October 5, 1997 in City

Embezzling ‘Out Of Sight,’ Says Official Government Rip-Offs Set Record; Private Sector Up To 20 Percent

Associated Press
 

It’s as easy as writing a check to yourself.

That’s how most embezzlers operate in a crime that has been booming in Washington state in both the number of offenses and dollars lost in recent years, investigators report.

Embezzlement arrests in Washington have increased nearly sixfold in the past decade, from 15 in 1986 to 85 last year, and the number of cases within state and local government rose from a low of 15 in 1991 to an alltime high of 48.

Government embezzlement losses statewide exceed $1.2 million and will set a record this year, said Joe Dervaes, a fraud expert in the state auditor’s office.

“Our numbers are going out of sight,” Dervaes said.

King County prosecutors report a growth of 10 percent to 20 percent a year in private-sector embezzlement cases over $100,000.

“Not long ago, a $300,000 or $400,000 case was big, but now we’re seeing $600,000 and $800,000 cases,” said Patrick Sainsbury, head of the prosecutor’s fraud division.

In the county’s biggest employee theft case to date, Carla D. Orcutt of Kent was sentenced three weeks ago to more than six years in prison for embezzling more than $1 million from Protective Coatings, a metal-finishing company.

“If this crime had continued much longer, … we could easily have been put into bankruptcy,” company president Stephen H. Rowe wrote in a letter to prosecutors.

Smaller businesses are vulnerable, too.

Earlier this year, George Bulloch found a bill in an employee’s files showing $450 in charges on a company credit card for a personal trip. Thinking it was a mistake, Bulloch left the employee a note to call the credit-card company and get it straightened out.

After more checking, he found more unauthorized billings and evidence of cover-ups. Eventually, he learned the trusted worker had taken him for about $85,000. He wound up closing his 10-year-old construction firm and let all 30 employees go.

As with Bulloch, experts believe a key reason for the burgeoning of embezzlement is inadequate monitoring by employers, as well as the unscrupulous greed of employees.

Often, Dervaes said, employees begin by taking office supplies or other goods from their workplace.

“Once that justification presents itself, the person changes from being honest to being dishonest,” he said.

Looting an employer’s bankroll usually requires being in a position of trust and control, and most embezzlers simply write checks to themselves, he added.

“The problem here is that the person is responsible for far too much,” Dervaes said.

Some experts advise larger companies to hold training seminars for employees in positions of trust so they can learn the consequences of embezzlement.

A broader solution is to eliminate the opportunity through internal monitoring by someone who regularly reviews the books for everyone handling money - for example, having company managers review bank statements, Sainsbury said.

“A failure of oversight is something we see over and over again,” he said. “These little things can save a lot of people a lot of grief and a lot of money.”

© Copyright 1997 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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