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If you think it can't happen to your business, you're probably wrong

Portland area newspaper headlines say it all.

"Woman accused of stealing $70,000 from family business" in Sandy.

"Manager accused of stealing more than $100,000 in merchandise" from a Washington Square retail store.

"Former executive accused of stealing $1.4 million from Beaverton freight company."

The methods were different with each of these recent fraud cases but the crime is the same — stealing from a business.

Overall, white collar crime in the U.S. has been generally trending lower during the past five years as banks and credit card companies have improved their electronic security systems. However, theft from businesses and nonprofit organizations remains a serious problem, the Association of Certified Fraud Examiners (ACFE), headquartered in Austin, Texas, says. According to a 2016 ACFE fraud study, the median loss from a case of "occupational fraud" was $150,000.

If a single employee does the stealing, the median loss was $65,000. Theft by a manager, $173,000. If an owner-executive perpetrates the crime, the loss averages $703,000.

"The problem with my business clients is that they are very busy and don't take time to look at monthly bank deposit receipts and bank statements," said Tiffany Couch, Vancouver forensic accountant and past board chairman of the 75,000-member national ACFE. "This creates a lot of temptation," she said. "A bookkeeper who knows that the business owner is not looking means that person is a lot more susceptible to taking money."

Cases can be heart-breaking for everyone, Couch said, because the person doing the stealing often is among the most trusted employees of the business.

For example, the woman charged in June last year with stealing an estimated $70,000 from a family-owned business in Sandy, Oregon was considered "a trusted family friend," a KATU news story said. It took her just 11 months to steal tens of thousands of dollars while sitting at a desk just a few feet from the owner.

In December, the perpetrator, who had two prior fraud and theft convictions, pleaded guilty and is awaiting sentencing.

The business owners agreed that a background check would likely have prevented the hire and the subsequent financial loss, although the thief had used aliases.

Harder in the old days

Couch, who has 20 years of experience as a forensic accountant, said that in the old days it was more difficult to catch a thief because transactions and deposits were done on paper, not electronically. A dishonest employee simply could use an eraser to cover their tracks, she said.

"These days, with payroll records, credit card transactions and deposits all done electronically, it is easier to follow an electronic trail," Couch said. "On the other hand, monthly printed bank statements no longer show up in the mail. A business owner must take the time to check the online accounting. Many business owners are too busy to regularly do that," she said.

Making a good hire that includes a background check is the best fraud prevention step.

Then ongoing anti-fraud controls such as regular management review and data monitoring as well as outside analysis reduces the risk of employee temptation and theft. Prevention may be as simple as hiring an outside accountant who regularly double-checks the business books.

Money may not be the only thing fraudsters are after. In 2015, a Williams Sonoma store manager was caught stealing store merchandise with an estimated value of $100,000.

Reaching more people

Couch, 42, is so passionate about her work that she has written a book, "The Thief in Your Company," to help business owners protect their organizations from insider fraud.

"Hopefully, the book reaches more people, saving them from real frustration and heartache," she said.

The first thing a business owner must do is get rid of the idea that "it can't happen here," said Couch, own operates Acuity Forensics in Vancouver.

"In my experience, the fraud is usually committed by the ones you trust the most, the person that is most liked," she said. "But sometimes the stealing starts from day one."

Couch, a certified public accountant and a certified fraud examiner, said she sees the same fraud schemes happening over and over.

Recently, she was called into a business after the owners discovered that the office manager had written herself a $2,500 check to pay a credit card bill.

"She tearfully confessed, she said she was just paying off her Christmas spending and that she would pay back the money," Couch said. The owners believed her but asked Couch to look further into the business records. The investigation showed that in the prior seven months she actually had stolen $98,000.

In her final report that covered the prior five years of business records, Couch found that the employee had stolen as much as $550,000 from the company and began stealing six weeks after she was hired. The FBI got the case, she said.

Certified fraud examiners, such as Couch, receive special training and must pass a series of qualifying exams to win the designation. Fraud examiners are hired to conduct internal audits. And they may work for banks or the FBI.

If you are business owner and suspect an employee of theft, a good first step is always to call the police, Couch said. However, these cases are time consuming and document intensive. The better you put your own case together, the more likely the crime will be investigated and prosecuted.

That means retaining all business records important to the case and contacting an employment attorney for advice on how to proceed with the suspect employee.

"Uncooking the books may require getting help from a forensic accountant," she said. "Someone who knows what they're doing."

Her basic rule: Safeguard your business from employee fraud by having checks on everyone working in the business from top to bottom. "That keeps everyone honest and keeps everyone safe in their jobs," she said.

Julia Anderson writes for women about money and retirement at sixtyandsingle.com.

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