Embezzlement’s damage can run deep for businesses

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Posted: Thursday, March 20, 2014 12:00 am

GRAND ISLAND, Neb. — It often starts out as $20 here and $20 there.

That grows to $30, $40 and $50 at a time.

Eventually, the total hits the hundreds and thousands.

Until the boss gets suspicious.

The books aren’t adding up. Records are questioned. Excuses are made. The police are called. Charges are filed.

Or not.

The owners of Midwest Imaging and Advanced Radiology in Grand Island decided to press charges against their former office manager, but not every business decides to take that step.

John Allen, co-owner of Midwest Imaging, said the two businesses, which are housed in the same building, chose to confront Joleen Freeman, who had been the office manager for seven years. After she had admitted to what she’d done, they called the police. Not every business that has been swindled by an employee makes that decision, he said. Some choose to let the employee return the money and fire them without getting the authorities involved, but Allen wanted to protect other businesses.

“The main thing is this: We want to keep this from happening to someone else,” he said.

Deputy Hall County Attorney Sarah Carstensen said businesses are often embarrassed by embezzlement or theft by deception cases. They don’t necessarily want everyone to know they were victims of a crime. But by not reporting these types of thefts, other businesses are left open to the crimes and the thief walks away, she said.

In this case, Freeman, 53, of Grand Island, was convicted of felony theft by deception for the incidents that occurred between Jan. 30, 2008, and March 15, 2012. She was sentenced to three years of probation and 60 hours community service. She must also pay $10,860 restitution within 45 days of her sentencing, which was March 12.

Allen said problems were discovered in July 2012. The businesses had done “surface audits” previously but nothing formal. The owners were looking through expenses and noticed what appeared to be personal items on the company reports. Six months prior, Freeman had done some things that didn’t “seem right,” so the owners began keeping a closer eye on the books, he said.

They found bank statements in the trash and receipts that had been submitted multiple times, he said. She had overpaid a company credit card and applied the surplus to her own card, and she lied about attending meetings during work hours, Allen said.

Freeman was fired on Aug. 1, 2012, and the matter was reported to police, he said.

An accountant was hired to do a complete audit going back several years.State statutes allow for only three years of transactions to be submitted in court, Carstensen said.

“We knew what she did, but we couldn’t prove all of it,” Allen said.

As a result, the businesses haven’t been able to recoup everything he believes they lost. They could, however, take the matter to civil court, he said.

The owners and employees also spent “hundreds and hundreds” of hours going over accounting books, financial reports and documents, as well as meeting with attorneys and going to court, all while also continuing to do their own jobs, Allen said.

“It was definitely stressful for everybody,” he said. “Everybody was angry. She was treated well here and paid well. Why would she jeopardize that?”

Carstensen said embezzlement cases can be more time-consuming to prosecute than other criminal cases because of the volume of records involved. It can also be complicated to explain to a jury.

This case was settled out of court, but it still required a lot of hours to prepare because of the variety of fraud used to steal money, she said.

The damage caused within a business or an agency can take a lot of time to repair, she added.

Two local nonprofit agencies, the Grand Island Community Foundation and the Child Advocacy Center, have dealt with embezzlement in recent years. The cases damaged the reputations of the agencies, and volunteers spent countless hours helping to uncover the fraud when they could have been spending time helping the community, Carstensen said.

“You definitely live and learn,” Allen said. “But you can’t watch everybody 24/7. You have to trust people. Luckily, we had a good assistant manager and she was promoted. She’s familiar with our system and that made it better.”

Allen’s advice to other businesses, big or small, is simple. If something doesn’t look right, check into it. Someone could have made an honest mistake or there could be deeper problems, he said. Do regular full audits and ask questions.

As for his own business, changes have been made concerning the handling of cash and about being more diligent about looking at monthly bank statements. The company also will have yearly audits done by a professional accountant, he said.

“If anyone out there is thinking about stealing from their employer, don’t do it,” he said. “It isn’t worth it. She’s a convicted felon now.”

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