A private investigator can identify employee fraud and thief in your workforce, eliminating future threats while maintaining objectivity.
Despite the ability of a business to flourish in any economy, every company is still vulnerable to the possibility of employee theft or fraud. Like a frog in a boiling pot, sometimes companies can be taken by surprise when the theft has gradually grown over a period of time, and no one is the wiser until the business takes an unexpected financial hit. Companies can protect themselves from these frauds with costly in-house investigations into the crime, but a private investigator can go a long way towards identifying all perpetrators, no matter how high up the chain of command it goes.
Recent statistics from several government agencies who supervise finances and labor estimate theft committed annually by employees reaches an excess of $50 billion. Even an isolated incident can blanket a company in a crisis and leave them clawing out of the depths of bankruptcy. It starts with small things, such as taking office supplies for personal use. When this action goes unchecked, the employee might begin taking from petty cash without authorization. The level of the theft will always ratchet up the longer the thief goes undetected.
When an investigator attempts to identify employee fraud is knowing what to look for. Elliot Rysenbry of Trustify says there are six warning signs of employee theft for which Human Resources should be vigilant.
Behaviors of people who might be very dedicated to their jobs are also characteristic of people who might be stealing from your business. People who are always working long hours and never take a vacation. This “dedication” is a front for superiors. People who are stealing via their position do not want to be absent from the workplace for fear a temporary replacement might notice inconsistencies that could indicate fraud.
Hyper-vigilance of connections
When an employee has a close personal connection/relationship with any vendor or associated financial institution, it’s usually not cause for concern of impropriety. However, hyper-vigilance or strong protection of those relationships, it’s possible there’s something in the business arrangement for this employee. One of the most common names for this kind of fraudulent arrangement is “kickbacks” or getting a cut of the profits vendors or financial institutions receive from a thieving employee.
This is one of the most common types of theft committed in the workplace. Line items on expense reports are either inflated or fabricated entirely in order to pad the thief’s pocket.
Payroll knows what individual employees make week to week, so when there are unexplained extravagences in an employee’s life, such as a flashy new car, it’s important HR keep an eye on said employee.
Frequent small transactions
Taking from petty cash in small amounts can add up quickly, and is often a sign of more serious, larger-scale fraud being committed within the company.
Employees who feel as though they are underpaid or undervalued at their company are also plausible perpetrators of theft. Whether as a motive or a rationalization, they feel as if what they stole was deserved payment.
While theft can be an extremely toxic element in any work environment, one of the ways to exacerbate it is by conducting a poor internal investigation. Human Resource employees are unsung heroes of companies and businesses, as they are one of the crucial gatekeepers with control over the quality of employees. Not only are they very busy individuals, but they might not be the most objective persons to conduct an internal investigation.
Sometimes a lack of experience with investigations will cause a member of HR to make false or unprepared accusations about the guilt of a particular employee. If this employee is unimpeachable, the company can open itself up to lawsuits and bad press. Even if HR is not conducting the investigation, most employees are not trained investigators and might conduct an inquiry in an illegal manner that could also open the business up to litigation. Sometimes a pay cut for an employee suspected of stealing might seem like a quick and quiet way to resolve these issues, but legal counsel should always be consulted before making these decisions. By the same token, hasty termination of these employees to avoid a messy investigation should always involve the opinion of a legal expert—all in the name of protecting the country from plausible legal trouble.
The simple answer to avoiding all of the aforementioned ways to inflame an internal theft investigation is to retain the services of a private investigator. Private investigators can save companies from themselves in terms of opening themselves up to litigation or bad press. Private investigators have more skill and experience in these areas preventing investigations from blowing up in a negative manner. They are independent contractors, therefore, do not have a dog in the race when it comes to identifying the culprit of the theft. Their objectivity will be crucial, especially if the theft within the company goes all the way to the executive level. Because of their authority over employees, CEOs of companies might often get a soft front from HR or other investigative bodies within the business. Private investigators—being unknown to other employees in the business—can also conduct undercover operations to yield truthful and unbiased results. The private investigator, along with business counsel, can also advise Human Resource departments how to proceed once the culprit has been identified. Whatever the specific needs of a company, always consider hiring a private investigator to conduct internal investigations in order to protect and enhance the longevity of your business.
Identify employee fraud and theft today with Lauth Investigations International. Call 317-951-1100 or visit us online at our website for a free quote.
What is a corporate crisis? While exact definitions may differ, a corporate crisis is generally defined as “an event, situation, or public initiative that threatens the company’s ability to effectively operate its business. A crisis can escalate into a disaster or long-term impediment to business growth if not handled with efficiency and sensitivity to all involved.” This is a large umbrella that encompasses many of the internal issues we associate with companies, including (but not limited to) fraud, theft, misconduct, and harassment of all kinds.
A majority of corporate crises fall into one of three categories: personnel, systemic, and contextual.
A personnel crisis is an internal issue that is a direct result of an individual employee or a group of employees’ bad behavior. Theft by personnel is one of the most widely-reported crises in corporations throughout America. The scope of this problem can be as small as stealing office supplies all the way up to executive embezzlement. Sexual harassment is a type of personnel crisis receiving a welcomed new level of attention in corporations. In the age of the #MeToo movement, corporations are viewing their workforce very differently when it comes to identifying potential predators in their midst in the name of a “pound of cure.” Prudent steps taken when vetting potential hires and current employees has saved companies difficulties down the line, especially in legal fees and public relations.
A systemic crisis refers to a major breakdown in operations negatively impacting business. A common example is food service corporations that receive a sudden influx of food poisoning complaints. Source of the outbreak may be traced back to how the supplier or distributor handled the food product, and suddenly, there’s a systemic crisis: A misstep in operations led to a large sum of incidents. Systemic problems manifest themselves in many forms, including external theft. Repeated theft, both in cyberspace and the real world, is often the result of insufficient security within a company. Consequently, the company incurs loss because they remain vulnerable. Companies who have chronic turnover due to employee misconduct may have flaws in their vetting system for potential employees. That is another example of a crucial operation where a breakdown occurs and erodes a company’s profits with labor hours to hire a new individual to fill a vacant position.
A contextual crisis has exponential consequences for a business relative to its size. These are the types of crises that companies cannot anticipate, because they influence public perception of their brand based on real-life events. A major news story like a mass shooting, or a major criminal case, or a lawsuit, can negatively impact a brand even if that event is not directly associated with that company. These external events can drastically change a company’s internal operations, and can weigh heavy on employees at every level. Sexual harassment is another example of this type of crisis in motion. The media coverage regarding high-level Hollywood executives like Harvey Weinstein and his alleged history of abuse have executives in companies of all shapes and sizes revisiting their human resource policies and practices when it comes to addressing sexual misconduct in the workplace. Internal operations receive a major overhaul to the benefit of a healthier work environment for everyone.
When it comes to corporate crises, not all businesses will be able to afford specialized investigators to work in-house to resolve issues that arise. Even if they can afford these professionals, investigators employed by the company—regardless of the quality of their work—by definition cannot provide a truly objective solution to any problem. Because they’re employed by the corporation, they have a potential stake in the outcome of the investigation, whether that stake be real or perceived. Hiring an independent professional, like a licensed private investigator, to conduct an external investigation is the best way to ensure that the solution is objective. This is particularly important personnel crises, because terminating personnel based on an unbiased investigation is kerosene for a disgruntled employee that can manifest itself with many devastating consequences—most commonly wrongful termination lawsuits. Private investigators can assist in systemic crises as well, like the example of repeated thefts with regards to security. Private investigators who specialize in different kinds of risk assessment can identify a company’s vulnerabilities to thieves and scammers, and provide them with a game plan to improve their security.
If your business has encountered a corporate crisis, call Lauth Investigations International today for a free consultation. Learn how we can provide you with an objective solution to your corporate crisis. Call 317-951-1100, or learn more about our services here.
Over the past weekend, many Americans participated in St. Patrick’s Day festivities in their community. With the 17th of March falling on a Sunday this year, many service industry establishments held events and promotions all weekend, which for many employed individuals meant three days of imbibing and socializing. After all of the excitement and green beer, it’s no wonder that March 18th is one of the most common days for employees to call off in the entire calendar. Consequently, there is a spike in employees who are suddenly experiencing “flu-like” symptoms, including sweating, headaches, and stomach upset—employees who are calling in sick who could very well just be hung over. This is what employee malingering looks like, and it can have disastrous impact on businesses and corporations throughout the country.
Employee malingering can be a difficult subject, as it usually falls under the umbrella of other sensitive topics, such as FMLA abuse. Some companies do not feel comfortable investigating possible abuses of FMLA, and do not probe into suspicions of malingering. Often, however, sometimes it’s just a matter of an employee who has a chronic case of the “sniffles.” Malingering employees have a pattern of faking sick in order to get out of working. This can be for a single day Malingerers cost companies across the country billions of dollars a year, with exponential costs of investigation and possible litigation, laying heavy blows to a company’s profits.
Malingering is preventable, but only if an employer provides consistent and accommodating policies concerning their employees’ physical and mental health needs. These enforced policies will leave no single employee feeling victimized by a vindictive supervisor or employer. If your company requires employees to document visits to the doctor, then there should be no exceptions in to that rule, barring extenuating circumstances. After all, asking for documentation is one of the best ways to prevent malingering, because employees who would simply rather stay home will be reluctant to spend their day in the doctor’s office as an alternative. This consistent enforcement of company standards also adds another veneer of integrity that becomes valuable in later stages of any investigation. It’s also important for an employer to remember that there must always be room to accommodate an employee’s needs. Unreasonable, aggressive policies with regards to sickness can make a work environment unhealthy, both in the physical and metaphysical sense. Employees who don’t feel free to take a sick day when they have an actual illness can spread it to the entire workforce. Employees who also feel as though their needs are not being accommodated can be resentful and their work performance may suffer as a result.
Just as the case with FMLA abuse, in order to have an objective investigation into any honest suspicions of malingering, it’s crucial to retain the services of a external, third-party, private investigator. Investigators appointed from within a company to investigate suspicions of malingering may know the ins and outs of a business intimately, but are objectively useless when it comes to investigate one of their own. For starters, if this employee is well-known to much of the workforce, they will be easily spotted when conducting any surveillance on an employee who is suspected of malingering. They will be recognized and the employee will immediately be on their guard. If an internal investigator is not licensed by the state, they may not know the legality of their methods and it can taint the investigation going forward. Private investigators—while having more autonomy than law enforcement—still must operate within state and federal law. Private investigators are trained to gather and document evidence and interview witnesses to corroborate their observations of a malingering employee’s movements. Any business owner knows that investigating employees for any reason has the potential to lead to litigation, and during those proceedings, an objective, third-party investigator is the one with the most integrity during deposition or testimony, as they do not have a stake in the outcome of the case.
If you suspect an employee of yours is malingering, then lay the groundwork for a solid investigation by retaining the services of a qualified licensed investigators. When it comes to taking the steps to investigate employee malingering, an employer must begin with what’s called “honest suspicion,” which is pretty self-explanatory. When an employer investigates a malingerer with honest suspicions, the decision to hire an external investigator to do so continues the transparent narrative in which the employer acts in the best interest of the company. Hiring private investigators to maintain objectivity not only make for a quality investigation, but also foster a culture of integrity and mutual respect within any company.
When growing a business, executives and owners have to go the extra mile when it comes to protecting trade secrets. In the pursuit of their company’s business, a common practice for corporations of all sizes is implementing non-compete clauses in their employees’ contracts. This ensures, should an employee leave the company for any reason, they cannot utilize trade secrets for the purpose of building a similar business of their own. It’s in a business owner’s best interest to be preemptive in protecting themselves from client poaching, theft of company secrets, and possibly even slander when it comes to current and former employees who violate their non-compete agreements.
Though they go by several names and the laws concerning them vary state to state, non-compete agreements are generally a legally-binding contract between an employer and an employee, whereupon acceptance of a job offer by a company, an individual agrees during their employment and following their termination they will not enter into any competing business for a predetermined period of time. Whether it’s working for a company’s top competitor, or striking out in their own business, non-compete agreements protect trade secrets, sensitive company information, and prevent competing businesses from poaching successful employees with promises of a handsome pay-raise in exchange for the expertise they might have gleaned from their time at their previous position. This kind of information can range from client bases to business operations to future products and services. The duration of the non-compete agreement following an employee’s termination have to be well within reason, as no employer can permanently preclude a former employee from any line of work.
Not every company experiences difficulties by virtue of a former employee violating their non-compete agreement, and some companies do not see the need for non-compete agreements at all, but the consequences of trade secrets being used to steal a company’s business can have devastating effects, ending in the worst possible circumstances with a business closing and an owner in debt. Even if a company is able to quash a non-compete violation in court, the cost to the company in legal fees can be astronomical, especially for smaller businesses. That’s why it’s important for owners and executives to be preemptive and proactive when it comes to potential violators. Luckily, a private investigator can help at all stages of a non-compete violation investigation.
Human resource employees are the salt of the earth, and can have a great influence on how a company develops based on the individuals they select for their workforce. However, human resource employees are not lie detectors, and do not always have access to legitimate, comprehensive background screening tools. Background screenings and checks are among the most common service associated with private investigators. If there is something suspect in a candidate’s past, licensed private investigators have the tools and experience to find it out. Private investigators can pull a candidate’s criminal history, financial history, and interview persons in their lives who can speak to character and work ethic. They can also spot patterns in a person’s work history or lifestyle that could be high-risk factors in a hypothetical non-compete violation—things like transience, long periods between positions, or financial destitution.
Some malingering employees can’t wait to be terminated before violating their non-compete agreements. It’s not uncommon for these individuals to exploit trade secrets for their businesses own gain while on company time and dime. While on a business trip, an individual might use company per diem to buy drinks for a person who could be a potential investor in their new business. Employees might use company supplies to supplement their project, such as printers, fax machines, computers, and other equipment. Private investigators can conduct diligent investigations within a company’s workforce to root out the source of the theft. Private investigators can interview witnesses, including upper management and other staff, review vital documents like bank records, and conduct surveillance of the company’s operations as needed to expose the perpetrator. Their objectivity makes them an ideal candidate to conduct such an investigation because they do not have a stake in the outcome.
There are many circumstances under which a business owner might come to suspect a former employee has violated their non-compete agreement. Word might have traveled through business circles that a similar business is starting up. Employees might start disappearing in clusters. Clients may suddenly decide to sever business ties in favor of a new contender in the competition. Whatever transpires, one thing is certain—documenting and exposing this exploitation is imperative, because the consequences can be costly. Retaining a qualified private investigator who specializes in corporate crises is crucial to resolving non-compete violations quickly, before the exponential costs begin to erode profits. Private investigators can perform surveillance on suspected former employees to document their movements, record with whom they met, and collect evidence such as pictures of a brick and mortar establishment, marketing materials, vital documents, and filings with the Secretary of State. Private investigators can send undercover operatives to infiltrate a workforce to get information the business privy only to employees. They can also enlist the aid of a confidential informant—an individual already within the company to provide information. This requires quality interviewing skills and developing a natural rapport with potential witnesses, both important qualities in a qualified investigator.
When non-compete violations are at their ugliest, not only do violators seek to siphon off their former employer’s business by exploiting trade secrets and knowledge of their operations, but they can also play dirty by exposing this information publicly. Another method involves deliberately spreading lies about the competition in order to drive business towards the former employee’s company. That’s known as slander and it’s legally actionable. Documenting the perpetuation of these lies and proving they are in fact false are crucial in these cases. Diligent fact-finding is the cornerstone of any private investigator’s expertise. Private investigators can conduct cyber investigations to track down the users behind profiles that post false negative reviews, follow rumors back to their roots, and forensically track how information left the competition and made its way into the former employee’s business nucleus. They can implement many of the strategies aforementioned: surveillance, interviewing witnesses, documenting evidence. Slander cases tend to have a divisive they-said, they-said narrative, which is where a private investigator’s objectivity becomes invaluable once more. Private investigators have no stake in the solution of an investigation. Their independence coupled with their expertise and resume make them spectacular witnesses in any subsequent litigation.
When a company has a non-compete agreement in place, it’s important that executives and owners are proactive when performing a risk assessment on a potential employee. It’s important that a healthy company culture fosters good comradery, honesty, and a policy of “if you see something, say something.” Building a case against a former employee who violated their agreement can be time consuming at the expense of company resources. Dealing with the fallout from litigation can bring a reliable business to its knees. Private investigators can assist in all phases of any non-compete agreement violation, and retaining their services will go a long way towards a body of objective evidence and testimony that can resolve a company’s crisis.
If you have suspicions that a current or former employee has violated their non-compete agreement, contact Lauth Investigations International today for a free consultation on how we can help you! Call 317-955-1100 or find us online at www.lauthinvestigations.com.
Carie McMichael is the Media and Communication Specialist for Lauth Investigations International. She regularly writes on investigations, missing person, and other topics in the criminal justice system.
Even if you’re not a fan of Fox’s successful prime time drama, Empire, you’re likely aware of the name Jussie Smollett by now. Smollett has come under fire in the media and on the internet for his allegedly false account of a racially-motivated attack against him in January, where he alleged two men attempted to strangle him and pour bleach on him. When the story first broke, it was shaping up to be a watershed moment in conversations about how the current administration is affecting race-relations throughout the country. After law enforcement conducted an investigation into his version of events, they’ve released statements that Smollett may have hired the men responsible to help him stage the attack. The case has created divisive new conversations about the United States’ current political climate, but is also prompting career investigators to highlight the importance of thorough and diligent fact-finding in the early stages of any investigation—especially within corporations.
Conducting an investigation with unimpeachable integrity is very similar to building a structure ready to withstand natural disasters. Laying a firm groundwork from the moment of the intake narrative will set an impregnable foundation allowing investigators and support staff to develop strong leads. Investigators must be prepared to ask every question—albeit inane or delicate—in order to ensure they are getting all of the existing, relevant information on the case. This is a process called fact-finding, in which a victim or witness’s statement is documented and entered into record, thereby allowing investigators to thoroughly vet every aspect of their statement. Were they in fact present when the incident took place? Can they accurately describe the alleged perpetrator? Is their story consistent across multiple iterations?
As is the case with any investigation, operatives are racing against the clock. With time, witnesses’ memories fade and witnesses themselves disappear, having relocated or simply left town. As time goes by, evidence is eroded, eventually disappearing, eliminating the leads they might have developed. This is why thorough fact-finding is so important, because investigators who are operating off false or inaccurate leads can lose days or weeks on a case as they chase a lead that will eventually come to no end. While investigators chase those dead leads, the truth about what actually occurred dissolves into obscurity.
Investigators in the Smollett case were able to vet his account of events and discover there may be more to the story than meets the eye. The case was not an isolated incident of allegedly false accusations having major consequences for the parties involved. Regardless of why an individual would make false accusations—whether it was with malice or simply a mistake—these circumstances could occur in many areas of life that could be devastating to both individuals and corporations.
Allegations of misconduct in the workplace immediately come to mind. Whether it’s allegations of theft or sexual harassment, these are the kinds of cases where it’s crucial to have the intake narrative well-documented, with detailed first accounts from all principles on the who, where, when, how, and why in any series of events. Cases regarding misconduct in the workplace have a higher chance of being litigated following the completion of any investigation, usually through civil and wrongful termination lawsuits.
A thorough and diligent private investigator is an invaluable asset to both sides of any investigation, as they are an independent third party and do not have a stake in the outcome of the investigation. Any fact-finding performed by an objective third party stands up to a much higher degree of scrutiny by the opposition. Investigators who are directly employed by any parties in either side have a lot to lose if their employer faces ruin following a lawsuit.
Which brings us to another issue in handling the fact-finding internally. Internal investigators can have a variety of qualifications depending on the corporation’s procedure. It’s true some businesses have licensed investigators on retainer to assist in regular operations, like a business who hires a private investigator to run a background check on a candidate for an upper management position. However, depending on the size of the company, the investigating party in some corporate crises is just the head of Human Resources—who might then be supervising other subordinates to do the legwork. Human Resource managers are invaluable employees who keep businesses running like clockwork, but this does not necessarily qualify them to conduct an investigation in every possible scenario, such as investigations requiring surveillance, undercover work, or properly documenting any evidence that might be recovered. This kind of oversight can have disastrous consequences in the later stages of an investigation, or even in a court of law. The opposition’s case is strengthened when there is evidence an internal investigator has not done their due-diligence.
Corporations of all sizes, trades, and levels of notoriety experience crises throughout their history. When disaster strikes and the stakes are high, it’s important to retain the services of a qualified, licensed, private investigator to begin an investigation. It’s not uncommon for a private investigator to be hired on after internal investigators have already made an attempt. It’s best to start strong, with due-diligent service from a seasoned external investigator to lay an impenetrable foundation for a thorough investigation.