Archive for October, 2011

Correct Procedures Can Cut Down on Theft by Workers

Each year employee theft costs companies big bucks. While the true extent of employee theft is unknown, researches estimate that it exceeds $30 billion annually. When other implicit costs are included, such as the investigation, possible negative publicity, and the probable interruption of normal business, the cost may be two or three times the amount.

One of the primary areas susceptible to employee theft is reimbursable business-related expenditures, including travel, supplies and entertainment. In large businesses, reimbursable expenses can be a significant amount of money. Unfortunately, most companies do not have a formal set of guidelines that outline what expenses are reimbursable, nor do they provide strict procedures for employees to follow when submitting expenses.

Instituted guidelines often are vague and not consistently enforced by company management. As a result, the potential for employee misuse is very high. As an example, a long-time, trusted employee of a major retailer with numerous locations stole hundreds of thousands dollars over a period of several years. The employee could have continued to abuse the reimbursement system had she not been caught as a result of procedural change.

Annual audits never uncovered the problem, which is not surprising because only 3 percent of all employee theft is discovered by outside auditors. A review of the retailer’s internal control structure was conducted after the resignation of the employee. Although there were employee reimbursement guidelines posted at the corporate offices, these guidelines were not uniformly implemented at the various store locations. As a result, employees were able to steal funds through several methods, including:

-Submitting more than one receipt for the same reimbursement.
-Submitting expense vouchers without adequate supporting documentation.
-Using company credit cards for payment and then submitting the invoice for employee reimbursement.
-Purchasing supplies from vendors that were directly invoiced to the company and submitting them as a reimbursable expense (this is also common with travel-related expenses).

Employers should be aware of the following key indicators in an employee’s personal lifestyle could suggest the potential for employee embezzlement:

-Excessive drinking or gambling.
-Maintaining a lifestyle beyond their means.
-Carrying excessive amounts of cash.

Key indicators in an employee’s work lifestyle that might indicate problems include:

-Treating company finances as an extension of their own.
-Attempting to spearhead all internal and external audits.
-Submitting inadequate documentation to support expense reimbursement.
-Initiating and approving payments to vendors

The following are some suggestions for improving your company’s reimbursement policies and procedures:

Establish clear guidelines. Management should provide strict written guidelines as to what expenses are reimbursable. The guidelines should also include procedures as to what documentation is to be submitted in order to obtain the reimbursement, and detail when the request for reimbursable expenses should be submitted. The guidelines should be consistent at multiple locations.

Expense approval check. Managers should review submitted expenses to ensure they are appropriate and that the supporting documentation is complete. Some companies allow employees to submit reimbursement requests with the understanding that supporting documents will be submitted later. This should be avoided as managers may forget to follow up on the required supporting documents.

Approval of reimbursement request should be in the form of a legible signature of the manger so that accounting will know the expense has been approved. Managers also should provide a contact person if there is a problem.

Reimbursement timeliness. A common problem is employees re-submitting receipts for reimbursement. Management should always request original supporting documentation. In addition, it may be beneficial for managers to set timeframes when expenses will be considered for reimbursement. Generally, 30 days following the expenditure should be sufficient.

Vendor-related expenses. In some instances, employees can purchase supplies from a vendor on the company’s behalf. In addition to the employee getting a receipt, the vendor sometimes sends an invoice directly to the company. As a result, there can be duplicate payments.

Employees should not be able to submit reimbursement requests for expenditures made through approved vendors. Vendors should bill the company directly. In some cases, employees will have legitimate out-of-pocket travel expenses, but they should not be allowed to pay large bills that could reasonable be billed directly to the company.

Company credit cards. Many companies issue company credit cards to employees to pay for miscellaneous supplies, travel and other related expenses. Most companies automatically pay the credit card company. Therefore, it is important that management review monthly credit cards statements to determine that the expenses are appropriate.

Under no circumstances should the employee use company credit cards for personal expenses. Implementation of these suggested internal controls is not guaranteed to stop employee theft. However, they will mitigate the potential for fraud.

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K-9 picked up scent at missing baby’s home

KANSAS CITY, Mo. — Police say an FBI cadaver dog reacted to the scent of a dead person inside the Kansas City home where a baby girl disappeared nearly three weeks ago, and investigators discovered soil in the backyard that had been “recently disturbed or overturned,” according to a released court document.

The affidavit, released Friday after being filed earlier this week in support of a search warrant targeting the family’s home, also stated that the girl’s mother, Deborah Bradley, “made the statement she did not initially look for her baby behind the house because she `was afraid of what she might find.’”

Those details and others in the affidavit, publicly released for the first time Friday, led to a daylong search Wednesday of the family’s home, where the parents say then-10-month-old Lisa Irwin must have been snatched in the middle of the night as the mother and two other boys slept. Bradley and the baby’s father, Jeremy Irwin, reported the girl missing on Oct. 4 and have denied any role in the disappearance while insisting police have pointed the finger at them.

The affidavit stated that an FBI cadaver dog taken into the house Monday indicated a “positive `hit’ for the scent of a deceased human in an area of the floor of Bradley’s bedroom near the bed.”

The FBI dogs, which often are used at both disaster and crime scenes, are trained “specially to recognize the scent of decaying, decomposing human flesh,” retired FBI special agent Jeff Lanza said Friday.

“That can be the scent of an actual body decomposing, or residual scents after the body is no longer there,” Lanza said.

Dr. Edward David, a deputy chief medical examiner for the state of Maine and co-author of the “Cadaver Dog Handbook,” said that when a body is left in one spot for several hours, cells are left behind. They continue to decompose and create an odor, giving the dog scents to detect.

He said that while trained dogs may fail to detect the smell of human decomposition about 30 percent of the time, they generally don’t alert when nothing is there. One exception is when human waste is present.

Joe Tacopina, a New York lawyer hired by a benefactor he has not identified to represent Bradley and Irwin, said the dog could have detected “a dirty diaper or 10 other non-human-remains items.”

But granting that cadaver dogs are trained chiefly to detect decomposing flesh, “There’s really no scenario where this baby, God forbid she was dead, would have decomposed in that short a period of time,” Tacopina told The Associated Press in a telephone interview Friday night.

The court document also indicated police felt they needed handheld digging tools after an investigator noticed dirt in a garden area behind the home appeared to have been “recently disturbed or overturned.” During Wednesday’s search, investigators could be seen digging behind a shed in the backyard. Among other revelations in the affidavit:

— Officers searched all rooms in the house and the basement after being called to the home Oct. 4. Officers sought evidence but because the parents said the baby had been abducted, the only areas extensively processed for DNA and fingerprints were the baby’s bedroom and possible entry points.

— The parents had told police that three cell phones were missing. The affidavit said a phone had since been found in a desk drawer, but that phone wasn’t one of those reported missing. The missing phones haven’t been found.

— Interviews with people involved in the case revealed “conflicting information for clear direction in the investigation.”

Another document released Friday revealed some of what police recovered from the home during Wednesday’s search: a comforter and blanket, some clothes, rolls of tape and a tape dispenser. The family’s local lawyer, Cynthia Short, did not immediately return a phone call seeking comment on the documents, and police declined to discuss what they found.

But before the affidavit was released, a statement issued by Short’s office insisted the parents had no role in the disappearance and disputed claims that the parents aren’t cooperating with police. The statement said the parents have consented to “unfettered access” to their property and allowed police to take hair and other samples.

“They have taken all calls from detectives, and answered questions posed again and again,” the statement read. “In the initial hours of the investigation, they tolerated accusations, volunteered to take polygraph examinations; continued to work with detectives even after the interviews turned into pointed accusations.”

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Injuries mount as inmates riot at Oklahoma prison

Authorities in western Oklahoma said Tuesday they were responding to a prison riot at the North Fork Correctional Facility, where multiple injuries were reported.

A morgue had been set up in a tent outside the prison, according to a witness, though there had been no reports of deaths.

More than 20 people, all inmates, were injured in the riot and at least five were flown to area hospitals, according to Julie Heavrin of Air Evac Lifeteam. She said she had no information regarding their conditions.

However, Beckham County sheriff spokeswoman Amy Brewer said that just eight inmates were injured.

Aerial video of the scene from CNN affiliate KOCO showed armed officials holding prisoners at gunpoint.
Inmates riot at Oklahoma prison

The riot started shortly before noon and it was not clear what motivated it, said Brewer. She said the Oklahoma Highway Patrol had six crews on the scene and Beckham County sheriff’s deputies were assisting.

The prison is located in Sayre, about halfway between Oklahoma City and Amarillo, Texas.

Ronnie Harold, Sayre’s police chief, said his department was providing security for the prison, which can house up to 2,400 inmates.

“We are still at a standstill. The prison guards are doing their job inside and we still have the perimeter secured,” he said.

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Authorities in Kansas City conducted another search Tuesday for a 10-month-old girl who went missing more than a week ago in a suspected kidnapping.

The latest search effort was focused on an abandoned home about a half mile from Lisa Irwin’s home, and included an inspection of a well in the backyard of the property, Kansas City fire officials told CNN.

The search did not yield any evidence, police said. Authorities had previously combed a nearby landfill and creek.

Lisa was last seen around 10:30 p.m. October 3, asleep in her crib, police said. Authorities were called to the home about 4 a.m. October 4.

“It appears the suspect entered/exited through a bedroom window,” authorities said in a statement. “Evidence at the scene leads police to believe the child has been abducted.”

Lisa’s father, Jeremy Irwin, told reporters that he discovered the girl was missing when he got home from work. “The front door was unlocked,” he said last week. “Most of the lights were on in the house, and the window in front was open — all very unusual.”

Three cell phones were also reported missing at the home, according to police Capt. Steve Young.

Police had expressed frustration recently after Lisa’s parents had stopped cooperating with investigators, Young said. However, a family spokeswoman for Deborah Bradley and Jeremy Irwin attributed the frustration to “miscommunication,” and a subsequent meeting with the parents was held Saturday.

Police, who were joined in their search effort by federal authorities last week, have said they have no suspects or solid leads in Lisa’s disappearance.

Lisa is described as 30 inches tall with blue eyes and blond hair, police said. She weighs between 26 and 30 pounds and was last seen wearing purple shorts and a purple shirt with white kittens on it.

The missing girl has two bottom teeth, a small bug bite under her left ear and a “beauty mark” on her right outer thigh. She had a cold with a cough, police said.

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Five law enforcement officers were among 70 people in Arkansas charged in a federal drug-trafficking crackdown that also involved public corruption charges, authorities said Tuesday.

The five officers took bribes to look the other way while crimes were being committed, authorities said.

Investigators are continuing to look at other law agencies for criminal misconduct, authorities said.

On Tuesday, 800 federal and local authorities arrested 51 of the 70 people, officials said. Five others were already in custody, and the remaining 14 defendants are considered fugitives, authorities said. The Arkansas National Guard was also involved in making the arrests, authorities said.

One agent was shot while serving warrants, and he is hospitalized with injuries that are not life-threatening, authorities said.

The law enforcement figures named in indictments are Helena-West Helena Police Department officer Herman Eaton, 46; Helena-West Helena officer Robert “Bam Bam” Rogers, 35; Helena-West Helena Sgt. Marlene Kalb, 48; Marvell police officer Robert Wahls, 42; and former Phllips County Deputy Sheriff Winston Dean Jackson, 44, who’s now a Helena-West Helena police officer, according to court records and a prosecutors’ statement.

Their attorneys couldn’t be immediately determined or reached for comment.

A two-year investigation, called Operation Delta Blues, focused on public corruption, cocaine and crack cocaine trafficking, and money laundering in the Helena-West Helena and Marianna, Arkansas, areas, authorities said. Investigators used 16 court-authorized wiretaps in their investigation, officials said.

“Today’s indictments and arrests are merely the beginning. We believe there are more cases of corruption, and we intend to press forward with our investigation to weed out those who would sacrifice their oath and violate the public’s trust,” said Valerie Parlave, special agent in charge of the Little Rock field office for the Federal Bureau of Investigation.

“Several of those indicted today are no strangers to law enforcement. Many have been charged in state court with some of the serious class (of) felonies, including murder,” Parlave continued. “Yet they remain free today. As our investigation moves forward, we continue to find instances where these violent felonies were never completely prosecuted and some of the most serious charges were dropped.”

Added U.S. Attorney Christopher R. Thyer of the Eastern District of Arkansas, “Our commitment to eradicating drug trafficking and violent crime has never been stronger.

“When these two elements are mixed with law enforcement corruption, it can make for the perfect storm in a community. It can paralyze honest law enforcement action, silence witnesses, and erode public confidence in our system of justice,” Thyer said in a written statement.

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Below is a clean copy of a document comparing the data retention policies of the top five cell phone providers in the U.S. The document, entitled, “Retention Periods of Major Cellular Providers,” was produced in 2010 by the Department of Justice to advise law enforcement agents seeking to obtain cell phone records and was uncovered by the ACLU’s coordinated records request on cell phone location tracking by police. The original was received by the ACLU of North Carolina.

In August 2011, 35 ACLU affiliates filed 381 requests in 32 states with local law enforcement agencies seeking to uncover when, why and how they are using cell phone location data to track Americans. You can find more information about the effort here.