Sacramento Business Fraud Prevention Lawyer

Fraud Prevention and Detection in California

The vast majority of trade secret misappropriation and business fraud occurs from employees and those whom the principal has long trusted. That is the sad reality business owners have to face today.

If you suspect your employees have committed business fraud, contact the Law Office of David Barrett. The skilled fraud prevention and detection attorney at our law firm will help you handle all aspects of the fraud. Our law office is located in Sacramento, California.

Fraud Can Cause Serious Harm to Sacramento Businesses

The survey by Actimize, a leading provider of transactional risk management software, reported that 85 percent of large businesses experienced employee fraud. A study by the Association of Certified Fraud Examiners (ACFE) of over 950 cases of occupational fraud between 2006 and 2008 revealed that U.S. organizations lose an estimated seven percent of their annual revenues to fraud — but the average damages are actually larger among small businesses. Highlights from the study include the following:

The median loss suffered by organizations with fewer than 100 employees was $200,000. Check tampering and fraudulent billing was the most common of all small business fraud schemes. In fact, more than one-fourth of all small business frauds in the survey involved check tampering, making it a much more common method of fraud than in larger organizations.

The typical fraud in our study lasted two years from the time it began until the time it was caught by the victim organization. The accounting department or upper management most often committed the fraudulent activity, and most fraudsters were first-time offenders. Small businesses are especially vulnerable to occupational fraud. Lack of adequate internal controls was most commonly cited as the factor that allowed fraud to occur.

How to Protect Your Business From Fraud

Litigation is often times the result of fraud, but fraud prevention measures are the best way to stave off fraud and expensive litigation. A few small steps taken by the business owner can identify and effectively manage potentially costly fraud losses.

• Be proactive. Create and maintain internal controls specifically designed to prevent and detect fraud. Implement a code of ethics for management and employees and set up an overt policy that the company will not tolerate any unethical behavior.
• Establish hiring procedures. Every company, regardless of size, can benefit from formal employment guidelines. When hiring staff, conduct thorough background investigations. Check educational, credit and employment history, as well as references. After hiring, incorporate evaluation of the employee's compliance with company ethics and antifraud programs into regular performance reviews.
• Train employees in fraud prevention. Once carefully-screened employees are on the job, they should be trained in fraud prevention. Are employees aware of procedures for reporting suspicious activity by customers or co-workers? Do workers know the warning signs of fraud? Ensure that the staff knows at least some basic fraud prevention techniques.
• Conduct regular audits. High-risk areas, such as financial or inventory departments, are obvious targets for routine and surprise audits.
• Call in an expert. For most firms, fraud examination is not a core business component. When fraud is suspected or discovered, hire an anti-fraud expert.

At the Law Office of David Barrett, we work with a Certified Fraud Examiner to examine businesses, set up a fraud prevention system, and also to audit the financial records to detect any existing fraud. There is a variety of methods used to defraud a business, therefore knowing these methods makes it much easier to prevent and detect fraud.

Contact our Sacramento, California law firm online or call 916-440-0233 to arrange a consultation with David S. Barrett about your objectives.