<html xmlns:v="urn:schemas-microsoft-com:vml" xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:m="http://schemas.microsoft.com/office/2004/12/omml" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=us-ascii">
<meta name="Generator" content="Microsoft Word 15 (filtered medium)">
<!--[if !mso]><style>v\:* {behavior:url(#default#VML);}
o\:* {behavior:url(#default#VML);}
w\:* {behavior:url(#default#VML);}
.shape {behavior:url(#default#VML);}
</style><![endif]--><style><!--
/* Font Definitions */
@font-face
{font-family:Wingdings;
panose-1:5 0 0 0 0 0 0 0 0 0;}
@font-face
{font-family:"Cambria Math";
panose-1:2 4 5 3 5 4 6 3 2 4;}
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
@font-face
{font-family:"Monotype Corsiva";
panose-1:3 1 1 1 1 2 1 1 1 1;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:11.0pt;
font-family:"Calibri",sans-serif;}
a:link, span.MsoHyperlink
{mso-style-priority:99;
color:#0563C1;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{mso-style-priority:99;
color:#954F72;
text-decoration:underline;}
p.msonormal0, li.msonormal0, div.msonormal0
{mso-style-name:msonormal;
mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:12.0pt;
font-family:"Times New Roman",serif;}
span.EmailStyle18
{mso-style-type:personal-compose;
font-family:"Calibri",sans-serif;
color:windowtext;}
.MsoChpDefault
{mso-style-type:export-only;
font-size:10.0pt;}
@page WordSection1
{size:8.5in 11.0in;
margin:1.0in 1.0in 1.0in 1.0in;}
div.WordSection1
{page:WordSection1;}
/* List Definitions */
@list l0
{mso-list-id:1698774294;
mso-list-template-ids:1639324114;}
@list l0:level1
{mso-level-number-format:bullet;
mso-level-text:\F0B7;
mso-level-tab-stop:.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Symbol;}
@list l0:level2
{mso-level-number-format:bullet;
mso-level-text:o;
mso-level-tab-stop:1.0in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:"Courier New";
mso-bidi-font-family:"Times New Roman";}
@list l0:level3
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:1.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
@list l0:level4
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:2.0in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
@list l0:level5
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:2.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
@list l0:level6
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:3.0in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
@list l0:level7
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:3.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
@list l0:level8
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:4.0in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
@list l0:level9
{mso-level-number-format:bullet;
mso-level-text:\F0A7;
mso-level-tab-stop:4.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
font-family:Wingdings;}
ol
{margin-bottom:0in;}
ul
{margin-bottom:0in;}
--></style><!--[if gte mso 9]><xml>
<o:shapedefaults v:ext="edit" spidmax="1026" />
</xml><![endif]--><!--[if gte mso 9]><xml>
<o:shapelayout v:ext="edit">
<o:idmap v:ext="edit" data="1" />
</o:shapelayout></xml><![endif]-->
</head>
<body lang="EN-US" link="#0563C1" vlink="#954F72">
<div class="WordSection1">
<p class="MsoNormal">Gothamite Michael J. Garibaldi, CPA/ABV/CFF/CGMA is quoted in today’s Newsday Small Business Column written by Jamie Herzlich. The article focuses on the Hiscox study on embezzlement and the impact it has on small businesses. <a href="https://www.newsday.com/business/columnists/jamie-herzlich/embezzlement-hiscox-workplace-1.14693307">https://www.newsday.com/business/columnists/jamie-herzlich/embezzlement-hiscox-workplace-1.14693307</a>.
Network with Michael at next week’s (Nov. 15) NY Legal Meeting at Club Quarters; and Gotham LI on December 7, 2017 and LI Legal on December 14, 2017 both at the Inn at Fox Hollow in Woodbury.
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Many thanks to Gothamite Don Hochler for making the connection!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Monotype Corsiva";color:#1F4E79">Lisa B. Waterman</span><o:p></o:p></p>
<p class="MsoNormal">Garibaldi Group<o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt">Certified Public Accountants * Financial & Management Consultants</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt">990 Stewart Avenue-Fifth Floor</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt">Garden City, NY 11530</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt">516-288-7400 x102</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt">Cell: 516-532-2299</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt"><a href="mailto:lisa@garibaldicpas.com">lisa@garibaldicpas.com</a></span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt">twitter: @ilawinc</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="background:white"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></b><span style="color:black"><a href="https://www.newsday.com/business" target="_blank"><b><span style="font-size:15.0pt;font-family:"Arial",sans-serif;color:#999999;text-transform:uppercase">BUSINESS</span></b></a><a href="https://www.newsday.com/business/columnists" target="_blank"><b><span style="font-size:15.0pt;font-family:"Arial",sans-serif;color:#999999;text-transform:uppercase">COLUMNISTS</span></b></a><a href="https://www.newsday.com/business/columnists/jamie-herzlich" target="_blank"><b><span style="font-size:15.0pt;font-family:"Arial",sans-serif;color:#0079C2;text-transform:uppercase">JAMIE
HERZLICH</span></b></a><o:p></o:p></span></p>
<p class="MsoNormal" align="center" style="text-align:center;line-height:16.8pt">
<a href="https://www.newsday.com/columnists/jamie-herzlich" target="_blank"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#0079C2;text-decoration:none"><img border="0" width="88" height="104" style="width:.9166in;height:1.0833in" id="_x0000_i1026" src="https://cdn.newsday.com/polopoly_fs/1.1229020.1436180874!/httpImage/image._gen/derivatives/mugshot_88/image." alt="Newsday"></span></a><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#666666"><o:p></o:p></span></p>
<p class="MsoNormal" align="center" style="text-align:center;line-height:16.8pt">
<b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">By Jamie Herzlich</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#666666"><o:p></o:p></span></p>
<p class="MsoNormal" align="center" style="mso-margin-top-alt:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:0in;text-align:center;mso-line-height-alt:12.0pt;background:white">
<b><span style="font-size:33.0pt;font-family:"Arial",sans-serif;color:black;letter-spacing:-1.5pt">Study: Embezzlement cases cost firms an average of $1.13 million<o:p></o:p></span></b></p>
<p class="MsoNormal" style="background:white"><span style="color:black"><o:p> </o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="color:black"><o:p> </o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="color:black">Updated November 5, 2017 6:00 AM
<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">PRINT <a href="https://www.newsday.com/business/columnists/jamie-herzlich/embezzlement-hiscox-workplace-1.14693307" target="_blank"><span style="font-size:10.5pt;color:#666666;text-transform:uppercase">SEE
COMMENTS</span></a> SHARE <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Last year workplace embezzlement cases cost companies an average of $1.13 million, according to a 2017 study by global
specialty insurer Hiscox.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Fifty-five percent of the cases occurred at companies with fewer than 100 employees, and 37 percent involved losses
of more than $500,000.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">For small businesses those kinds of losses could be crippling. That’s why it’s important to put safeguards in place
to detect and deter such theft.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="color:black"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">“Embezzlement continues to be a significant threat to large businesses, but most particularly small businesses,” says
Doug Karpp, a senior vice president at Manhattan-based Hiscox.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">It’s much harder for smaller businesses to recover from significant losses than their larger counterparts, he says.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Small businesses can be more vulnerable because of the amount of trust they may place in one individual; plus, they
likely don’t have the sophisticated controls and audits that a large company would, says Karpp.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">No business is immune, and knowing the warning signs is important.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">What to watch, according to the Hiscox study: an employee who’s eager to know how everything in the office works, or
is living a lifestyle out of proportion with his salary, or who may be overly diligent, coming in early and leaving late and never taking vacations.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">This doesn’t mean every employee who exhibits these traits is an embezzler. “You have to look at it holistically,” says
Karpp.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">But if an employee is not timely with his work, that also could be a sign of trouble, says Stephen Pedneault, principal
of Glastonbury, Connecticut-based Forensic Accounting Services and author of “Fraud 101” (Wiley; $70). For example, you keep asking for financial records that keep getting delayed or stalled.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">“You’ll know it’s happening in their behavior long before you find it in their transactions,” Pedneault says. For instance,
an employee could be defensive about her area of responsibility, insisting nobody cover for her when she’s out.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Pedneault says there are three main ways to combat fraud and embezzlement: <o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;margin-left:16.5pt;text-indent:-.25in;line-height:19.8pt;mso-list:l0 level1 lfo2;background:white">
<![if !supportLists]><span style="font-size:10.0pt;font-family:Symbol;color:#333333"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><b><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Prevention</span></b><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">: Avoid giving any one person too much access or opportunity.<o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;margin-left:16.5pt;text-indent:-.25in;line-height:19.8pt;mso-list:l0 level1 lfo2;background:white">
<![if !supportLists]><span style="font-size:10.0pt;font-family:Symbol;color:#333333"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><b><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Detection</span></b><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">: Periodically review bank statements and cash disbursements
to look for anomalies.<o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;margin-left:16.5pt;text-indent:-.25in;line-height:19.8pt;mso-list:l0 level1 lfo2;background:white">
<![if !supportLists]><span style="font-size:10.0pt;font-family:Symbol;color:#333333"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><b><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Insurance</span></b><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">: Consider employee theft insurance to recover embezzled
funds and associated costs.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Common schemes include perpetrators taking cash or bank deposits and transferring the funds to an account they control;
checks being altered or forged to be made payable to the perpetrator; and fabricated or inflated vendor invoices and false billing, according to Hiscox.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">“People ultimately want to take some level of cash, more so than say inventory or an item,” says Michael J. Garibaldi,
president of the Garibaldi Group, a Garden City CPA firm that does forensic accounting.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">But you have to keep your eyes open across all areas, he says.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">So check payroll to make sure everyone listed is a legitimate employee and the salary amounts look appropriate, he says.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">When reviewing accounts, look not just for eye-popping large losses, but also smaller sums of money over time. The longest-running
scheme the Hiscox study found lasted 41 years.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">It’s not uncommon for longtime trusted employees to embezzle, says Douglas Nadjari, a law partner at Ruskin Moscou Faltischek
in Uniondale and member of its white-collar crime and investigations group.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">“They’ve built up trust, and people come to rely on these key employees,” he says.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Prevention starts on Day One with the recruitment process, he says. Confirm any information applicants provide and run
background checks to the extent permissible, he says.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Put in controls, such as having some checks require two signatures for disbursement, and have company bank statements
sent to both the bookkeeper and owner, says Nadjari.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Also check your accounts online on a regular basis, says Garibaldi.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">“I have clients that look every day at their online bank accounts,” he says. “It really is a combination of having your
eyes and ears open.”<o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:16.5pt;margin-right:0in;margin-bottom:4.5pt;margin-left:0in;line-height:19.8pt;background:white">
<b><span style="font-size:18.0pt;font-family:"Arial",sans-serif;color:black;letter-spacing:-.4pt">Embezzlement by the numbers<o:p></o:p></span></b></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">55% — Percent of cases that occurred at companies with fewer than 100 employees<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">37% — Percent that were committed by someone in a finance or accounting function<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">48 — Median age of perpetrators<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">51% — Percent of perpetrators who are women<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">29% — Percent of cases where the fraud lasted more than 5 years<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">41 years — Longest-running scheme in study<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:19.8pt;background:white"><i><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333">Source: 2017 Hiscox Embezzlement Study of nearly 400 cases</span></i><span style="font-size:13.5pt;font-family:"Arial",sans-serif;color:#333333"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height:16.8pt;background:white"><a href="https://www.newsday.com/columnists/jamie-herzlich" target="_blank"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#0079C2;text-decoration:none"><img border="0" width="88" height="104" style="width:.9166in;height:1.0833in" id="_x0000_i1025" src="https://cdn.newsday.com/polopoly_fs/1.1229020.1436180874!/httpImage/image._gen/derivatives/mugshot_88/image." alt="Newsday"></span></a><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#666666"><o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
</body>
</html>