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Tuesday, July 23, 2013

Son Steals More Than $1M From Mother's Printing Company By Forgery: How Can You Prevent This Crime From Happening to You?

On July 1st Michael Britt of Brentwood, Missouri, was charged with 13 counts of forgery resulting in the theft of over $1 million from Gene-Del Printing, a company co-owned by Mr. Britt’s mother and three partners.

The company’s internal investigation revealed that Mr. Britt’s modus operandi extended over more than five years.  It involved making at least 166 cheques out to himself and forging the names of two of the company’s owners on the cheques.  He also stole at least $25,000 through unauthorized purchases using a company credit card.  Mr. Britt later admitted to police that he had also used the company’s accounting software to conceal the theft by creating fraudulent invoices for the cheques he forged.

Since the days when I managed the Ontario Association of Quick Printers, I have heard too many similar sad stories from small-printing-business owners with first-hand experience of embezzlement at their own company.  Usually the perpetrator was someone they thought they knew well and trusted.

Embezzlement is the theft of assets or property by a person in a position of trust or responsibility over those assets.  Statistically in such cases, the average amount stolen from small companies is $120,000 (versus just $10,000 from Fortune 500 companies.)  Additionally, employers of fewer than 100 employees and fewer than three bookkeepers are 100 times more likely to experience employee fraud than larger companies.  The crime often persists over a number of years and has forced many small companies into bankruptcy.

Update on 16 September 2013:

Yet another story of embezzlement by an employee of a printing company is all over the news again:  in this case, Leona Gebhart, the 68-year-old former comptroller of Henderson's Printing of Altoona, Pennsylvania, has been charged with embezzling at least $151,000 over an 11-year period.  I rest my case.

Fortunately, many tried and true internal control systems exist to help you detect and (better still) prevent embezzlement.  Some are detailed in the on-line resources included in the links below: