Fraud Prevention Tip: If Someone Commits Fraud, Have Them Thrown in Jail

One thing I consistently find to be true is that, from a legal perspective, 75% of people who are caught stealing and committing fraud are first time offenders. That’s not because it suddenly occurred to them that they could steal and supposedly get away with it; these are people who have been caught in the past but who were never prosecuted.

That’s right – people catch other people stealing money and inventory from them and don’t use the law to prosecute them, whether for restitution or punitive reasons.

Why Don’t People Prosecute?

People don’t prosecute for a few reasons.

1. It seems easy for us to say, “Oh my gosh. Someone was stealing from you? You had them arrested and sued them, right?” After all, if someone broke into your home and stole your grandma’s diamond necklace, you would sue them, wouldn’t you? Of course you would, but for some reason when people work for us and we feel like we know them, we want to forgive them and not mess up their lives, so we fire them – but we don’t prosecute. However, if people don’t go to jail, they don’t learn their lesson (this isn’t some legalistic philosophy I stick by – this is based on the experiences that I’ll flesh out more below and in future posts).

2. Prosecuting seems messy. It creates paperwork, involves lawyers, and it takes time, energy and more money, and you’d rather not lose more considering that someone’s been stealing it already, right? Wrong. You can get some of that money back if it can be had, and the mess is worth the trouble.

3. It’s embarrassing. People think it’s embarrassing that someone was stealing from them and they didn’t uncover it sooner. They don’t want other people to know, whether employees, the public, friends or family. They don’t want a big deal made, attention attracted, ill will and weird feelings. It seems icky somehow and people seek to avoid the associated feelings.

What Are the Consequences of Not Prosecuting?

When people don’t prosecute it hurts everyone and it’s bad for the larger business world. In the long run, when people prosecute it benefits everyone, from employers and industry to the average honest worker who deserves a job for which he’s not competing against thieves.

One of the biggest problems of not prosecuting those who steal and commit fraud is that you can’t say to their next potential employer that they’re thieves. Legally, if you fire someone for theft but don’t prosecute in a court of law, you can’t say that he’s a thief. That means you have to say that you chose to part ways amicably or you will be seen to be impeding his ability to acquire gainful employment without legally proving the reason he doesn’t deserve it. The word that comes to mind here is poppycock!

Prosecute thieves and those who commit fraud to ensure that you can tell future employers the information that they deserve to know. Then you can let those employers make informed decisions about who to let in their businesses.

Again, those who commit fraud aren’t first time offenders – they’re just getting caught for the first time and prosecuted. Do us all a favor and make sure people are prosecuted for their crimes.

Have you ever prosecuted someone for fraud? What happened?

Have you ever chosen not to prosecute someone for fraud? Why not?

You’re Serious? You Don’t Have a Fraud Policy?

Though I could believe it, I was still shocked when I spoke recently to a group of over 200 CEOs, not one of whom raised his or her hand when I asked who had a fraud policy. Disheartening still was that most people didn’t even know what I meant when I asked the question.

What is a Fraud Policy?

A fraud policy is similar to a mission statement and core values. Most companies have a mission statement. It says something to the effect of why the company exists and what it was formed to do at the highest level. Core values might further flesh out those elements of a company’s attitude and approach that are indispensable to its running successfully year after year. They might deal with product quality, customer service, community interdependence and so forth.

If you go into any Whole Foods, for instance, you’ll see the mission statement and core values on huge signs near the checkout area at the front of the store. Many companies even spend tens of thousands of dollars (or much more) hiring consultants to perfectly craft their mission and values.

Similarly, a fraud policy clearly states – for all to see – the approach a company takes towards those who commit fraud, steal, lie or cheat.

For instance, a fraud policy could state something like, “If you steal, you will be prosecuted to the fullest extent of the law.”

Why Don’t Companies Create Fraud Policies?

With all that time and energy invested in mission statements and core values, why don’t companies take ten extra minutes to tack on a Fraud Policy and then display that at the front of their stores, websites, factories and warehouses?

In short, I think they don’t know they should. So let me be the first to tell you that you should. Every single company should have a fraud policy.

As you can see, it doesn’t take long to come up with a Fraud Policy, especially since it doesn’t need to be perfectly crafted and expertly displayed. Crudely stating, “If you steal, we will throw your butt in jail so fast it knocks the shoes off your next of kin,” would be sufficient. The point is to share the very direct fact that no one will get away with fraud or theft, and if people do steal from you they will be caught and they will be prosecuted to the fullest extent of the law.

Let’s Make a Plan

So, this week, I want you to take the time to make an official fraud policy. Display it, own it and love it.

In addition to putting that on your to-do list, we’re going to put some things on The Turnaround Authority To-Do List. To honor Fraud Prevention Month, we’re going to address numerous issues about fraud throughout the month of March, and even continue well into April since preventing fraud is a year-round process.

In coming posts I will discuss the importance of prosecuting perpetrators of fraud and the values of an informal fraud policy. I will also share a dozen tips and ways that you can prevent fraud, things that you should watch out for, and much more.

If you know other business owners or managers then this is the time to forward them a link to this blog, and if you haven’t yet subscribed to The Turnaround Authority, I encourage you to do so as we prepare to prevent fraud and make the business world a safer and more honest place.

So, I ask you to share right here: what is your Fraud Policy and what are you doing to spread it throughout your company?