Selzer Gurvitch - Attorneys at Law

Gotcha! 9 Questions To Ask Workers When You Suspect Fraud or Theft

February 15, 2008

Employee fraud and theft cost U.S. organizations more than $400 billion every year, according to the Association of Certified Fraud Examiners (ACFE). More shocking, the average organization loses about 6% of its total annual revenue to employee fraud and theft.

If you think your company is the victim of an inside job -- whether the loss is $10 or $10,000 -- you need to catch the crook and demonstrate that employees can't get away with such crimes.

You needn't hire an investigator. You or someone on your staff can interview suspects, potential informants and anyone who may know something that will help solve the crime.

Set the Stage

Interview each staff person individually. Begin by asking simple, nonthreatening questions to put them at ease. For example, ask them to tell their job titles, responsibilities and how long they've been with the company. Observe their verbal and nonverbal responses -- this is the "calibration" phase of the questioning.

Then, when you begin asking questions related to fraud or theft, notice if the worker's reactions differ in any way. A significant change in attitude, a more defensive posture, nervous fidgeting or colder tone of voice could indicate the worker may have something to hide.

If you have a particular suspect in mind, start by interviewing employees farthest from that suspect and "work inward." If you lack a suspect, interview employees randomly. Obviously, you shouldn't single out only minority or older workers for questioning.

Ask the Questions

The ACFE developed nine questions to ask employees when you investigate suspected fraud, and guidance on how to interpret their answers. Here are the questions and analyses of possible responses:

1. This interview's purpose is to look into ways to prevent and detect theft and fraud by employees and managers in this company. Do you understand?

This question doesn't accuse the employee of anything, but a dishonest person may get nervous at this point. If the worker hesitates or issues a denial like, "It wasn't me," that might indicate a high-fraud-risk employee or that the worker knows about a crime and doesn't want to be blamed.

2. By theft we mean stealing company assets, and by fraud we mean generally cheating the company out of money or lying to shareholders. Do you think fraud or theft is a problem for business in general?

If the answer is "yes," the worker appears to be honest and realistic. A worker who answers "no" may be telling the truth, but may just be uncomfortable with the questioning and want to get it over with quickly. Further questioning may be fruitless.

3. Do you think this company has a particular problem with fraud or theft?

If the answer is "yes" or "maybe," the subject may be a potential whistleblower and could possibly supply valuable clues or even perpetrators' names. On the other hand, a quick denial may indicate increasing discomfort as the questioning shifts from general to specific.

4. If employees or managers are stealing from this company, why do you think they would do it?

Honest workers tend to gives answers such as "greed" or "They're just no good." Dishonest workers might tend to rationalize fraud or theft on the basis that "The perpetrator must have been underpaid" or "Everybody does it."

5. If you knew another employee was stealing from the company, what would you do?

Honest workers generally are willing to report criminal activity, especially if your company has a policy on how and when to do so. Dishonest workers are less likely to blow the whistle on fraud or theft. They might say, for example, "I wouldn't report it because nothing would be done aboutit anyway."

6. If a person in this company wanted to steal from the company, how could he or she do it and get away with it?

An honest worker probably wouldn't know the answer or would offer specific ideas that might help you evaluate your internal security. A thief may more likely give evasive answers such as, "It must be a bookkeeping error," or "I don't think you could get away with it if you tried." Of course, the worker could go to the other extreme and reply, "Anyone could steal anything around here and get away with it."

7. In your opinion, who in this company or your department is beyond suspicion when it comes to stealing or committing fraud in your department?

Honest workers are generally more willing than thieves to eliminate possible suspects. Thieves would want to keep the circle of suspects as wide as possible.

8. Did you ever think about stealing from the company even though you didn't go through with it?

Again, dishonest workers would tend to say no (or absolutely not) more quickly and emphatically than an honest one. Dishonest workers are more likely to use phrases such as "Quite honestly, no" or "To tell you the truth, no." Honest workers are more likely to say, "Yes, but not seriously."

9. Do you have any other information about possible fraud or theft in this company?

This question gives the worker one more chance to blow the whistle. Honest workers may tend to hesitate while they think about the question before saying "no." But workers who shift nervously while hesitating may know something they're not sharing.

End on a Positive Note

End the interview on a positive note by thanking the worker. Then, if you strongly suspect that any person has committed or knows something about a crime, contact your attorney before confronting the suspect. You should be aware of everyone's rights before accusing anyone or taking legal action.

Questions Are Not Slanderous

You may worry that employees might feel slandered by direct questioning about fraud. No need to worry. You can be held liable for slander only if you make untrue accusations or statements. You can't be held liable for slander if you merely ask nonaccusatory or hypothetical questions.

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