Embezzlement cas

[pic 2][pic 1]

[pic 7][pic 3][pic 4][pic 5][pic 6]

Summary :

Introduction        

Definition of Embezzlement        

Methods of embezzlement:        

Famous Cases of embezzlement        

ENRON:        

CARLO PONZI:        

Madoff        

2011 Iranian embezzlement scandal        

Consequences of Embezzlement        

1. Net Losses        

2. Disrupts Operations        

3. Throws Off Accounting        

4. Erosion of Trust        

5. Investor Confidence        

6. Public Perception        

7. Customer Confidence        

How to Handle Embezzlement ?        

Conclusion        

Introduction

Embezzlement is the illegal transfer of money or property for personal use. The difference between embezzlement and theft is that embezzlement involves some form of breach of trust between the embezzler and the owner of the property, often their employer. Thus, embezzlement involves no physical violence and is often a white-collar crime. Embezzlement charges may be filed for almost any amount: high-profile embezzlement cases may involve the misappropriation of millions of dollars, but an accusation of embezzlement may involve only a very small amount of money.

In the following, we are going to have a better understanding of this phenomenon, by discovering its methods and consequences. We are also going to talk about some popular embezzlement cases, so scandalous that the whole world knows about them by now, and finally we are going to try and give some helpful recommendations to handle embezzlement and deal with its consequences.

Definition of Embezzlement

Embezzlement is an act withholding assets for the purpose of conversion (theft) of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud, a lawyer might embezzle funds from the trust accounts of his or her clients; a financial advisor might embezzle the funds of investors; and a husband or a wife might embezzle funds from a bank account jointly held with the spouse.

Embezzlement usually is a premeditated crime performed methodically, with the embezzler taking precautions to conceal his or her activities of the criminal conversion of the property of another person, because the embezzlement is occurring without the knowledge or the consent of the affected person. Often it involves the trusted individual embezzling only a small proportion or fraction of the total of the funds or resources he/she receives or controls; in an attempt to minimize the risk of the detection of the misallocation of the funds or resources. When successful, embezzlements continue for years (or even decades) without detection. It is often only when a relatively large proportion of the funds are needed at one time; or they are called upon for another use; or, when a major institutional reorganization (the closing or moving of a plant or business office, or a merger/acquisition of a firm) requires the complete and independent accounting of all real and liquid assets; prior to, or concurrent with, the reorganization, that the victims realize the funds, savings, assets or other resources, are missing and that they have been duped by the embezzler.

Examples:

•  Bank tellers or store clerks who are given lawful possession of money, which is the property of the bank or business owner, during regular business transactions.
•  employees who are given lawful possession of company property such as laptop computers or company vehicles

Methods of embezzlement:

Here are a few of the more common methods:

It exists a lot of other methods but the methods prescribed below are relatively simple:

1. Stealing Office Supplies: Employees can make personal use of company postage stamps, supplies and equipment, as well as charging personal long distance phone calls to the business.
2. Fake Refunds: A fake refund involves issuing a refund to a customer that doesn't really exist and pocketing the money.
3. Fake Loans: Taking out a loan for a business and not telling the owner is a common way for embezzlers to get their hands on cash quickly. When the loan eventually comes due, the embezzler is long gone.
4. Check Kiting: Check kiting takes advantage of the time period between deposit of a check and collection of funds. The check kiter steals money from the company and deposits the money in an account. He then writes checks back and forth between two bank accounts, his own and that of the business, each time escalating the amount of the check. In effect, the money exists in two accounts at the same time.
5. Stealing Cash: In the simplest situation, cash is received and the employee merely pockets it without making a record of the transaction. This is especially popular in cash businesses, such as bars or restaurants.
6. Fraudulent Vendor Purchases. A dishonest employee may set up a dummy supplier and creates bogus documentation of fictitious purchase transactions. He pays the fictitious vendor, i.e. himself, and spends the money on a new car or some other indulgence.

Real life example:

Joe Thomas: I am the treasurer of a sports booster club and we recently set up a separate account for our concessions person and first thing she did was write a $1500.00 check to herself and deposit it in her personal account and then a week later she wrote a check to Bank of America for $400.00 and wrote in the memo: Reimbursement. Our organization does not bank with Bank of America and the concessions chair is stalling in presenting any receipts for the money spent. What should I do?

...