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65% will steal if situation’s right; take preventative steps: CATA speaker

November 17, 2010

"Nobody in his right mind steals from his employer. I thought I was nuts," said Barry Webne, who stole $1.25 million from his employer.

 

Webne, convicted of bank fraud and sentenced to six months in federal prison, spoke at a CATA seminar in October about how dealers can detect and prevent employee theft. 

"Almost one in three U.S. businesses has been or will be victimized by this type of fraud," he said. "Worse, only 41 percent of these business executives will ever know they are victimized. And worse still, prosecution is a viable alternative in only 21 percent of these cases."

 

And, said Webne, when the money is gone, it rarely can be recovered. 

He said: "I had nothing to show for it. I spent it as fast as I got it. My kids had more stuffed animals than the Disney Store. They didn’t need that; they needed me, physically and mentally. So they got cheated."

 

Webne worked in Cleveland, Ohio, as controller of a holding group of 10 small manufacturing companies. When the company downsized, the first positions eliminated were in departments that were not revenue-producers, like his, which created a breach to internal controls that could have prevented his crime. 

Webne oversaw payroll and boosted his salary from $2,000 a month in 1991 to $50,000 a month in 1995, when he and his boss were fired. His crime was uncovered shortly thereafter.

 

"I didn’t drink or do drugs or gamble, but this (stealing) became an addiction," he said. "My wife knew nothing about it, and that is typical of this crime." 

When the FBI appeared at his home, Webne said, "Part of me felt relief that I didn’t have to look over my shoulder anymore." Now he trains financial professionals on behavioral traits and tendencies that might indicate larceny.

 

Occupational fraud is nearly 10 times more likely to occur in businesses with fewer than 100 employees because fewer internal controls usually exist. "The person who accepts the cash shouldn’t be the person who makes the bank deposit," said Webne. 

He said all three aspects of a "fraud triangle" must exist and be in the perpetrator’s favor for occupational fraud to occur: Opportunity—gaps in internal business controls—Rationalization—"They owe me," or "It’s just borrowing and I’ll pay it back"—and Financial Pressure/Incentive—addiction or "keeping up with the neighbors."

 

Criminal behaviors can be hard to detect because, viewed in a different light, they are behaviors shared by honest workers. Impulsive behavior, said Webne, is the most important indicator. 

"By acting impulsively, meeting all deadlines, completing projects and reports in a timely manner," he said, "the perpetrator achieves his goal of calling attention away from himself at all costs.

 

"I ask for an inventory analysis and say I need it in a week, and the report is delivered two hours later. They want to address your every need immediately. But most people are procrastinators. The perfect employee doesn’t exist anymore. 

"Let’s face it, we’ve downsized this country to the point we’re overworked and underpaid. It’s possible to do a report that quickly, but not probable. You should look at it."

 

Other traits and tendencies Webne cited: 

Superficial. Perpetrator couldn’t care less about his words; his only intent is manipulation.

Egocentric. Expensive home or vacation used as a silent form of bragging.

Need for Excitement. Always looking for change, out of place in normal activities.

Lack of Responsibility. Erratic job efficiency: responsible about items linked to crime, but deteriorated performance otherwise.

Antisocial Behavior. Feeling untouchable or above the law.

Always Pleasing. Ready, willing, able to please all who are potential targets, to deflect criminal activity.

 

Dealers who suspect employee theft should enlist an attorney and a certified fraud examiner. Law enforcement mostly is busy with violent crimes, so comparatively fewer white-collar crimes are prosecuted. Also prison sentences for white-collar criminals usually are lighter and entail time at a "camp," or minimum security facility.

 

Webne mentioned a recent—and astounding—legal trend where convicted perpetrators sue the company, charging negligence for creating an opportunity for theft to occur.

 

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