Small Business Face More Fraud in Downturn
Ms. Wilson also alleges that the former employee had written checks to herself instead of paying publishers for book orders. Payments were made to a local golf-club membership and for private-school tuition, Ms. Wilson says. She estimates she lost as much as 20% in potential sales during this past holiday season because she wasn't able to order enough books. In all, she alleges that the employee took about $150,000 over the course of about 2½ years.
Ms. Wilson, who co-owns the business with her husband, says she typically would give the company's finances a cursory look but the bookkeeper had access to all the accounts. She claims the worker doctored reports to make it look like vendors' and other bills had been paid.
"I definitely think she realized quickly how trusting we were," she says.
According to the Fairhope Police Department in Baldwin County, Ala., the person was charged with 25 counts of criminal possession of a forged instrument in the second degree. An attorney for the person declined to comment because of the pending litigation. Ms. Wilson has made fundamental changes to the way she runs her business. The stamp bearing her signature went in the garbage. Bank-account statements arrive at her home, instead of the business. Employees no longer have access to company credit cards -- all charges go through Ms. Wilson.
Last spring, Brandon Ansel, who owns a Roly Poly sandwiches and a Biggby Coffee franchise in Jackson Mich., noticed one of the restaurant employees wasn't depositing the money from the cash register daily as he was supposed to do. Instead, he was making deposits every three or four days. Mr. Ansel says when he approached him, the manager would say he ran out of time. As the economy worsened, the employee took even more days to make the deposits, claims the 30-year-old Mr. Ansel, at one point waiting nine days. He says he suspected the worker was skimming money so he confronted the employee. Mr. Ansel claims the employee admitted that he was having financial problems and intended to pay the money back. He says a family member of the employee ended up paying him $9,000, the amount he claims the employee admitted taking, and Mr. Ansel decided not to press charges.
Mr. Ansel, who declined to disclose the former employee's name, says he's watching the bank account more closely and his accountant is combing over account statements as well. Even so, he feels that as a small-business owner, he's more vulnerable because he doesn't have a lot of systems in place to flag fraud.
