LEWISTON – In hindsight, there were red flags.

For Chip Morrison, president of the local Chamber of Commerce, it was an employee’s personal financial troubles. For accountant Tom Robustelli, it was a client’s reluctance to provide timely documents.

Both men shared their personal experiences with employee fraud and theft at a seminar at chamber offices Thursday. The problem, which analysts estimate costs American business $40 billion a year, is remarkably common, said Morrison.

“After our issue with this topic, we had over 100 members call or e-mail and say ‘It happened to us, too’,” said Morrison. “That’s 10 percent of our membership. Don’t feel like it can’t happen to you.”

The presentation fulfilled a promise Morrison made to members last year after a chamber employee was fired for allegedly stealing $17,000 from the organization. Rather than hide the incident, Morrison and his board decided to use the experience to teach others about the problem.

“It is so rampant and common that I’m guessing at least half the people in this room are affected,” Morrison told the crowd of about 25, many of whom nodded their heads in agreement.

Two essential ingredients leading to employee theft are need and opportunity. Morrison said he knew his employee was in trouble when he started to field calls from creditors, but he never thought she’d steal to fix things. The situation was exacerbated by the chamber’s capital campaign to move into its new building, which meant much more money was moving around the organization’s books than normal.

Robustelli, a certified public accountant with Robustelli Rotz & Soucy, said he learned a valuable lesson after performing a routine audit on a nonprofit organization that had been his client for 10 years. He said he wasn’t suspicious until he began asking the bookkeeper for canceled checks to reconcile with the bank statements.

“She said the treasurer had them,” said Robustelli, whose multiple requests were stonewalled until he contacted the treasurer and bank directly. He discovered a 3-year fraud by the bookkeeper that netted her $260,000.

“It was all there,” said Robustelli. “She’d written a check to herself for $20,000 the day before I began my field work.”

Luckily for businesses, new laws in the wake of the Enron and Worldcom scandals have ramped up the intensity of audits. But it’s still the responsibility of management to uncover fraud, said Robustelli. The easiest thing to do is prevent it in the first place, and that’s possible with internal controls.

“The first thing to do, is set a tone in the organization,” said Robustelli. “Make it a controlled environment.”

He suggests: competent bookkeeping, a workplace emphasis on honesty and integrity, knowing the boss is paying attention. The situation with the ripped-off nonprofit was made worse by an executive director who focused on the group’s mission and was hands-off on managing the money, he said.

Robustelli also suggested people think like a thief to identify where the company is vulnerable. Procedures that provide good checks and balances – the employee who prepares the bank deposit shouldn’t be the one to post customer accounts – offers protection, as do things like outsourcing payroll and installing surveillance cameras.

Lewiston police Detective Lee Jones, who investigates white collar crimes, said digital or video tape has been instrumental in prosecuting employee theft cases. He, too, presented at the chamber seminar, adding his voice to those who say they see a rise in workplace fraud.

“People that handle money do steal,” he said, encouraging extensive background checks before someone is hired. “I try to prosecute 100 percent of the time.”

In Robustelli’s example, the thief was sentenced to nine years. The chamber case is still pending, but Morrison said the $17,000 was restored through its insurance company, which is seeking restitution from the former employee.

Besides the legal and financial fallout, the emotional toll can be severe, as well. Robustelli said he was so angry – at himself, at the board, at the fraudster – that he donated $12,000 in services to the nonprofit “to make it right.” Morrison said every employee at the chamber felt violated by their co-worker’s deceit.

“Other people are affected mightily,” he said, noting that everyone went to voluntary counseling. “Some are still working out their anger.”


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