Media sources are constantly
reporting on white-collar crimes
that are taking place from local businesses to national corporations. In
the past decade, there have been many
high profile, white-collar crime cases.
Fraud cases have been around since
the beginning of time because there are
always people in the world who try to
obtain money, contracts, or something
of value by lying and deceiving, says
Linda Pence, director for Sommer
Barnard.
There is currently a heightened awareness and vigilance with white-collar
crimes. The days when the CEOs of companies were thought of as untouchable
or gods are gone.
Smart Business spoke with Pence
about the increased awareness of such
crimes, the steps to take to prevent such
crimes and how to recover after being a
victim.
What steps should business owners take to
protect themselves against white-collar
crime?
There are numerous forms of white-collar crimes. They are often considered
paper or nonviolent crimes that usually
involve illegally taking something of
value. They can vary from selling inferior goods, embezzlement, bribery, receipt
of kickbacks, securities fraud, price-fixing and antitrust violations. One needs
to understand their business to protect
themselves properly.
First do a risk assessment. What type
of business is your company involved in,
and what crimes are typical for such a
business? For example, corporations
may be at risk for embezzlement. It is
hard to know what everyone is doing at
all times. Therefore, such companies
need to make sure there are financial
controls in place to prevent such crime.
Second, set an ethical tone. Act in a
manner which you expect others to act.
Business owners lead by example. If
you, as the head of the company, are misusing company funds, employees are
going to notice. Then employees — who would have never thought of acting
unlawfully before — begin to think,
‘Who cares? The boss is not being honest, why should I?’
Teach all employees integrity and
develop compliance programs. Make
sure employees understand the mission
of the company.
It is important to bring in people who
are reliable, dependable and honest.
Controls should be put in place to
ensure compliance. If employees know
there are internal controls in place, honest management and ethical employees,
they are less apt to commit a crime.
What warning signs can business owners
look for to protect their company against
such crimes?
It is crucial to trust your gut instinct.
The people committing these crimes
may be your partners and friends, but it
is important to investigate every accusation to protect your company.
Crimes occur when responsibilities are
given to trusted employees who then are
not supervised. Given full reins, an employee can commit numerous crimes. It is
important to design a type of checks or balances system to prevent such crimes.
Some people commit crimes to keep
their business afloat. In desperate times,
people may try to take a little from the
company with the intention of paying it
back later. This is never acceptable and
typically cannot be paid back.
Why should they invest money in protection?
Investigation of wrong-doing is very
disruptive and hurts businesses. Employees are questioned, files are audited,
and lawyers and investigators are in and
out of the office. These interruptions
decrease production and make employees uneasy.
Investigations also entail substantial
fines. Running the business ethically and
investing in means to do so will pay off
in the long term.
Business owners often do not learn of
a criminal investigation until an investigator shows up asking questions of
employees or a subpoena is served. Your
entire company quickly becomes part of
an investigation. Companies must hire
attorneys and investigators.
As these processes take place, time,
money and productivity is lost. Employees
will be interviewed. This process often
frightens employees and makes it difficult
to focus on the needs of the business.
Investing money to prevent all of these
losses not only saves money but may
save your company.
How should a company respond if it is a
victim of a white-collar crime?
If a company has been a victim of
fraud, it should report the crime immediately. Many federal and state actions
protect victims and recover monetary
losses. If a corporation is the victim, it
must make sure the media is reporting
the story accordingly. You want people
to know you were the victim.
LINDA PENCE is a director at Sommer Barnard PC. Reach her
at [email protected].
