In the news just the other day, a merchandising executive for a popular clothing store was sentenced for taking onwards of 25 million dollars in kickbacks from a vendor. Let that sink in for a second. 25 MILLION dollars. That’s a lot of money, even if it was taken over a period of several years. The losses were so hard to track that an employee theft investigation was never thoroughly conducted until after the vendor was indicted for several other illegal trade violations.
As the story goes, this particular merchandising executive entered into a deal with a particular manufacturer. With the agreement to buy a particular amount of merchandise exclusively from this manufacturer, the executive would receive 50% of the profits.
The executive’s company lost out on possible profits that could have been generated by using other manufacturers that had better pricing, or better quality of products offered.
While it is very unlikely that the majority of small businesses would be put in a position to have 25 Million in kickbacks, that doesn’t mean a trusted employee might have their own kickbacks and under the table partnerships with vendors.
One of the common internal theft schemes found is one between an employee and a vendor where product might be bought back due to damages, expiration dates, etc. The vendors might make a deal with your employee that if they do not send product back for credit to the store, the vendor will split a portion of their commission with the employee.
The employee ends up making some extra cash on the side, and the business is left with merchandise and profit losses.
For more information on employee theft, employee theft investigation or internal theft contact us or call 1.770.426.0547 – Atlanta Georgia
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