Workplace Fraud: The Three Types of Employees

Workplace Fraud: The Three Types of Employees

According to the Association of Certified Fraud Examiners, a typical organization loses an average of 5 percent of revenues each year due to workplace fraud.

According to the Association of Certified Fraud Examiners, a typical organization loses an average of 5 percent in revenue each year due to workplace fraud.

There are a few generally accepted types of employees when it comes to workplace fraud and embezzlement. Social science has done a great deal of research on who commits workplace fraud and why they decide to offend. The three most common types of employee, when it comes to likelihood of committing fraud, are: honest employees, generally honest employees, and professionally dishonest employees.


Professionally Dishonest Employees

Often referred to as “professional fraudsters”, these individuals are more uncommon than the other types, but are important to understand and make note of. They certainly do exist, and there may be more of them than you might think. These fraudsters seek companies with weak controls and the inability to detect workplace fraud. These employees move from company to company in order to defraud them. These individuals generally had no intention of working for said company; their only intention from their initial interview is to defraud an organization for personal gain. This type of planned, calculated, and premeditated workplace fraud is one of the most serious types of fraud, and often times they involve large dollar amounts.

Companies can combat these fraudsters by creating stronger controls and implementing a plan to discover workplace fraud. The mere existence of such of a plan to deter workplace fraud can be enough to denture these fraudsters from ever infiltrating the company to begin with—they are looking for any easy payday. Organizations with weak controls and highly autonomous workers should be particularly aware of this type of employee, and take steps in order to make sure they are never hired in the first place.


Generally Honest Employees

The second category of employees is generally honest ones. These employees took the job and, originally, never planned on stealing or defrauding the company. There are two main risk factors that are used to determine how likely a particular employee is to engage in fraud.

The first risk factor is opportunity. If a generally honest employee is given a large opportunity, or many smaller opportunities, to steal from the company they are more likely to commit workplace fraud than an employee with limited opportunity. Limiting the opportunity for workplace fraud to occur may be the single best preventative measure that can be taken to avoid the issue altogether.

The other determining factor is the employee’s perceived need for the money. Employees who are dependent on gambling, alcohol, or drugs are certainly at a higher risk to offend, but sometimes, all it takes for fraud to occur is any level of perceived need and a high level of opportunity.


Honest Employees

They certainly exist, but far too often, employers estimate that they have more honest employees than they actually do. Often times, victims of workplace fraud become victims by believing that their employees are all honest. Other times, employers are concerned about low-level workers while the most likely individual to commit fraud is a long-term, trusted, knowledgeable, and important employee.

Employees that have been around for awhile have a working knowledge of the company, and in turn, understand the best ways that they could defraud the company without suspicion. Companies can help insulate themselves from fraud by understanding that their most likely offenders are also the employees they might least suspect.


Regardless of the character of the workers that a given company employs, it is impossible to completely avoid the possibility that workplace fraud could occur in the organization. Understanding these simple categories can help avoid hiring the wrong people, but because workplace fraud can happen anywhere, it is also important to know how hiring a Private Investigator can help you discover fraud, recover losses, and prosecute offending employees.


Aaron Snyder, Writer, Lauth Investigations Blog


Workplace Fraud: The Three Types of Employees

5 Options for Who to Call When You Suspect Workplace Fraud

Suspect work place fraud? Do you know who to call?

Suspect work place fraud? Call Lauth Investigations today.


So you’ve realized that you are the victim of workplace fraud. What now? For many business owners, it can be frustrating trying to figure out what to do after uncovering fraud in the workplace. Here are five options of who to contact when you suspect that you’ve been duped.


1. Many begin by calling an attorney

You certainly might need one at some point during this stressful process, but not all attorneys are capable of assisting in the same way. Different attorneys have different specialties, and their advice on the proper way to proceed will likely vary widely. Calling your attorney could be helpful, and again, may be necessary. Still, it might not be the best first-option due to the high professional fees that attorneys tend to charge.

2. Luckily there is crime insurance, right?

It’s certainly true—crime insurance can help recover funds lost in workplace fraud cases. However, just like most other types of insurance policies, there are countless factors that play into the decision to approve or deny a particular claim. Far too often, a small error or failure by the policy-holder results in the claim being denied. Not to mention, when approved, crime insurance policies usually only cover a tiny fraction of the overall loss. Crime insurance is great, but it is no substitute for a proper investigation.

3. Contacting the police is also always an option.

The police can certainly investigate; however criminal justice is a slow process, and often times workplace fraud cases can be tough to prosecute—especially if the district attorney feels there is an apparent civil agreement that has already been made. But what if the employee agrees to pay the money back, and defaults on their agreement? For several reasons, the police are only limitedly helpful in workplace fraud cases.

4. Often times a small business owner will contact their CPA.

Again CPAs and other trusted advisors could be needed at some point, but the advice you receive may vary a great deal. Sometimes the actions taken can actually complicate the issue—costing even more in professional fees. Take the wrong step, and you may hurt your chances of criminally prosecuting the employee and having a successful recovery of losses. Although involving a CPA could be necessary, it also may not be the best first step.

5. The correct first step very well may be to contact a private investigator.

Many private investigators have experience dealing with workplace fraud cases; they also have experience working with attorneys, crime insurance companies, police, CPAs, and other professional advisors. Working with a private investigator on a workplace fraud case can yield important results while keeping costs low.


A private investigator can examine the case and determine which, if any, of these avenues would be the most fruitful. Getting a private investigator involved in the case, before hiring other professionals, can help simplify the issue while keeping costs for professional services, like attorney fees and CPA costs, to a minimum.

Explore the blog for more about when to call a professional for a corporate investigation and a few ground rules for a successful workplace investigation.


Aaron Snyder, Writer, Lauth Investigations Blog