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14 n e w h a v e n B I Z | F e b r u a r y 2 0 2 1 | n e w h a v e n b i z . c o m years before being discovered, usually through an audit, when the individual went on vacation and someone else took over their duties, or when the business' owner did a close review of finances. Embezzlers have used a variety of tactics — such as diverting funds to personal accounts, paying themselves unauthorized bonuses, or using company credit cards for personal expenses. According to the 2018 Hiscox Embezzlement Survey, respondents reported that 85 percent of embezzlement cases were perpetrated by someone at the management level or above, with 70 percent of cases lasting more than a year. The average loss was $357,650. With the coronavirus pandemic causing widespread financial distress, embezzlement cases are sure to climb, and business owners should be on their guard, according to Stephen Pedneault, principal of Forensic Accounting Services LLC in Manchester. "There is an inverse relationship between the economy and fraud," Pedneault says. "If people are desperate to make ends meet, they may turn to their employer's coffers. When the economy gets better, embezzlement will go down." Remote-work risks Frank Rudewicz, a managing partner with accounting and W hen you imagine someone stealing from your business, a stranger likely comes to mind. Yet, several area companies have lost large sums of money from culprits working on the inside. A Waterbury woman, Ashleigh Herring, was recently sentenced to three years of probation and ordered to pay $86,000 in restitution for stealing from Hamden-based Best Choice Home Health Care, where she had worked as a payroll supervisor. Barbara J. Buchanan, also a payroll manager, was sentenced in July to a year in prison following her conviction for embezzling $260,202 from her employer, H.J. Baker & Bro. LLC in Shelton. In one of the largest area cases, Thomas Malone, the former chief financial officer of New Haven biotech firm Artificial Cell Technologies Inc., was sentenced in 2019 to two years in prison for stealing more than $1 million from the business. These are just a few examples of local embezzlement cases that have impacted businesses from various industries, from health care to manufacturing. Those convicted typically had a position of authority and handled a business' finances. The thefts often transpired over the course of months or How to protect your business from the thief within Stopping Embezzlement By Michelle Tuccitto Sullo "If people are desperate to make ends meet, they may turn to their employer's coffers. When the economy gets better, embezzlement will go down." Stephen Pedneault consulting firm blumshapiro, which has offices in Shelton and West Hartford, does forensic accounting and investigations. He sees another reason why the pandemic could mean more embezzlement cases — because more employees are working remotely. "Where someone might have had access eight hours a day, now it is 24 hours a day," Rudewicz said. "The opportunity to embezzle and commit fraudulent acts is greater." According to Pedneault, embezzlers typically aren't career criminals, but rather individuals who are trying to solve a personal financial need, such as making a mortgage or rent payment. They may initially plan to put the money back, but their financial situation doesn't improve. "Then it snowballs," Pedneault said. "There is always someone looking somewhere for an opportunity." In long-standing embezzlement cases, the culprit typically is a trusted employee who does all the finance- related work and never uses vacation time, he said. "If someone never takes time off, that is a red flag to me," Pedneault said. "Maybe they don't want someone else looking at their work." He noted that many businesses are struggling due to the pandemic, and many have reduced staff. If they have had three people in accounting, maybe now they are down to just one, making them more vulnerable to theft. "We don't have segregation of duties the way we should," he said. "People are struggling financially, and internal controls are looser." Prevention and detection What can business owners and PHOTO | DREAMSTIME.COM

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