White-collar crime covers a great deal of offenses that might seem very different; however, some of these traits have them united under the same umbrella. All white-collar crimes deal with some deceit, avoid the usage of violence and many times come about because the perpetrator was given the chance by advantage of his or her occupation. According to Edwin Sutherland, white-collar crime is “crime committed by a person of respectability and high social status in the course of his occupation” (1949, p.9). In addition, many of the features of the committed crime happen during the course of work while being as part of the employment duties of the criminal. One great example of white-collar crime is embezzlement in which is defined by The Federal Bureau of Investigation (FBI) as the “misappropriation or misapplication of money or property entrusted to one’s care, custody, or control” (FBI, 2001). In other words, embezzlement is type of fraud where a person illegally takes money from an account he or she has given legal access to ranging from high-end bank employees to a cashier or waiter who pockets the money given from a customer to pay a check. This paper will discuss how embezzlement happens, some of the costs and statistics related to embezzlement in the United States, and, lastly, some of the current efforts companies and federal agencies are doing in order to stop or prevent embezzlement.
Embezzlement is a non-violent crime; however, it is a serious crime that has much impact on its victims. A very important feature to distinguish embezzlement from other theft related crimes is the fact that some trust was violated between the owner of the money or property and the criminal who has stolen it. Embezzlers are “trust violators” who deprive their victims of economic benefits and of the ability to trust others financially (Crime and Justice, 1971: 247). One of the most common forms of embezzlement is employee theft. Employee theft is one of the most predominant and costly problems faced by today’s business organizations. The techniques that an employee can embezzle or steal from an organization depend on many reasons, including what kind of money or properties was entrusted to him or her, the degree of access to the organization funds the individual might be allowed because of his or her position, and the degree of trust the owner of the money or property has towards the deviant. For instances, a cashier at a department store may fail to ring some of the purchases and pocket the money or a waiter may void a transaction from the register and still charge the customer and keep the excess money. More serious offenses of embezzlement are related to high-rank companies like banks and investment companies. For example, an employee with more access within a company’s expenses accounts might cheat on the reports, or one may misappropriate funds through billing, inventory or payroll schemes. Although researchers had found that many of the embezzlement made by employees of a particular company were solitary events, the influence of coworkers on theft behavior has been shown to have a very important impact on many of these deviant behaviors. In his case study in occupational theft, Mars not only shows how the “mores of theft are accepted within a particular group”, but how the “group works together to create a system of theft that is beneficial to the workers and does not hurt the company” (Mars, 1974). Now, in order to better explain why employees engage in certain types of deviant behaviors against other people whom trust on them, Green (1993) underlined four steps as leading to embezzlement. Such steps are: “an unshareable financial problem, embezzlement defined as a means to fix the financial problem, an offender with skills to commit the crime, and neutralizations to give the offender the mental strength to commit the crime.” Therefore, employees who engage in embezzlement either against their own employers or clients whom they hold access to their money enter this “lifestyle” due to a combination of the above described steps.
Many people view the workplace as a place protected from deviant or questionable behaviors found in many other aspects in society; however, statistics can be quite alarming. According to the National White Collar Crime Center, “it is estimated that losses due to employee theft can range from $20 to $90 billion annually to upwards of $240 billion a year when accounting for losses due to intellectual property theft. This makes theft by employees two to three times more costly than all of the nation’s Type I index crimes combined, and accounts for approximately 30 to 50 percent of all business failures" (National White Collar Crime Center, 2009). In addition to the monetary costs of employee embezzling accounts within their corporations or their client, the cost of the time spent in discovery and recovery, wrecked trust among everyone surrounded, broken relationships, loss of clients, and lastly, but definitely not least, health issues associated with the ongoing stress are far greater than actual money that was lost. The emotional and physical cost of people victims from some of the ways of embezzlement most often surpass the financial cost lost. Many people lost every single savings they had due to the fact they trusted someone to manage their accounts, hired certain employee, or gave too much access for someone who was not trustworthy. Multiple business owners sold their business simply because they lost the heart to continue. Statistics shows that as many as three fourths of all employees steal from their employers ate once (National White Collar Crime, 2009). In addition, many employees engage in theft behavior as a regular part of their lives on the job. To complement, embezzlers engage in such acts from an average period of twenty-three months, ranging from one week to nine years. Therefore, embezzlement is a crime in which combines the need and opportunity of the offender. Statistics from the Federal Bureau Investigation reveal that the “typical bank robber steals approximately $3,000 in a given robbery, and stands about 61 percent chance of being arrested. On the other hand, the average embezzler steals approximately $42,000, and stands a slim chance of being apprehended and prosecuted.” Most embezzlers participate in such acts due to the misunderstanding of his or her wants and needs; in addition, using motives as greed for bigger, better life as excuse for unwise life choices and decisions.
There is not one employer who likes to consider the chance that dishonesty from one or more of his or her employees can bring him serious loss. Traditionally, many of the organizations who were victims of embezzlements acts from their employees did not want the public disgrace of being labeled as an “easy target” or a company that protected embezzlers and other types of dishonest employees. Most of the issues were handled within the company, if they were handled at all. Also, many companies used to view employee theft as cost of doing business. On the other hand, people who were also victims of embezzlers did not report to the authorities due to shame of being fooled easily and did not want to destroy their image to the public surround them. However, in recent years, such organizations have started to disclose the reality that they have hired dishonest people who were causing significant economic losses. In addition, many companies are increasing the usage of deterrence and apprehension against employees who engage in theft whether a small amount or in most cases a bigger amount. In today’s world with one third of new business failing because of employee theft, prevention is a requirement for any business. So, what are current efforts that business and government agencies are or should take in order to prevent or stop embezzlement and some other forms of employee theft? According to the Association of Certified Fraud Examiners, one of the first things companies should do in order to prevent employee embezzlement is “establish a firm company policy on theft” (Citation). Most organizations are embracing a “zero-tolerance” approach to theft. Another way companies are preventing employee embezzling money from companies account is during the hiring process where hiring managers are selecting employees more carefully to end insider theft. According to Pedneault, employers should use background checks and credit checks that will inform them of the employee’s prior criminal record (p. 227). In addition, Dr. Payne describes many different types of prevention strategies to lesser the extent of employment theft such as importation strategies, internal strategies, technological strategies organizational culture strategies, and awareness strategies (Payne, 2012). On the other hand, the Federal Bureau of Investigations had made partnerships with numerous agencies to capitalize on its expertise in specific areas such as securities, tax, pensions, energy, and commodities. In addition, the FBI has also worked with many different organizations in the private industry to increase public awareness about combating corporate embezzlement and fraud (FBI, 2010). Hence, the steps taken to prevent or stop embezzlement acts from employees can be really difficult and costly for many companies; however, the rewards that will come with following such steps will be outweighing the costs. In addition, acting swiftly when problems arises, and treating its employees well, a company will be on a way for reducing and even eliminating employee theft and embezzlement.