it is a crime.

Joined: Apr 2002
Posts: 7,386
Likes: 7
Hey Les.....nice to hear from you!!!!


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