The nightmare employee

He seemed like the perfect hire ... at first.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Embezzlement safeguards Embezzlement safeguards Embezzlement safeguards
5 things you can do to protect your business from an accountant gone wild.
When will you know that an economic recovery is underway?
  • When the Dow tops 10,000
  • When GDP turns positive
  • When job growth resumes
  • It's already started

(Fortune Small Business) -- A while ago I needed to hire an accounts payable person for my picture-framing business. We put an ad in the paper and received a good number of applications. One candidate jumped out from the pile: He had exactly the right background, and it didn't hurt that he asked for a slightly lower salary than we were planning on paying.

After a successful interview we moved to the reference check. We called his previous employer, who was now retired, and left a message on his answering machine. He returned the call promptly and said all the right words: on time, conscientious, honest, reliable, easy to work with.

So far, so good! Unfortunately, there were no other references because our candidate had worked for this guy for years and his only employer before then was out of business. But his background check and drug test came back clear, so we offered him the job. He readily accepted. He even asked if he could familiarize himself with our financial-software manual in advance so he could hit the ground running.

Within a week it was clear that we had hired the perfect employee. He came in early every day, needed very little training and always went out of his way to do something extra. He even offered to drop the mail at the post office on the way home.

Two weeks later my luck ran out. Mr. Perfect told me his mother-in-law had died and left him and his wife a lot of money. He explained that he was quitting because he no longer needed to work and had to tie up the loose ends of his mother-in-law's estate. It was disappointing, but we understood that unexpected things happen sometimes.

The next day I received a phone call from an FBI agent. She explained that she had driven by my business yesterday and had recognized my new hire walking in the front door. He was an old acquaintance of sorts: She had helped put him in jail for fraud a few years earlier. She gave me his name, but it was unfamiliar. I quickly realized that my perfect employee was a perfect embezzler, operating under a false name.

We had not received a bank statement since he started. (This was several years ago, and we weren't yet banking online.) So I called the bank to see if anything was wrong.

There was. About $75,000 worth of checks had been drawn on the account, payable to fictitious company names that matched the dollar amounts of real checks that the embezzler had thrown out. He had deposited the fake checks in a separate bank account that he controlled.

Mr. Perfect had done a lousy job forging the checks, but they cleared anyway. Here's the bigger surprise: Bank officials admitted that they didn't check signatures! So I had no responsibility for the loss, and they replaced the money. Our problems weren't over, though. There was a huge mess with the state of Illinois involving unpaid sales tax, and it took a while to mend fences with our real creditors.

Here are some warning signs that I missed at the time. During the job application process we asked Mr. Perfect to show his driver's license. He could produce only a state ID. He had just one reference, who, it turned out, was his accomplice. In retrospect it was also suspicious that he had offered to drop our mail at the post office. Finally, we should have exercised much tighter control over blank checks, particularly with a new hire.

By the way, the FBI arrested Mr. Perfect a week later. I imagine he's out of jail by now -- and looking for a job.

Jay Goltz employs 104 people at Artists Frame Service, Chicago Art Source and Jayson Home & Garden, all based in Chicago. He is the author of The Street-Smart Entrepreneur (Addicus Books).  To top of page

To write a note to the editor about this article, click here.

Ask a Question

QMy dream is to launch my own business someday. Now that it's time to choose a major, I'm debating if I should major in entrepreneurial studies or major in engineering to acquire a set of skills first. Is majoring in entrepreneurship a good choice? More
Get Answer
- Spate, Orange, Calif.
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.