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How to Recognize Embezzlement as an Employer

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What Is Employee Embezzlement?

Employee embezzlement happens when a worker seeks to use company money, assets, or property that has been entrusted to them for their own private use or gain. For instance, a common form of embezzlement occurs when an employee is granted access to a company bank account. If they use their access to the account to withdraw funds for their own use, it could lead to an embezzlement charge.

Embezzlement is a serious white-collar crime that can lead to severe consequences. It can even lead to felony charges, depending on the value of the property or the amount of money stolen. 

Embezzlement is different from simple theft by an employee. With embezzlement, the employee has been entrusted with care or ownership of the property in some way, usually for a temporary amount of time or in a limited fashion. With employee theft, the worker might not be authorized to handle the funds or property item.

How Can I Recognize Employee Embezzlement?

Embezzlement can sometimes be difficult to recognize because the employee is given some amount of authority to act and make decisions for the property that they are stealing. However, it may be detected over time if certain patterns of behavior begin to appear. Some signs of employee embezzlement include:

  • Delayed bank transactions, especially business deposits
  • Messy or disorganized ledgers and book-keeping documents
  • Altered checks or questionable signatures
  • Large credits or benefits issued out to one customer (the customer may be collaborating with the employee to move the funds)
  • Unaccounted-for dips in profits
  • Unnecessary or duplicate expenses
  • Reports or testimony from other employees (these can often go ignored because employers sometimes fail to make connections between suspicious behavior and embezzlement)
  • Changes in an employee’s schedules, habits, or standards of living

Lastly, embezzlement can sometimes be discovered through simpler means. For instance, many embezzlement cases are brought due to employee behavior being caught directly on camera or through e-mail exchanges.

What Should I Do If I Suspect an Employee of Embezzlement?

As an employer, you have every right to investigate suspected instances of embezzlement. If you suspect an employee of embezzlement, you can take steps such as:

  • Monitor the employee’s actions more closely
  • Interview the employee to obtain more specific information
  • Obtain witness testimony from other employees
  • Examine documents and records for evidence of embezzlement

However, as an employer, you need to make sure that you do not violate employee privacy rights and that the investigation follows company guidelines and handbook procedures. Failure to follow proper investigation procedures can result in further legal complications such as a lawsuit from the employee.

Should I Hire a Lawyer to Help My Company Handle Employee Embezzlement?

Employee embezzlement is a serious issue that can cost a company much loss revenue and profits. You may need to hire a business law attorney in your region if you have any legal issues that involve possible embezzlement activity. Your lawyer can research the laws in your area and provide advice on how to proceed. If you need to launch an investigation or file a lawsuit, your attorney can represent you and guide you through the process.

Photo of page author Jose Rivera

, LegalMatch Legal Writer

Last Modified: 09-23-2015 08:41 AM PDT

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