Trucker’s wife urged to stay calm about embezzlement flap
First of all, tell her not to worry if she did not do it. What she wants to know is what embezzlement is and what she can expect from the audit.
By JIM KLEPPER
The Trucker News Services
8/30/2009
My wife works for a flower shop in our hometown. She has worked there for years without any problem, but now the owner thinks someone is stealing money from the shop and has hired a CPA to audit the records. Talk of embezzlement is spreading like wildfire in this small town of 13,000. People are talking about my wife and the other woman who works there and asking which one is stealing the money, at least that is what my wife thinks. She is a nervous wreck and wants me off the road until this is resolved. What can I tell her to expect?
First of all, tell her not to worry if she did not do it. What she wants to know is what embezzlement is and what she can expect from the audit. I am not a CPA so the audit process is a bit fuzzy to me, but here is what I expect the audit to show.
The audit is a process to basically count all the inventory purchases and match them with all the inventory sales for a specific period of time and to determine the spoilage of the flowers. By doing that, the CPA can determine the reliability and validity of the accounting records and the flower shop’s internal controls.
The internal controls are an important part of preventing and detecting fraud. An example of an internal control we use in my office is the person that opens the mail (receives the check) is not the person preparing the deposit slip and whoever makes out the deposit slip can not make the deposit in the bank. The person opening the mail can then make the bank deposit because the deposit slip is the backup for the money. The CPA explained it to me this way: “Make sure the person receiving the money is not the person depositing the money; you want two or more people to have to agree to violate the law before any money is lost.”
Once the audit is complete and the CPA has made a finding, the owner then can take the necessary action. He can either find out he is spending too much money on advertising or not charging enough for his flowers or anything in between that show the missing money is due to bad management.
If the audit exposes evidence of theft or unexplained missing money, then the owner may want to contact the police department to report a theft. The police may then investigate to see where the money trail leads. Any employee with unexplained extra money or recent purchases will be a possible suspect.
Embezzlement was not originally an English Common Law crime, but in 1799 it was made a misdemeanor by statute and is regarded as part of the American Common Law. Modern statutes usually distinguish between grand embezzlement, a felony, and petit embezzlement, a misdemeanor, based upon the value of the property embezzled. The felony charges differ from jurisdiction to jurisdiction from usually $50 to $200 as the starting place to file felony charges.
Embezzlement is the taking of assets, usually money, which had been placed in an embezzler’s trust but belongs to another person. The usual example here is the bank employee that secretly steals money he or she has been entrusted to protect for the bank’s depositor.
Embezzlement, depending upon the jurisdiction generally requires; (1) the fraudulent (2) conversion (3) of property (4) of another, (5) by a person in lawful possession of that property.
The defendant must intend to defraud for a conversion (the defendant taking action with the property inconsistent with the trust arrangement which he has with the property owner) to become embezzlement. The property can be money, car, or just about anything that can be stolen with the general exception of real property.
Embezzlement requires that the property be that of someone other than the embezzler. A person who takes the $10 bill you gave them to buy you a movie ticket and spends it on his personal desires is guilty of embezzlement. However, the guy you loan $10 who fails to repay you is not guilty of embezzlement. The difference is you and the defendant agreed that he would take the money and purchase you a movie ticket, he did not, and he spent the money on himself. While when you loaned the guy $10, you both understood he was to use the money for himself as he desired and would repay you. Failing to repay is not embezzlement.
Demand for return of the property is not necessary if there has been a clear conversion of the property, but if there is doubt as to the conversion, a demand by the owner for return and a refusal to return by the defendant may be necessary in some jurisdictions.
Some states limit embezzlement to the fraudulent conversion of property “entrusted” or “delivered” to the embezzler. In those states, they would not punish a person who finds lost property and, while in lawful possession of it, converts it.
The critical element of embezzlement is that the defendant must have been in lawful possession of the property at the time of the fraudulent conversion. If the defendant only had mere custody of the property, then the crime would be larceny, which is the taking and carrying away the property of another with the intent to deprive him of it permanently.
Tell your wife to relax if she did not take any money. The police and the forensic accountants can track money so easily these days it is scary. Think of how the government tracks the money of terrorists and money launderers and know how easy it will be to track the money of a small town flower shop with only a few hundred money transactions verse the hundreds of thousands of transactions of the money launderers.
Jim C. Klepper is president of Interstate Trucker Ltd., a law firm dedicated to legal defense of the nation's commercial drivers. Interstate Trucker represents truck drivers throughout the 48 states on both moving and nonmoving violations. He is also president of Drivers Legal Plan, which allows member drivers access to his firm’s services at discounted rates. A former prosecutor, he is a lawyer who has focused on transportation law and the trucking industry in particular. He works to answer your legal questions about trucking and life over-the-road and has his Commercial Drivers License.
For more information call (800) 333-DRIVE (3748) or go to www.interstatetrucker.com and www.driverslegalplan.com.
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