The tale of a scary nine-page background check

Fraud & Security / August 4, 2015

I wasn’t too long out of college and at my first “real job” (no background check required) when I stumbled into my very first fraud. I’d been assigned to do some job costing reports because my boss could not find out why the company was losing so much money on a job. After some digging, I found checks that should have been destroyed (and were voided in the accounting system) but had been cashed at the bank. Turns out there was fraud in the accounting department. Not only were “voided” checks being cashed but the payroll person was issuing two checks per payroll for herself and her accounting buddy (including the double 401K contributions for the company AND double vacation hours). The employee had been there for more than eight years – and had been committing fraud for seven and a half of them.

I can remember sitting in the hot warehouse of the company, in the summer, on a box, looking through bankers boxes of check stubs when I found the duplicate stubs. My disbelief that someone would actually do that. And my fear about who I was going to have to tell and how bad the ramifications would be for me. These were senior people. And I had all the proof in my hands, but still, I knew it would be bad, and to be honest, when it all came down, it was. I think since that day I have had a nose for fraud. That whole experience changed how I looked at a lot of things. It honed my detail skills. It made me more suspicious of people who were “too nice.” These women I’d worked side by side with for four years were not what they appeared to be. They weren’t my friends, they were thieves.

Since that day I seem to have walked into a number of cases of fraud, at other companies and with clients in my business. I’ve counseled my clients when they’ve had an employee rob them blind. Fake checks, fake vendors, missing deposits – nothing takes the anguish away when they realize someone they trusted has stolen from them.

It has also me hyper-vigilant about The Wren Group, Inc. and how to keep us as safe as possible from fraud and theft. I have been studying to be a Certified Fraud Examiner (CFE). And, one of the things I’ve learned is how important a background check and a reference check is in the hiring process.

One of the very best ways to prevent fraud in the workplace is to have a sound hiring process including reference checks and most importantly, background checks.

The thought here is that rarely do people all of a sudden start stealing. There have been issues as past employers and potentially even with law enforcement. And for what a background check tells you (and potentially saves you), they’re really inexpensive, between $17 and $50 depending on the number of states and what you’re checking.

Before you run a background check on a potential employee, you have to have a policy that tells the potential candidate what you will do with the information, especially if it’s negative. Definitely, check with an attorney or your background check company for the right language. Basically, my policy says that I will give the potential candidate the opportunity to explain any incidents found and that if what is found influences the hiring decision, they will be informed of what the information was and why.

A couple of years ago I was hiring for a bookkeeper in my office and found a delightful candidate that checked all the boxes for the position. Great at QuickBooks. Strong Accounting knowledge. Bright. A college graduate. Super personality. Lots of volunteer work. Sounded too good to be true, and I offered her a position contingent on a background check. It’s the first (and only) time I’ve offered a position before I got the results back but I felt so good about this person that I just knew the background check was a formality.

Ha. Nine scary pages of check fraud (about 30 offenses). Two incidents of forgery. Theft by taking. I was aghast. How could my people-meter have been so off? This was a delightful person, a great background, the perfect candidate. And a thief, forger, and potential company-ending hire. I dutifully sent the required e-mail asking for clarification and explanation and I never heard back from the candidate. I’m pretty sure she’s probably working in an accounting office somewhere and I hope to God she’s not skimming, stealing, or forging there because they didn’t do their due diligence.

Another candidate had a clear background check, but the reference check was a little off. The litigious society we live in has made former employers reticent to give feedback freely. Nobody wants to be honest lest they prevent someone from getting a job and are sued for their honesty. This means that as the potential employer, you have to ask a few questions and listen for the long pauses. Not sure what to ask? Click here. There have been a couple of times when I’ve said to the reference, “I know that you are reluctant to be honest, but I hear something in your voice that worries me. I have a business too. What aren’t you telling me? This is a confidential phone call.” And that has usually worked. Ask tough questions, expect straight answers.

There’s been a couple of times recently where a client has told me they’re hiring and asked me if I’d do a background check — or worse — they tell me they don’t want to do them. There seems to be a stigma that if an employer does a background check, they don’t trust their employees. But it’s not about trust; it’s about taking care of the business you built and maintain every day. It’s about protecting your income, your business, your clients, and employees.

For information on finding a background check company, you can check the web or contact your attorney. We’re happy to share the local company that we use (and have been extremely happy with), just give us a call at our office.