Thursday, April 23, 1998 | 10:25 a.m.
There's no fail-safe way to avoid business fraud, but taking some basic precautionary steps can reduce the chances.
Walter Stowe, assistant special agent in charge at the Las Vegas FBI office, said common practices like checking references can combat internal fraud.
"It's incredible how many people lie on their resumes," Stowe said.
Stowe addressed the Business Watch Network, a Las Vegas business organization interested in crime prevention.
He said businesses could protect themselves by checking the basics, like credit and criminal histories as well as employment records. The more responsible a position a person is seeking, the more extensive the check should be.
In some cases, it's helpful to check for drug, alcohol, gambling or marital problems because those people are more vulnerable to committing fraud. Stowe said about 35 percent of all people hired wouldn't be if their backgrounds were adequately checked.
"Don't assume that someone who is a con artist is going to look like a criminal," Stowe said. "You're talking about people who look just like us. And they have good people skills."
It is also important for management to set an example for lower-level workers.
"If employees see upper-level management playing fast and loose with company assets, you're creating a culture ripe for fraud."
This threat can come from unexpected sources. Stowe told of a case in Oakland, Calif., where after hours clean-up crews had taken checks left out that were later forged and ultimately cost the company $3 million.
Though external fraud like credit card scams or fraudulent checks first come to mind when talking about business fraud, greater losses tend to come from inside a company, Stowe said.
Yet businesses need to be vigilant on both fronts. External fraud, similar to internal fraud, can be at least partially mitigated by using some common sense. Stowe said to check identification when accepting a check and to establish procedures for doing so. And don't be afraid to let an employee follow a gut feeling.
"You're going to see checks coming in that look absolutely perfect,"' Stowe said. "If an employee has a hunch, let them follow it."
Also, report all fraud immediately, no matter how small the amount of money involved. Small amounts of money may not seem worth the bother, but investigators can sometimes connect them with other cases -- improving the chances of prosecution.
The odds are a business will face some type of fraud. About 75 percent of all business organizations are victimized and 41 percent have suffered fraud five or more times, Stowe said.
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