I started my company, Obermiller Construction, Inc., in 1993, with five-hundred dollars and some used office equipment. My husband and I had a blended family of 7 children and not much money for extras, so I started looking for ways to bring in a little cash. I knew how to inspect construction projects and perform soil tests, so I hung out my shingle and got started.
For the next seven years I went from working part-time, to working full time, and then hired a couple of employees as the business grew and I added asphalt paving to my operations. As my business expanded, so did my family; my husband and I welcomed our eighth child during this time. I definitely had my hands full!
Then something unexpected happened – my business exploded! I hit a huge pothole in the parking lot of a large retailer and destroyed my muffler. I had no idea you could submit a claim for repairs, so instead, I chewed out the manager. I told him I was not going to shop there anymore because the lot was unsafe. I also pointed out that I owned the construction company up the street and could fix the potholes for him.
I guess fortune really does favor the bold! No one told me that a company the size of mine, grossing around $100k annually, couldn’t market one of the largest retailers in the world and win them as a client, so I just did it without knowing any better. That relationship has lasted over 20 years and been worth tens-of-millions of dollars to my company. It is the stuff dreams are made of – right? A real Rags-to-Riches story!
In reality, the whole thing would have been much cooler if I hadn’t gone from rags to riches, and nearly back to rags again. It wasn’t the economy. It was n’t lack of business. It wasn’t anything I saw coming.
I was embezzled.
In 2010 I discovered that my trusted accountant had been stealing from my company. She was convicted of embezzling just under half-a-million dollars in 4 years, but the theft appears to have gone on for over 8 years and likely cost my company upwards of a million dollars. I was stunned. I was devastated. I was almost bankrupted. I felt like one of those people you sometimes read about who, after the death of their mother, find their adoption papers in her attic. It was as though everything I thought I knew about this person, who I had considered a dear friend, was a lie.
My accountant was sentenced to 33-months in prison. My company recovered, but it was a grueling process that took years. It was also humiliating. Although my embezzlement was, according to the FBI agent assigned to my case, a textbook operation, it was so simple I could not believe it wasn’t discovered years earlier.
Since a business with under a hundred employees is literally one hundred times more likely to be embezzled than a larger company, I was amazed that so little fraud prevention information focused on small businesses. I taught myself to think like a thief, continually watching for FraudPoints!—areas where my company was vulnerable to fraud—and set up processes to protect them. Most fraud is simple, so simple controls will usually prevent it. Because check forgery, electronic transfers, and billing schemes are some of the most common and expensive methods used by embezzlers, those were the first things I focused on.
The FraudPoints! system I developed to protect my company, includes the following 3 daily habits:
- Get your own mail—look at each item and ask yourself what a thief could do with it.
- Lock up your checks and credit cards—a thief can easily convert them to goods and services.
- Check your online bank account—you should recognize every transaction.
Whenever I speak about fraud prevention, at least one person comes up to me and sadly confides how fraud impacted their business. Often a formerly confident and successful business owner will break down and cry as they recount the experience. For many, the three simple steps above would have saved their business from harm.
If I had spent only 20-minutes a day monitoring my financial processes, thus preventing my embezzlement, it would have been worth over $2,500 per hour to me. How much is 20-minutes worth to you? Why don’t you think about it on your way out to get the mail!
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