Most people tend to think of white-collar crime as something that involves wealthy people involved in complex financial schemes, such as the Bernie Madoff case. While it’s true that some white collar crime cases take place on a large scale, there are just as many smaller-scale cases that involve regular businesses.
In fact, it can sometimes be more difficult for police and investigators to discover these types of cases, as business owners might not always realize they’re losing money — especially if the fraud is carried out by a long-time employee the business owner believes they can trust and rely on.
In many situations, white collar crimes are carried out by employees who work in a financial role. Because these employees might have inside access to company records, they can often conceal their crimes, siphoning money away from their employer for years. By taking small amounts of money consistently over a long span of time, employees in financial roles can accumulate hundreds of thousands or even millions of dollars before anyone realizes it’s missing.
According to the FBI, white collar crimes total around $300 billion each year. This makes it more costly for businesses around the United States to operate, and it can drive up the cost of goods and services for regular consumers. Fortunately, there are steps businesses can take to protect against being a victim of white-collar crime according to federal white collar crimes defense lawyers at the Dallas Law Office of Broden & Mickelsen.
When Employees Engage in White Collar Crime
It’s not just the mega-rich who commit white collar crimes. Many crimes involving financial fraud are carried out by the employees of small and medium-size businesses. It’s common for a modestly sized business to employ one bookkeeper or accountant who handles the majority of financial matters for the business.
This employee might even be in charge of signing paychecks or preparing the business’s tax returns. The employee might handle accounts payable matters, which means they see all the money that comes into the business.
With this kind of authority, it can be fairly easy for an employee to steal money. In many cases, this type of theft starts out as a relatively small matter. For example, the employee might need a few dollars to fill up their gas tank or make rent when they’re short for the month. They might even tell themselves they will reimburse the company down the road.
Once they see how easy it is to get away with taking money, however, the employee might end up taking additional funds. Before long, they might start dipping into their employer’s profits to fund a lifestyle they couldn’t otherwise afford.
There are a few strategies businesses can use to try to prevent this type of theft.
- Checks and balances – One way is to prevent employee fraud is to implement a sort of checks and balances system by requiring at least two people to sign off on deposits and expenditures. If two people are required to approve money that flows in and out of the business, it’s much harder for someone to take funds for their own purposes.
- Outsource accounting – Some businesses also hire a third party bookkeeper or accountant to manage their finances. In some cases, it makes sense to outsource this type of work. An independent financial expert can provide oversight, making sure funds are handled properly.
It might also make sense for a business owner to hire an outside financial expert to conduct a yearly audit of the business’s financial records. This audit helps protect against employee fraud since employees will know in advance that an outside party will be double-checking their work and reviewing the financial records.
When Third Party Vendors Engage in White Collar Crime
Of course, not all third-party workers or contractors are trustworthy. There have been many white-collar crime cases in which the individual or entity perpetrating the fraud was actually a third party or outside firm.
These types of cases can involve a number of schemes. For example, a vendor might submit an inflated invoice, overbilling so that it can keep some of the profits for itself. In other cases, a third party might carry out fraud by delivering a substandard or counterfeit product.
Businesses can cut down on this type of fraud by thoroughly investigating their vendors. Organizations like the Better Business Bureau rate companies based on their trustworthiness, service and customer experiences. Before contracting with a company, it’s important for business owners to do their homework and research any third party vendors they’re considering.
It’s also important for business owners to maintain accurate and honest financial records, as businesses that lie about their books for the purposes of securing a loan or other financing, can also engage in a form of white-collar crime. Any business owner who has been accused of a financial crime should speak to an experienced Dallas white collar crime lawyer at the Broden & Mickelsen, LLP. These are serious cases, which is why it’s important to work with a criminal defense lawyer who regularly handles complex federal white collar crime matters.
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Prior results cannot and do not guarantee or predict a similar outcome with respect to any future case.