How Embezzlement Affects a Small Business and How to Prevent it

Last week a Bismarck woman was accused of embezzling 40,000 dollars from a small business in town.

KX News spoke with an accountant today who said 80 percent of embezzlement happens to small companies, and when it does, like this case at a small Bismarck car accessory store, it’s devastating. 

The Krumm and Associates accountant Ken Krumm says stealing cash is just the tip of the iceberg in embezzlement cases.

Krumm adds, “If they just took the cash from you, you’re out 500,000, but what if they took the cash by pretending to be paying the IRS bills but never did. Well, now I owe the IRS 500,000 dollars plus interest and penalties. Plus, I’m out 500,000 cash that you took, so now we’re at a million plus.”

For small businesses like Automotive Addictions, it’s not just the 40 thousand dollars lost, but it’s the time spent, drop in employee morale and more.

Just this July, two other women were accused of embezzling. Burleigh County court documents say Faye Zempel and Amanda Sapin stole more than 50,000 dollars from Merle Norman.

The women were employed at the cosmetics store when they were caught taking cash from the till.

Store Owner Lyla Lovdal didn’t wish to comment while the case is on-going, but she told me, that besides losing the money, she feels like she was betrayed. 

Bismarck Police Department Sergeant Tim Sass says, “Some people are able to commit a crime and they show signs of being nervous or are uncomfortable right away. Other people are able to commit certain crimes and may stay calm and potentially stay at that business for years to come.”

Krumm adds, “It’s this good, kind, trusting attitude that made them vulnerable, and that’s where the theft comes from.”

Krumm and Sergeant Sass agree, the best way to prevent embezzlement is to have a system of checks and balances.

Sass adds, “People get so caught up and busy with their own duties, their business, that we rely on our help so much and put so much faith and trust, that you don’t like to think that you may just have to double check.”

According to Krumm and Associates, businesses typically are only able to recover less than 30 percent of the money stolen.

Krumm told me that it’s a very under-reported crime due to embarrassment. He urges businesses to always report embezzlement, because those who steal money and get away with it, will move on to another business and do the same.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Don't Miss