In most situations, simply calling the local police won’t help. False allegations or a wrongful termination may backfire against an employer and cause worse damage than the fraud itself.
Prematurely tipping off an employee or co-conspirators may result in losing opportunities to obtain information and valuable documentation that can be used to substantiate the fraud. An experienced attorney and forensic accountant can help counsel you through this process.
Quickly gathering the facts is paramount to any investigation, along with safeguarding the organization from continued fraud. Documentation substantiating your losses must be complete and thorough.
As your investigation begins to identify the perpetrator and scheme being used, you should develop your objectives.
Some businesses are satisfied with a termination, while others want full restitution and prosecution. Most organizations will quantify their losses before making this decision. Be prepared to be surprised throughout the process. Your loss may far exceed what you first imagined.
Professional assistance is particularly useful in understanding your rights as an employer concerning access to a suspected employee’s office, cell phone, e-mail/texts and voice-mail communications.
Interviews should be conducted by those with proper experience and knowledge of their boundaries. The initial interview may be the best and last opportunity to obtain information. A trained fraud examiner can be very effective in soliciting a confession from an interviewee. During this process, perpetrators will likely become aware that you suspect them of the fraud, so you want to use this opportunity wisely, before they seek counsel.
Investigating transactions, combing through business records and interviewing employees could quickly become overwhelming and disruptive to an organization. As the scheme is identified and developments quickly unfold, it is important for the company to remain focused on its business and identify appropriate personnel to coordinate these efforts. This is extremely important because the fact-finding phase may be quick to start and end. Yet, potential litigation is often prolonged and slow moving.
As soon as it is determined that fraud has taken place, consider notifying your insurance agent. The insurance company must be notified in a timely manner, and perpetrators may have to be criminally charged for a claim against the policy to succeed. If you decide to have the person responsible for the fraud criminally charged, or if you proceed with a civil case, your documentation must be clear, concise and rock solid. Most district attorneys’ offices don’t have many white-collar experts. It is even tougher for them to investigate the smaller cases.
Building and documenting your case in an organized manner will help to ensure that it will move through the system more quickly.
A thorough and well-documented case may lead to a demoralizing situation for perpetrators. Faced with solid proof, they may be inclined to confess.
Your attorney should be consulted as to whether a civil suit should be brought against the alleged perpetrator. If you are having trouble obtaining certain information, a suit may provide you subpoena power to collect additional documents.
For example, obtaining personal bank statements can assist you in quantifying how much of your funds was deposited into the perpetrator’s account. A civil claim can work parallel to a criminal case. It can be used to secure a judgment against the offender’s property so assets won’t disappear while a criminal proceeding limps along.
If an investigation produces solid results, many organizations are happy with a simple termination and a plan for restitution. Many nonprofit organizations choose this route. They are often concerned about negative publicity threatening their funding sources.
Other organizations have a strong desire not to “air their dirty laundry.” Forgoing prosecution usually results in your problem becoming someone else’s in the future, as white-collar criminals will frequently repeat their crime if left unpunished.
Taking the time to carefully investigate an allegation of fraud, enlisting the help of qualified professionals and carrying through with determined prosecution will send an undeniable message throughout the organization.
It may prevent your having to go through this process again in the future.