3 steps to address employee embezzlement

Employee embezzlement is a serious problem among medical practices, with several critical steps that should be taken to prevent it. But even with precautions, the likelihood is high you may at some point suspect an employee is stealing from you.

A recent article from American Medical News outlines the steps practices should take in handling potential employee fraud.

1. Investigate.
"You don't want to jump to conclusions without gathering the facts," said Jason D'Cruz, chair of the employment practice with Morris, Manning & Martin in Atlanta. Rather, experts recommend you first preserve evidence--before a suspect can destroy it--of any electronic financial data and make copies of relevant paperwork.  

Next, discreetly contact an attorney, certified fraud examiner or forensic accountant to help you assess the situation. Remember that if you fire or even confront the employee too soon, he or she will likely hide or spend the money before your investigation is complete, noted a post from the Society for Human Resource Management (SHRM).

2. Limit losses.
Even if your investigation confirms fraud, legal prosecution may be difficult. "District attorneys do not have the manpower to go after every employee who steals thousands," Rachel Steely, an employment attorney with Gardere Wynne Sewell LLP in Houston, told SHRM, adding that in most cases, embezzlement of less than $100,000 will not be prosecuted. According to a 2009 survey conducted by the Medical Group Management Association, the average amount of money that been stolen from respondents who experienced office embezzlement (83 percent) was $1,000, and most were not prosecuted, amednews noted.

A better way to recover the money, according to Steely, is to file a lawsuit asking a judge for a temporary restraining order to prevent the criminal from getting rid of most of their assets. In addition, within a couple of days, practices can obtain a garnishment order to prevent the embezzler's bank from releasing money to the embezzler.

3. Communicate carefully.
To avoid the risk that a fraudulent employee will sue the practice for defamation after being fired, do not overtly tell employees the individual was let go for stealing, Steely said. Instead, send employees a memo explaining that the person is no longer with the company and designate point people to which employees can direct questions. Although it may be acceptable to use an employee meeting to discuss embezzlement in general, the company should not say anything about any individual accused of stealing.

To learn more:
- read the article from American Medical News
- see the post from the Society for Human Resource Management (registration required)