It's Always The One You Don't Suspect

The United States Attorney in Fresno announced that an employee of Westamerica bank pled guilty to embezzling $250,000.  Mary Perez could face 30 years in prison, which at her age -- 50 -- could be a lifetime.  She must also repay the amount to Westamerica and pay a criminal fine.  How she will pay the debt is a mystery since she spent the majority of the money on gambling. 

It's a sad and pathetic ending to a woman's career that spanned nearly three decades.  In that time, I am confident that Ms. Perez did much good, served customers well most of the time, and made other good decisions.  Otherwise, she wouldn't have been in the position where she could take the money almost unnoticed. 

You see, it is always the one you don't suspect who embezzles.  It is always the person in a position of trust.  It is always the person on whom you could depend for important matters. 

Years ago I represented a client who hired his friend from high school.  (They were well into their 50s.)  The client trusted his friend, and allowed him access to company accounts.  Over a period of years, the trusted friend embezzled over $700,000 from the company. 

Something unexpected happened and the embezzlement came to light.  It was easy to do.  The client's signature was easily duplicated.  The trusted friend took steps to hide the stolen money.  He had access, trust, and a need for money. 

Unlike Ms. Perez, the friend invested in retirement for he and his wife.  I recovered the stolen money, or at least most of it.  However, most embezzlers don't save but rather spend the money.  I have had several cases where embezzlers took their ill-gotten gains to local casinos. 

What have I learned from embezzlement cases? 
1.  Put checks and balances in place.  Have your CFO or outside accountant / auditor put together processes that don't permit trust to be the only defense against embezzlement.  This way you can avoid theft and pinpoint it when it happens.  This also allows employees to work without suspicion of wrongdoing.  
2.  You must work fast when embezzlement is discovered.  The legal process is complicated.  You must file a complaint and seek ex parte orders from the court freezing assets, if they exist.  You must locate assets, and quickly perform the forensics work necessary to prove embezzlement. 
3.  Expect that what was taken is about 7 times what you originally discovered. 
4.  Expect that you probably won't see most of the money. 
5.  Realize that it was your trust, without overseeing, that allowed the event to happen. 

There are rarely great results in embezzlement cases.  Money is lost.  Trust vanishes.  Accusations of fault are made.  Friendships are broken.  A life is punctuated by a criminal record.  And families are left hurting.