When Going Gets Tough, the Help Embezzles
Kostigen
It seems that tough economic times aren’t just putting more workers out on the street, they’re pushing those who are employed to embezzle.
According to the Association of Certified Fraud Examiners in Austin, Texas, the level of workplace fraud has increased over the past year.
“The message to Corporate America is simple — desperate people do desperate things,” says ACFE President James Ratley. “Loyal employees have bills to pay and families to feed. In a good economy, they would never think of committing fraud against their employers.”
But now, he says, times have changed.
This really should be no surprise. The unemployment rate has spiked to 8.9 percent, a 25-year high, and is expected to rise to 9.6 percent by year’s end, according to a survey of economists by Bloomberg. Since the recession began, 5.7 million people have lost their jobs.
Further, the ACFE survey found more fraud is taking place by unrelated third parties — such as identity theft, con schemes and securities fraud.
It says this may be partly due to the upswing in mortgage fraud related to the housing market crash, as well as crimes within many financial institutions that have played a central role in the current economic crunch. In any case, fraud by vendors, financial statement fraud and corruption also increased during the present economic slump.
Moreover, as companies institute pay freezes and pay cuts, the temptation to commit fraud may grow. By example, almost 90 percent of those surveyed for the report said they expect fraud to continue to increase during the next 12 months. The type of fraud most expected to increase is embezzlement. And 60 percent of this group said their companies had experienced layoffs during the past year.
Again, not surprisingly, about half of the people surveyed cited increased financial pressure as the biggest factor in the spike in employee crime.
To be sure, the biggest cases of fraud have occurred during good times, and from the top. Bernie Madoff’s Ponzi scheme and the pervasive mortgage fraud combined with the disingenuous sales of credit derivative contracts by large financial institutions added up to a greed ethos like none other in American history.
That was then.
It’s at those times when the “little guy,” or employee, gets screwed over the most. Savings, investments and retirement monies are lost. Now that more workers are being pushed out the door, they are taking — presumably in their minds anyway — a form of comeuppance against “The Man.”
Is this right? No. But it’s true. Payback is a bilk. All this just goes to show that the trickle-down theory holds true — even when it comes to crime.
At the tail end of this recession, we should brace for more random crime and street crime. That will be the real bottom indicator.
You’ll come home. Your house will have been robbed. Celebrate. It’s boom time again.
Meanwhile, business owners beware.
*This article originally appeared on Dow Jones’ MarketWatch.com Web site.
Last 5 posts by Thomas M. Kostigen
• Business Takes Up the Green Cause - April 26th, 2010
• The Need for a New Global Ethic - October 23rd, 2009
• SEC Steps in to Protect Investors - June 16th, 2009
• Shame Is a Powerful, Necessary Deterrent - May 22nd, 2009
• Heated Opposition Is Driving Us Apart - May 1st, 2009
