Marquet International Releases 2009 Report On Embezzlement

Marquet International released its annual report on embezzlement, The Marquet Report On Embezzlement for 2009. Some interesting conclusions can be made based upon the findings from the past two years reports, including:

• Women are more likely to embezzle than men.
• Men embezzle significantly more than women.
• Perpetrators typically begin their embezzlement schemes in their early 40s.
• By a significant margin, embezzlers are most likely to be individuals who hold financial positions within organizations.
• The two broad industry categories that have the highest risk for a major embezzlement are Financial Services and Government Agencies/Municipalities.
• The Financial Services industry suffers the greatest losses from major embezzlements.
• On average, major embezzlement schemes last about 4½ years.
• California and Florida are consistently the states that experience the greatest losses from major embezzlements.
• The vast majority of major embezzlements are caused by sole perpetrators.
• Gambling is a clear motivating factor in driving some major embezzlements.
• Fewer than 10 percent of embezzlers have a criminal record – less than expected, but enough to suggest that pre-employment screening has merit.

Specific highlights from the 2009 study include the following:

• The average loss was just over $1 million; the median loss was $386,500. These numbers were significantly lower than the 2008 report ($2.2 million and $500,000, respectively).
• Nearly 63 percent of the incidents involved female perpetrators, consistent with our 2008 findings (60%).
• Male perpetrators, on average, embezzled nearly twice as much as females, consistent with our 2008 findings.
• The average adjusted age of perpetrators at the commencement of their embezzlement was 42*, somewhat lower than our 2008 findings (44 years).
• 40 – 49 year olds caused the greatest overall percentage of losses, consistent with our 2008 findings.
• The top two industries victimized were Financial Services and Manufacturing, again consistent with our 2008 findings.
• Non-profit and religious organizations accounted for more than 11 percent of all the incidents, consistent with our 2008 findings.
• Two-thirds of the incidents were committed by employees who held finance & accounting positions, again consistent with our 2008 findings.
• The average scheme lasts nearly 4 ½ years, consistent with our 2008 findings.
• Vermont had the highest loss ratio followed by Wisconsin, Oklahoma, Montana and Iowa.
• 87 percent of the cases involved individual perpetrators, slightly higher than our 2008 findings (80 percent).
• More than 7 percent of the cases involve perpetrators who reportedly had gambling problems, consistent with our 2008 findings.
• 5 percent of the cases involved perpetrators who had a prior criminal history, significantly higher that our 2008 findings (3 percent), but more consistent with our projection of 5 – 10 percent.

Employee misconduct and internal corporate fraud will be a continuing and growing problem as the U.S. economy continues to struggle. The seeds of future major embezzlements, yet to be discovered, are being sown in the current market environment. That having been said, the revelation of so many major embezzlements in the US in recent years is in part due to the downturn in the economy beginning in 2008. As the saying goes, “when the river runs dry, the jagged rocks are revealed.” Corporate fraud schemes tend to reveal themselves when organizations pay more attention to their finances. Other white collar crimes, such as investment frauds, simply collapse on themselves in economic downturns. I hope our annual report on embezzlement will add to the dialog and understanding of this insidious and pervasive type of corporate fraud.

Read The Marquet Report On Embezzlement here.