Introduction
As long as I have been involved with asset recovery for victim employers, it has been an uphill battle trying to convince employers to go after rogue employees. Employees take millions of dollars from employers, yet there is a reluctance to be aggressive and recover what was theirs.
Canadian and moral law demands for a fair recovery of all assets that you can prove have been wrongfully taken, but more importantly, recovery is the right thing to do. The excuses for not pursing the rogue are many:
- shame in letting yourself become the victim;
- inability to prove that they have taken the assets;
- belief that the police will fix the problem;
- belief that you will never recover the assets; and
- belief you are throwing good money after bad.
None of these reasons justify putting your tail between your legs. The real, potential benefits from trying to recover your losses far outweigh the cons.
Letting Yourself Become the Victim
If you look into why people steal from their employers, the common belief is that there is a Fraud Triangle. The Fraud Triangle is opportunity, need and rationalization. Opportunity is often created because the people you trust most are the ones that have the most opportunity. What you can do to protect yourself is to put in more checks and balances.
What you cannot do is not trust anyone. Trusting someone is not something you should feel bad about. What you should do is pursue the person that breached your trust and do not stop trusting others. Pursuing the rogue is the right thing to do. Even if it’s hard. Even if it’s a reminder of personal failure. Even if it doesn’t reverse a wrong. It can take the negative and turn it into a positive.
Also, when you file your lawsuit, there will be a public record of what you say happened and how you were wronged. This can set the record straight and tell others that your organization is not to be taken advantage of.
There is value in trying. We all have situations where we wished we would have done more or at least tried and this will be one of them.
Cannot Prove it
The standard of proof in criminal matters is much higher than the civil burden of proof. Employee theft is also a criminal wrong, and the courts have often required a higher burden of proof than a standard civil claim, but it is substantially less than the criminal burden of proof beyond a reasonable doubt.
Civil investigators have substantially fewer hurdles to overcome during an investigation. They do not have to worry about the Charter of Rights and Freedoms as they are not the government. This means they do not have to read a person their Charter rights. They do not have to find them a lawyer to ensure their statement or confession is admissible. They may be able to record their statements without consent. In many instances a civil investigator may not have to get a warrant prior to searching a workplace desk, locker or cell phone. An investigation must still bear evidence that will convince a judge of wrongdoing, but the burden is much lower and collecting evidence is much easier.
The Police Will Fix It
The Police have many cases to deal with. In many instances they can only spare the resources for million dollar cases. In many provinces, Crown Counsel also have to approve any criminal charges, and the Crown’s test for charge approval is often a strong likelihood of success.
In addition, you have no control over the file in a criminal case. You are the victim and your involvement is limited to you giving your evidence. You have no say in a plea bargain or possible restitution. In a civil case, you decide what works best for you based on your evidence, needs and desires.
A person having a criminal record is a serious matter, but it should not stop there. Damages in civil court are often equal to the amount required to make you whole. In criminal court, the goal is to punish and renounce, thus, the two courts are not mutually exclusive and should be complementary, not exclusionary. Regardless, the police and the criminal courts will not fix the problem.
They Have No Money to Recover
First of all, if they have no money, there is a good chance you will get a default judgment for a nominal cost. Why not? It is good for ten years and can be used for garnishing wages, bank accounts or placing a lien on their property. Many things happen in ten years and this is a judgement from a court stating that you are owed a substantial amount of money (plus interest), that is a legal and public document.
If the person fights it, you can get a pre-judgement garnishee order to freeze assets and you can also get a certificate of pending litigation put on their property if you can show or believe that any of the assets they took went towards the property through mortgage or improvements.
If you get a judgement and you believe that they are hiding money, you can conduct an examination in aid of judgment. It is a very powerful tool that will allow you or your counsel to do an in-depth investigation into a person’s assets. The unique characteristics of an examination in aid is that if the person does not participate in the process (does not show up, lies, fails to give documents) they can be found in contempt of court and can go to jail or have a warrant out for their arrest. This is the only part of the process that if they do not properly participate, jail is an option.
If you act quickly and concisely, there is a very good opportunity to freeze assets until the matter can be resolved in court.
Throwing Good Money After Bad
This comes down to making sure that you have the evidence you need to be successful at court. A proper assessment prior to a starting a civil suit is key, and although it will not eliminate the risks, it will certainly minimize them.
In addition, there is a mechanism for recovering costs in court. Actual costs often equal 50% of actual legal fees. In cases of theft and fraud, there are opportunities to get increased costs because of the person’s conduct. I would be remiss if I did not mention that this sword cuts both ways. If you are not successful, you will most likely have to pay a certain amount in costs to the other party and, because the suit will often claim for theft or fraud, if you cannot prove they did it, you will most likely have to pay above the 50% norm.
Lastly, when you go after an employee that wronged the company, go after them for everything. Pursue them for the losses, the investigation, any losses because of their actions (loss of opportunity, interest), punitive damages to punish their conduct, legal fees (as much as you can get). If one is brave enough to pursue this, the goal should not be to simply recover what was taken, but to make the end result a complete success and to make sure the rogue understands that if one takes, they will have to pay back more than what they took. To put it simply, it will not be a zero sum gain.
Conclusion
The mentality in Canada when it comes to pursuing employees that become rogues has always been one of forgiveness and internal blame. This cannot continue. It is bad for organizations, employee theft has risen from 19% to 33.4% from 2008 to 2012 in accounting for retail company loss, and it is bad for our communities. The word gets out that when a person steals, the only consequence is they get a conditional discharge and may have to pay a little back.
If one is a victim of employee theft or fraud, they need to understand it was not their fault and that they can and should do better. They have nothing to be embarrassed about. It is much easier to prove than one would think. The police cannot make it right and, if properly assessed at the beginning, it is a good business decision that can not only allow you to recover what was lost, but recover even more.
Pursuing employee rogues is the right thing to do and should be the norm, but only when we change our attitude will it change. We are happy to assist as professionals who can help. There are many professionals who can help. Don’t be afraid to call for fear of letting the opportunity pass.