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HR Magazine, October 2003 - Cover Story

By Robert J. Grossman  10/1/2003
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HR Magazine, October 2003Vol. 48, No. 10

The Five-Finger Bonus

Law Enforcement's Lack of Enthusiasm

In 2000, the latest figures available, the FBI made 10,730 arrests for embezzlement, an increase of 43.9 percent since 1991, but still a paltry number in relation to the estimated losses organizations are suffering.

Numbers for state and local prosecutions are not available, but places like Denver, where District Attorney Bill Ritter Jr. has focused his office's efforts on fraud, are exceptions.

It's not easy to get the police or even the FBI interested in occupational crime, report Kristina Maritczak, an attorney at Miller Canfield in Detroit, and Ralph Summerford, certified fraud examiner, a partner with Dixon Odom PLLC in Birmingham, Ala. Federal prosecutors won't take on a $50,000 case; they push it off on local prosecutors. Generally, local police are similarly uninterested, preferring to focus on violent crimes. Private fraud investigators say that they have to do much of the legwork and preparation to attract police interest. And the number of convicted embezzlers actually serving jail time is miniscule. According to the Federal Justice Statistics Resource Center, 346 were in federal prisons at fiscal year-end 2001. Judges and prosecutors reason that the embezzler can't earn money to pay back the victim while confined.

While organizations are recovering a greater proportion of their financial losses than in previous years -- the amount recovered has grown from 29 percent to 51 percent- -- most of that money is coming from insurers. The money recovered from perpetrators remains at about 20 percent, according to the report, Fraud, the Unmanaged Risk, by accounting firm Ernst and Young.

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