What are Embezzlement Schemes?Leave a Comment
Embezzlement is a costly form of theft that can result in millions of dollars’ worth of damage. Some perpetrators remove a large lump sum of money once from their employer, while others play the long game. In these scenarios, the guilty party removes money in small sums over time – sometimes over the course of a decade.
Though we might think of embezzling as only dealing with money, it can actually occur in several different ways depending on what assets the perpetrator can get their hands on. In any case, embezzlement increases their net worth while decreasing that of the company/individual they steal from.
Methods of Embezzlement
Embezzlers must somehow come in contact with valuable property. The resources that an embezzler has at their disposal typically dictates the method they use to steal.
Line employees and supervisors often take part in cash embezzlement. This can be done in several ways:
- Pocketing cash from a transaction
- Taking cash from other workers’ and/or customers property (ex. purses and backpacks)
- Stealing change from customers
- Refunding stolen items and then keeping the cash
- Stealing cash from a coworker’s work area
Negotiable document embezzlement can be committed by any level of employee that has access to important documents or can forge important documents. Embezzlers manipulate these documents, reproduce forgeries, and glean important account-related information from certain documents.
- Money orders
- Property documents
- Travelers checks
- Company checks
- Refund authorizations
Account credit schemes often involve creating fake identities and manipulating account information. Account credit embezzlement can take several forms.
- Manipulating inactive bank accounts, usually owned by senior citizens and foreign account owners
- Unauthorized bank account transfers
- Creating fake employees and stealing their payrolls
- Establishing loans and credit accounts for fake borrowers
Embezzlers can also steal delivered or received items if they have access to these items within their line of work. This can occur when an employee does one of several different actions.
- Places items in a dumpster to retrieve after workplace operation
- Misusing employee benefits for friends and family
- Stealing raw materials and scrap items after manufacturing processes
- Manipulating stocks and bonds
- Manipulating trust funds
- Stealing equipment and supplies
Wire transfer is a form of embezzlement that a perpetrator carries out by:
- Manipulating their employer’s bank accounts and/or bank instructions.
- Manipulating transfer instructions coming from an external entity.
- Fabricating customer accounts and/or transfer information.
Computer embezzlement comes with a myriad of related concepts that illustrate different computer-related embezzlement schemes. These represent the most common schemes that embezzlers use to manipulate accounts are:
- “Skimming” (or removing small amounts of money) customer accounts. Utilizing “trap door” or “salami” techniques (many small transactions) to skim money, transferring this money to an alternative account.
- Manipulating the company’s programming, or “data diddling.”
- Inserting additional commands into the company’s programming, or “trojan horsing,” to make the program run extra unauthorized commands on top of its normal processing.
- Inserting “logic bombs” commands, or commands that assign specific programming functions to occur at different intervals, like erasing illicit data.
Famous Embezzlement Cases
Two famous embezzlement cases have made headlines for their grandiosity, amounting to millions of embezzled dollars.
The Enron scandal involves this energy giant’s CEO embezzling $11 million through accounting fraud. Operating without government watch due to its deregulation, the CEO of Enron (and its executives) approved the falsification of earnings reports. Moreover, the company staged a fake energy crisis and stole from their employees’ retirement funds. This was shocking to the public because Enron had significant ties to the White House at the time. Once the court ruled the company as guilty, they went bankrupt and CEO Jeff Skilling went to jail.
Stanford Financial Group of Companies ran one of the most extensive Ponzi schemes in American history. The chairman of the company initiated a 20-year embezzlement scheme that involved selling customers’ deposit certificates to fund his real estate business, his personal business ventures, and betting on cricket tournaments. The court sent Allen Stanford to jail after his illicit business transactions were discovered.
Successful embezzling schemes are meticulous, sometimes taking years to discover. Business owners beware that even line workers could be guilty of embezzlement, making company security vital.
If you’ve been accused of being involved in an embezzlement scheme, contact our Tacoma white collar crimes lawyers to discuss your case.