Red Flags to Watch For:
Every Business can fall prey to fraud, embezzlement, and other types of scams. That’s how billions of dollars are lost each year; by theft from employees.
You hear about it mostly from large corporations, but size is not a guard against theft. An employee can walk away with goods to resell or with money in the form of cash or checks.
Another type of scheme is that the person in charge of accounting creates “shell companies” that exist only on paper. The “shell company” sets up fake bank accounts and then invoices your company for phony goods or services that have never been delivered and, in fact, do not even exist. Your company pays. Theft also occurs when your trusted bookeeper is skimming incoming money, cashing checks, and pocketing the funds.
These type of thefts happen all the time in large amounts and in small amounts and over a long period of time.
How to protect your business:
- Set up a system where accounting is overseen by persons whose job is to double check the numbers.
- Do not put the same person in charge of both receivables and payables. Consider cameras to videotape employees at work.
- Have security personnel at all entrances and exits to the business.
- Do spot checks and surprise inventory counts on tempting materials and goods (especially if the items are small and valuable).
- If you are approached by someone with an investment scheme that seems too good to be true, be extra cautious before signing on
- If someone has a plan with a guaranteed return and no risk, this is a serious red flag. Keep away!
- Consult with a business attorney who can help manage risk and keep you out of trouble.
Do you have a similar legal problem or related question?
Liat Cohen has been practicing law in the Los Angeles Area for over 25 years. If you have experienced a similar issue, feel free to contact her for a free initial consultation to discuss how she can help you solve your legal problems.