Employee theft: 5 Steps to take if your business is defrauded

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Employee Theft

Last Updated: 05.04.2020

All businesses, large or small, will someday be subjected to an employee theft or fraud, whether it is office supplies, time sheet fraud, cash, stock manipulation, skimming, data loss, or something else.  The list is endless.  There are, however, some common ground rules to follow immediately after an employee theft.  Below is your Maryland Attorney‘s list of steps to take when you suspect an employee theft:

  1. Have an employee manual.  In that manual you should spell out several things.  First and foremost it should make it very clear that unauthorized taking from the workplace is not tolerated and is grounds for immediate termination.  Second, it should state what is and is not an employee’s property (i.e. computer, cell phone, company car, laptop, etc).  Immediate seizure of those items could later provide valuable evidence of the theft or fraud.  Third, make sure the employee handbook or manual is distributed to all employees, signed, and actually followed. If you suspect a theft, take it out and read it before doing anything else.
  2. If you suspect the employee is hiding your property on or about their person, get evidence then consider exercising a “shopkeeper’s right” to detain the former employee while police are called.   Better yet – Employee Theft
  3. Avoid searching the suspect personally.  Physical contact with the suspect should be avoided at all costs.  If illegal items, such as drugs or a handgun is found on the suspect, what do you do then?  What if the confrontation turns violent?  It is better to allow police or other trained professionals to handle those types of situations.  When the police arrive, explain the situation and kindly explain why you think the employee has some of your property.  The police certainly don’t have to search the suspect.  If they do, they have almost absolute immunity and don’t need to worry about the physical confrontations.  If the employee wants to leave, let them.
  4. If the detection of the fraud or theft is covert, consider how to approach the situation.  Are you going to investigate the matter yourself or do you bring in a people with experience handling those matters?  Do you have to interview employees?  Do you have specialized training in advanced interview techniques?  What liability do you have when conducting such interviews?  Consider that you could make the situation worse by conducting your own interviews.
  5. Preserve evidence at all costs.  In this Maryland Attorney’s experience the biggest problem with combating fraud and theft in the workplace is almost always poor record-keeping and lost files.  Keep old hard drives in a secure place.  Store old receipts. Comb over surveillance video.  If you suspect a fraud, gather anything that may be relevant to detecting additional fraud.  These frauds generally go on for years without detection and without proper documentation may not be provable in a court of law.

Most important, contact your Maryland Attorney if you suspect an employee theft or fraud and preserve your rights.

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