How to conduct an employee theft investigation

Wednesday, 29th May 2019

White-collar crimes can assume many forms – theft, fraud, bribery, corruption and money laundering to name but a few.

While all of these are significant offences, and all have their own respective frameworks for addressing and remedying the situation, theft is one of the most commonly occurring offences and one that needs to be treated delicately with guile and finesse.

Taking the necessary steps and implementing the correct processes and procedures when conducting an employee theft investigation is critical with respect to accuracy and the preservation of evidence. In circumstances where emotions may be running high, it’s easy to compromise a case, so maintaining an objective stance before making judgment is always advisable (not to mention professional).

At Blackhawk Intelligence, we have helped many corporations investigate their employee theft cases – and we have come across instances where evidence was compromised because of inappropriate discussions, often confrontations, between the company’s stakeholders and the employee. In this article, we’d like to share vital steps that can help avoid compromising the investigation, and also resolve any dispute more favourably for both parties.

What are the types of theft?

According to data collated by Statista in 2018, the number of ‘theft by an employee’ offences in England and Wales rose from the previous year, totalling 10,466 occurrences.

Theft often overlaps with fraud, especially if the person accused of theft obtained the money or property by deception. Regardless of it coming under the Theft Act 1968 or the Fraud Act 2006, the person involved can face serious consequences.

Theft can also assume a number of forms, including but not limited to the following forms:

Embezzlement – a type of property theft, embezzlement usually involves an individual in a position of status or power to steal money or property for their own personal gain through manipulating the company’s accounts.

Signature forgery – where a trusted employee falsifies documentation for their own personal benefit, an example may be an instance where an employee forges a director’s signature and signs off large cheques benefiting themselves.

Payroll fraud – refers to the creation of ‘ghost’ employees and receiving their salaries.

Data theft – relates to the theft of sensitive information and data that can be sold for profit. This can usually have a substantial impact on the health of a company.

While these are not exhaustive and give a rudimentary outline of the type and its description, it goes to show that theft and employee fraud can adapt according to specific circumstances and are not limited to select areas of business.

Why did an employee steal?

Theft does not discriminate when it comes to industry or business size.

We’ve had a client with just a headcount of just 10 staff and their accounting staff was siphoning money into fake vendor accounts over a period of two years. We also work with multinational companies which face a multitude of theft cases every day from data (e.g. customer list) and merchandise going missing to account manipulation, to name but a few.

There are numerous reasons as to why an employee may steal from you, including:

Personal greed.
Opportunistic theft facilitated by the trust the company has placed upon them.
Expensive addiction like gambling or drug use.
Getting revenge on the employers particularly if they feel underappreciated.

How to conduct an employee theft investigation?

When you discover wrongdoing – it’s important to remember that people should be treated as innocent until proven guilty – so being prudent in your initial interactions is good practice. Investigating a theft or potentially criminal wrongdoing will likely require a discrete workplace investigation which may also require the services of an external specialist experienced in the matter, as the company must observe specific employee and human rights legislation. To begin your investigation, follow the steps outlined below to build your case.

Be discreet – it’s always recommended that you do not confront any individuals immediately as doing so may lead to serious legal consequences later. Instead, it’s best that you only discuss the matter with key stakeholders. Make sure that you abide by any guidelines relayed by your HR department with respect to your employees’ rights and your responsibilities as an employer.

Come up with a plan – when you’ve identified that an issue exists, devising an effective and comprehensive method for dealing with it is paramount. This may mean calling in a professional investigative company like Blackhawk Intelligence if the transgression was substantial.

Don’t touch the data – leave any data that may affect the investigation untouched. Even the smallest disturbance (like trying to access records on the suspect’s device) may invalidate the evidence contained and jeopardise the eligibility of its admissibility in court.

Gather the evidence – it’s highly unlikely that you will catch a white-collar criminal in the act, but more likely through forensic investigative methods such as Accounting forensic and IT forensics. At Blackhawk, our forensic experts follow rigorous processes to ensure that evidence compiled can be used in court.

Trace the assets – once it’s been established that the offence and any related events have taken place, you will need to establish where the misappropriated/stolen assets (money, property, etc) have been secreted or laundered. Our Asset Tracing service operates on a multi-jurisdictional basis; we have the specialist ability to trace such actions across many countries and legal jurisdictions. Our goal is to ensure you have the best chance of recovering the loss in the shortest period of time.

Criminal prosecution or disciplinary action – as tempting as it may be to call the police, in most circumstances the reality is that unless you’ve been the victim of a multi-million-pound fraud, it’s unlikely that any importance will be assigned to your case. However, if you are able to present solid evidence to the authorities, they are more likely to become involved in and support a criminal prosecution. If the amount involved isn’t significant and it’s the actual employee transgression that is your main concern, a better avenue for you to pursue may be to deal with the employee through your company disciplinary process. This way you’ll potentially avoid a lengthy court case which can do further damage to your financial situation.

Evaluate processes – once the situation has been remedied, it’s also wise to consider the weaknesses in your systems that gave rise to the opportunity to defraud you in the first place. This will hopefully prevent the offence recurring in the future, and is something that our investigative specialists can assist you with immediately.

Blackhawk Intelligence can assist with an employee theft investigation

With a proven track record of providing our clients with solutions for dealing with employee thefts and fraud cases, as well as a number of corporate intelligence and forensic accounting applications, Blackhawk Intelligence has consolidated a solid reputation for investigating employees and achieving successful results.

We are trusted by many law firms and global organisations across the world and can assist with your endeavour, whatever it may be. If you suspect that one of your employees has been misappropriating or stealing assets, get in contact with us today to find out more about how we can help to protect your company and its interests. Call us on +44 (0)20 8108 9317 to arrange a consultation or reach out via our online enquiry form.

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This post is intended to provide information of general interest about current business issues. It should not replace professional advice tailored to your specific circumstances.