Workplace Thieves Hit Small Businesses the Hardest

Recent findings from the Association of Certified Fraud Examiners sheds insight into internal theft

In June, the incoming board chairman of the St. Paul Winter Carnival's organizing foundation was indicted by a federal grand jury for allegedly embezzling pension funds from his own contracting business in Columbus Township in Anoka County. Michael Jay, 54, resigned his position with the board but has disputed the charges.

Ana Hellzen, 40, of West St. Paul was charged Dec. 6 with stealing about $14,000 from a graduation party fund for students at Henry Sibley High School. Hellzen, who allegedly used the money to pay medical bills and other debts, told investigators that "she was waiting for this day to come, that she had fallen on financial hard times and … she knew she did not have a right to the funds," according to a criminal complaint.

The other party co-chair told police that Hellzen received all the invoices and bank statements because she was the primary person listed on the account. No one noticed the money missing until the bank reported last summer that the account was overdrawn by more than $11,000.

Asked how much she thought she had taken, Hellzen estimated at least $6,000, though she was unsure of an exact figure, according to a criminal complaint.

Organizers of the party, billed as an end-of-year lock-in, said they are already on their way toward making up the missing funds through donations from parents and businesses.

"We will work our tails off to raise as much money as we can," said Mary Anne Bailey, co-chair for the 2006 Sibley Senior Party. "The community is responding so favorably because this is such an unusual situation. …We've already raised well over $4,000, and we haven't even sent out a formal appeal."

Experts said most embezzlements are eventually uncovered, but studies show that more than a third of cases are never reported to law enforcement officials. The employee resigns or is fired with no legal repercussions.

Even after insurance, judgments, restitution and settlement agreements, companies tended to recoup only a slim percentage of their losses.

"In over a third of cases, they got no recovery," said John Warren, general counsel for the Association of Certified Fraud Examiners. "The general rule is prevention is much cheaper."

"I think, in a lot of cases, companies would rather absorb the loss and then move on, rather than letting the public know that money was lost," Bellows said. "They see it as a loss of confidence. … And, frankly, I don't think that's the right way to do it. It means these people are right back out there committing the crime."

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