Archive for the ‘Published’ Category
March 26th, 2012
2011 Publications in the Idaho Statesman’s Business Insider
Several of Denise’s articles were published in Business Insider in 2011:
Kootenai County Learns from Embezzlement
Lessons Learned from Embezzlement Cases at Colleges
Embezzlers Taught Port of Hope’s CEO a Bitter Lesson
How a Caldwell Bookkeeper Stole $1 Million form Isom
Law Firms Face a Higher Risk of Embezzlement than Most
Workplace Fraud May Cost the State Economy $2.7 Billion a Year
Why Bright, Educated People Steal From Their Employers
Your Trusted Employees Are the More Likely Embezzlers
March 26th, 2012
2012 Articles Published in Idaho Business Review
Visit www.idahobusinessreview.com for Denise’s recent articles on fraud and embezzlement:
Five Tips for Nonprofit Board Members;
Don’t Tell Your Daughter I am Here… (Elder Financial Abuse);
Property Management is a Risky Business;
Don’t Lose Touch with Your Company’s Wheel of Fortune
August 1st, 2011
Robbing You Blind
Can you imagine hiding an embezzlement of $31.5 million in a company with $38 million in annual revenue? That’s what a financial officer at Koss did. Koss is a small public company with 70 employees that designs, manufactures, and distributes stereo headphones.
Sujata “Sue” Sachdeva was CEO Michael Koss’ trusted friend and financial aide – that is, until December 2009 when he realized she had stolen millions from the company.
It’s hard to imagine a credit card processor would allow someone to transfer $30.9 million in corporate funds to pay personal credit cards bills. In fact, it was American Express that broke the news of the embezzlement to the company.
It’s hard to imagine how auditors could miss that much money for so long. Koss wondered the same thing and is suing their auditors for gross negligence.
It’s hard to imagine how someone could rack up over $30 million in credit card debt over five years.
It’s hard to imagine how someone with an annual salary of around $200,000 could escape detection for over five years while indulging an extraordinarily lavish lifestyle.
This is an extreme case of audacious greed. How could this happen and why should you care? You should care because similar circumstances cause businesses large and small to downsize or close their doors every year.
Sue Sachdeva was a long-term trusted employee, a personal friend of the CEO, and there was little or no oversight of the finance department on the part of the CEO, audit committee, or board of directors. The business was run “like a family.” Family members trust each other. Everyone trusted Sue.
Surprisingly enough, the typical profile of an embezzler is a long term, trusted employee who is conscientious, industrious, competent, trustworthy, and reliable. Because of these characteristics, the morally flexible employee achieves a position involving little or no oversight — which is like a license to steal.
Certainly embezzlers can be surly and defensive (to keep people from looking at their work) and often have a problem they’ve shared with no one – like a gambling, shopping, or drug addiction. But overall, embezzlers are really nice, which is why they can steal for years and avoid suspicion, even if, like Sue, they are living light years beyond their means.
Why didn’t the auditors catch it? A common misconception is that auditors are required to look for fraud. On the contrary, auditors review internal controls to identify the extent of testing needed to determine if the financial statements are free from material misstatement. Auditors must notify the company if they notice fraudulent or suspicious transactions, but they are not required to look for fraud.
Koss is an extreme example of an egregious embezzlement, but all organizations can and should learn from Koss’ experience. How can companies avoid giving trusted employees a license to steal?
Trust, but verify. It’s okay to trust your employees, but it’s possible to trust too much. Build checks and balances into your processes and take a hands-on approach to oversight. Don’t give anyone in your organization a license to steal.
Copyright 2011 Averti Fraud Solutions, LLC. Originally published in the Idaho Statesman Business Insider, July 26, 2011.
September 15th, 2010
Employee Theft in Group Practices Costs Billions of Dollars Annually
In the September issue of the MGMA journal Connexion, Denise and Jim Margolis present the results of a proactive collaborative research study on embezzlement in the medical practice realm. Find out why medical groups lose an estimated $25 billion to theft and embezzlement every year, and how to prevent it from happening. Click here to read the article: MGMAConnexion_Sept2010Feature
November 1st, 2009
Employee Theft Rises During Economic Downturn
In an article for the Healthcare Compliance Association Journal, Denise brings the current economic situation to bear for a dip in employee morale, and a rise in financial pressures and workplace embezzlement. Includes simple management tips and low-cost solutions to ease the risk.