Fraud Incident Response Planning | Atlanta, GA CFE



Fraud Incident Response Planning | Atlanta, GA CFE

The Fraudster Always Rings Twice

In the movie, “The Postman Always Rings Twice”, I’m not sure a postman even made an appearance. For the fraudster, it can be a much different story.

As Certified Fraud Examiners, we at times attend lectures given by convicted fraudsters. Their tales of embezzlement, corruption and ethical breakdowns are fascinating. They tell stories of travel down a slippery slope, of allowing a need or greed to overtake them, and explain the rationalization of their behavior that led to their offenses. Some are active on the speaking circuit, write books, give testimonials and appear before church congregations.

Recently, I responded to an interview question about hiring the “reformed” embezzler, which deserves further comment. Barry Webne was one who was convicted of embezzling over $1M from his employer, served a prison sentence, and started a fraud consulting business after his release. Webne spoke about the “bogus” process of external accounting firms who audit the books of corporations who hire them. He openly quoted fraud statistics, and cautioned leaders on the evils of fraud and the system which fails to detect illicit activity. Fast forward and Webne is charged and again convicted of another $1M embezzlement with his new employer. The Webne example is only one of many.

For the business owner who wants to hire the “reformed” embezzler, consider the following –

• Fraudsters often present themselves as likeable, repentant and may be 100% forthcoming about their past misdeeds.

• State parole boards hear cases and make decisions based on the information provided, but clearly make mistakes.

• Criminologists and forensic psychiatrists cannot perfectly predict if criminals will cease committing crimes.

• Do you believe because embezzlement is a non-violent crime, that somehow the violator will quickly learn their lesson and never do it again?

We have not begun to discuss the fraud rings, whose members enter the mainstream workforce. They wake up every day, wondering how they can execute another crime against individuals or a business. They are clever and ruthless. If they are caught and convicted, the punishment is typically lighter than that of their violent counterparts.

How about once an employer detects and confronts an employee who has committed embezzlement? It’s a topic which deserves its own article at a later time. Often if terminated, “sent home” or formally suspended, the fraudster returns to the workplace. They gather or destroy any evidence against them. They may use an unsuspecting employee to help them. I’m not just talking about an organized gang member; it’s also the long-term employee who is like everyone’s grandmother. You need not, nor should you, provide any details; but notifying your staff that Grandma Jones is not permitted back on the property is prudent. Retrieve their keys, change locks (they may have a duplicate key), and delete physical and remote access to systems. Strongly consider notifying key vendors if appropriate. Do so, even if the case is still under investigation and a final employment determination has not been made.

A common tactic the fraudster may use is to contact other employees, management, or board members to plead their case and gather sympathy. In their minds, casting doubt about their offense could help them. Fear makes them very clever and very convincing to the uninformed. There is nothing quite like dividing and conquering your accusers. Now, the employer must deal with further internal conflict.

We all love stories of redemption, but deciding you want to give a convicted embezzler a second chance, and provide access to company assets, is highly inadvisable. Most employers are not in the criminal rehabilitation industry, so don’t let the fraudster ring twice.

Fraud Incident Response Planning | Atlanta, GA CFE

Zane Kinney, CFE, PI

2 thoughts on “Fraud Incident Response Planning | Atlanta, GA CFE

  1. Dear Astinel,

    This is to thank you for the work that you do. I know of a very unfortunate fraud case that occurred in my spouse’s family. The person involved served a prison term that resulted in a family torn apart due to divorce and separation of children, along with much grief to extended family. Even further sorrow occurred when the person was released from prison and re-entered the workforce, only to be a repeat fraud offender! The person is now serving a second prison term. This is very hard to understand; but apparently, there are people who are unable to resist the temptation of whatever draws them to this deception. I am grieved for this family.

    I write this note to say, if employers would only put proper controls in place, think how many lives and families might be spared from this heartache. Employers have insurance in place for their buildings, their legal liability and employee health plans. Wouldn’t it make sense to have a fraud health protection plan of controls to prevent people from traveling this destructive path. The cost of loss to employers when a fraud case does occur, would seem to far outweigh the cost of protecting families and innocent children caught in the aftermath — not to mention the cost for all of us to support those serving prison sentences in these cases.

    I also have a friend who was recently frauded by a person posing as an attorney, who would supposedly provide a legal service. My friend lost over a thousand dollars before the truth came to light. Investigation determined that the person posing as the attorney had recently been released from prison for a history of fraud; and was now repeating the offense. This was so difficult for my friend, who has been unable to recover the loss.

    It is hard to fathom that someone would risk this behavior to begin with, and even harder to understand that this repeat behavior is so prevalent. So, again, thank you for your service and education to others. I hope it will make a difference for many.

    Grieved in Georgia

  2. Hello Grieved in Georgia and thank you for your comments! Unfortunately so many business owners believe fraud will never happen to them or use “hope” as a strategy. Proper controls are good; however, a strong anti-fraud program is even better.

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