NEWS - Banking & Finance

By Lou Phelps, SBJ Publisher

Jan 4, 2012 - A 35-year-old Savannah woman has been arrested after allegedly embezzling more than $17,000 from the company that employed her as a bookkeeper three years ago.

Heather Walker of the 4000 block of Ogeechee Road was arrested last Wednesday by Savannah-Chatham Metropolitan Police Financial Crimes detectives on charges of theft by taking, computer theft and four counts of financial transaction card fraud.

She had been employed by S&W Enterprise on West Bay Street between August 2008 and January 2009 when the manager inquired about unauthorized charges on a company credit card. Walker quit without notice the next workday, prompting an investigation.

Detective R.J. Woodberry’s investigation revealed she took cash from company deposits, forged payroll and petty cash checks to herself and made unauthorized charges on the company credit card, totaling $17,544.

Embezzlement Too Common at Small Businesses

While embezzlement does not take place at only small companies, the percentage of it occuring at smaller companies is much higher due to the need for individual staff members to perform multiple functions. 

There are a few fundamental steps that owners and managers can take to avoid it happening at their company.   

First, do not have the person writing checks and making deposits also be the one to open and balance bank statements.  It is critical that these functions be separated, even if it means that the owner/manager only opens the monthly bank statement and reviews all the checks, but does not do the balancing.  Look at all signatures on checks.  A great step is to require two signatures on a check over a specified amount. In this era of online bank statements, it is important to bank with an institution that either returns your paper checks or provides easy access to view the back of your checks.

Second, look at all vendors to whom your company issued checks.  One of classic methods of embezzling is to set up a fictitious vendor(s) in a company’s Accounts Payable system, and then write them checks. The embezzler simply creates a small business account as a sole proprieter using their social security number, and deposits the checks into their “small business” account…usually at a smaller community bank where there are sometimes less stringent practices.  They often write the checks for small amounts to not attract attention…but the drip, drip, drip adds up.  

Third, closely look at all credit card payments for bills and to vendors, as well.  Remember that the embezzler can also set up a PayPal account for their fictitious enterprise, and use your company credit or debit card to make these payments to themselves. 

Fourth, whomever IS balancing your bank statements should not be allowed to make General Ledger entries to balance the checkbook.  Do you know how to look at a list of General Ledger entries made by your bookkeeper?  This is their simplest way to bring the books into balance and cover their theft. 

Another way that embezzlers hit small businesses is by overpaying themselves payroll checks.  They’re your bookkeeper, handling your payroll.   One week, they pay themselves on Friday, occasionally they’ll pay themselves on Monday…and Friday…in the same week.  Or, they will increased their hours, hourly wage or base salary without your notice. With all the tax deductions, it’s easy to add $50.00 a week without you realizing - $2,500.00 a year.  Take the time to review the payroll occasionally….without prior notice.

If they are also paying your payroll taxes, and balancing your books, be careful that the taxes are actually being paid…not just entered into your checkbook.

Embezzlers start small…testing the waters to see if you notice anything, If not, they start to increase the methods they use and the amounts.  Many, many cases are reported annually where an embezzler has drained a company for years and years.

Remember that embezzling employees are brazen and sometimes subtle, but they seem like your most invaluable employee.  And, often, you’re not the first company they stole from.  When they start to get questioned at one company, they resign and move on to the next.   

Theft of more than $299.00 is a felony.