Embezzlement with Kelly Paxton

Embezzlement is on the rise, but only a few incidents ever get reported to law enforcement. Why do people steal and how are they doing it? What can business owners do to help prevent these crimes and what should they do if they suspect them?

Our guest today is Kelly Paxton. She has more than 25 years of investigation experience and is a certified fraud examiner and private investigator. She started her career in law enforcement as a special agent for the US Customs Office of Investigation in 1993. She has worked white-collar crime, fraud, money laundering, embezzlement, and conflict of interest cases. Kelly is also the proud owner of Pink Collar Crime, a passion of hers about embezzlers in the workplace.

Show Notes:

• [1:02] - Kelly has always been interested in money. She started her career in finance but had a client arrested for fraud. She then became interested in investigating why people steal money.
• [1:57] - Kelly's goal is never to put someone in jail. Her goal is to find out why the person stole the money and to hopefully see the money returned to the victim.
• [2:32] - Why do people steal money? Generally speaking, Kelly says most people will steal because they think that money will help them fix their problems.
• [3:51] - Most people are good people, but life happens, and most people think money fixes it.
• [4:11] - Embezzlement is stealing money from business. Kelly defines Pink Collar Crime as petty amounts stolen by low to mid-level employees, primarily women, from the workplace.
• [5:40] - In the 80s, this was a shift in thinking. Up until then, most people hadn't thought about embezzlement as a common crime.
• [6:17] - Kelly explains that in embezzlement cases, there is a lot of victim shaming. Due to this, only 15% of embezzlement cases are reported to law enforcement.
• [8:01] - Most victims like the employee and that is how the employee is able to steal. Trust is not an internal control.
• [8:46] - 60%, or 3 out 5, of all dentists have been ripped off.
• [9:13] - Kelly calls embezzlement "the crime of main street."
• [10:01] - Financial audits are not always when losses are noticed. Tips and hotlines are actually more effective in finding out about these problems.
• [11:06] - 90% of bookkeepers in the United States are women. Women push back against the title "Pink Collar Crime," but should be pushing back that women are in lower-level positions as a whole.
• [12:30] - Kelly shares an example of a woman who stole millions of dollars over 20 years. When she was arrested, she was exhausted because she could never take a vacation as she was afraid of being caught.
• [13:48] - Another warning sign is a control freak, especially when it comes to changing computer programs.
• [14:53] - The number one way people embezzle from the workplace is forged or unauthorized checks.
• [16:28] - It is never good to be ripped off, but there are good things that come from it, including connections with other people and lessons learned on how to manage the business moving forward.
• [18:36] - The principle doesn't pay the principal, meaning the principle of being ripped off doesn't pay the loss.
• [19:16] - At the end of the day, you have to get back to work. The money is replaceable. The trust is difficult to get over.
• [21:00] - Intuitively, you trust a coworker more than you trust a stranger. So you won't always see this coming.
• [21:41] - Trust but verify. Kelly uses an example of trusting your dentist when you have a cavity.
• [23:47] - If you are a small business owner, Kelly recommends that you mail your bank statements mailed to your home or to a P.O. Box that only you can control.
• [24:27] - Always look at the images of the checks on your online bank statements.
• [25:49] - Mix up when you check things. Check different size checks, audit your own finances at different times of the year. Keep everyone guessing so they don't see a pattern that they can take advantage of.
• [28:10] - Kelly also suggests that you have a binder or system of some sort that outlines everything in the event that you need to show details in a case.
• [30:23] - Business owners don't generally look at all the checks going in and out of the business. Some business owners even have pre-signed blank checks to make tasks easier, but puts them at risk of fraud.
• [32:01] - Kelly would rather train business owners to help prevent these events than to sit across from someone she is investigating as a criminal.
• [32:48] - Kelly shares an example of one of the craziest cases she worked.
• [34:18] - If someone starts at a business and if they steal within the first 6 months of working there, they've done it before. They may not have a criminal history or have not been caught yet.
• [35:45] - If you walk into your house and you see a dead body, you call the police and you don't touch anything. Unfortunately, with embezzlement, when a business owner notices something wrong, they go in and try to figure things out themselves and oftentimes mess up the crime scene.
• [37:46] - Kelly is writing a book, but admits that it will be an ebook because most people won't go into a bookstore to buy a book about embezzlement. This can be seen as embarrassing.
• [39:07] - If you have proof of embezzlement, most of the time the employee will confess when confronted. But you need to be prepared and never confront them alone. Kelly recommends having a lawyer with you as a reliable witness.
• [42:16] - The more people who have access to the information, the less likely the crime will happen.
• [43:13] - There is no CSI Embezzlement. These cases take an extremely long time.
• [44:40] - Law enforcement has limited resources and will need to put their focus on different types of cases due to the length of time and investigation needed to work on these cases. As a business owner, you will need to spend a lot of money to have things investigated.
• [46:10] - There is also a level of embarrassment when things like this happen.
• [48:42] - There's not a national database of arrests and convictions.

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