Employee Has Embezzled. Should You Take Legal Action?

You have indisputable evidence that an employee committed fraud against you and/or your company. You’ve terminated him or her. Should you take legal action? Press charges?

Emotionally and idealistically, of course you do. It’s the right thing to do. Fail to do so and you fail to uphold your duty to society and fail to set a clear precedent at your business. Delinquents deserve to be punished. More so, they need to be punished. The more public the better. In fact, maybe we should go back to flogging in the town square.

Practically and realistically, on the other hand, some say “pressing charges” may not make sense. First, legal action is costly, stressful and time-consuming. Many would rather get the bad experience behind them. Second, it’s likely an exercise in futility because the average amount reclaimed for U.S. white-collar crime is 20%. Forty percent recover nothing. Third, will a drawn-out fight damage company morale? Maybe it would be best for the company, and your family, if distractions were minimized and the incident swiftly put in the past. Fourth, Christopher Eiben, certified fraud examiner and author of It Pays to Be Paranoid, says many employers are culpable. They either harbored or tolerated an ethics-less culture or failed to maintain even a basic level of fraud prevention initiatives. He says even the most upright will go bad when faced with regular temptation.

What’s right for you? It’s a personal decision that you’ll have to make based on the facts of your case and your own principles and priorities. As to the facts, here are a few to get you started:

• Call the police? Doing so may be the right thing for you to do, but know that this has little real effect because the police are not going to make an arrest because you call and claim theft. Assuming they show up, it’ll be a startlingly visible display for all to see. In addition, they can write a police report, something you’ll almost certainly need to begin the process of pressing criminal charges. Finally, it doesn’t cost you anything.
• “Press (Criminal) Charges”: Pressing criminal charges is the act of requesting that the government (city, county or federal) protect your personal rights as a citizen – or those of your company, as a legal “citizen.” In such a case, the government, through a district attorney or prosecutor, is the plaintiff. At the expense of the government, they will investigate the case and, based on their findings, decide whether to file charges. Once charges are filed, the case will be decided by a jury unless the defendant pleads guilty or the prosecutor and defendant work out a settlement beforehand. Compared to civil action, criminal prosecution is less expensive because the government represents you. But experts say that the injured party who pursues criminal prosecution typically will spend his or her own time and money assisting the government in gathering evidence. Criminal prosecution can take a very long time and the terms of settlement are totally determined by the prosecutor (i.e., not by you).
• File a (Civil) Lawsuit: The civil court system is separate and distinct altogether from the criminal court system. It’s a means by which a person or legal entity may seek protection or relief on his or her or its own behalf. You or your company will be the plaintiff, not the government. The good news is that you have the freedom to bring whatever claims you deem to have merit and you remain in control of any settlement terms. If it goes to trial, a judge or jury will decide. Civil remedies do not include incarceration. Civil trials are much more expensive because the plaintiff must bear all the expenses. It will be more expensive for the defendant as well because the government will not provide the defendant with an attorney.
• Is it worth the time and money? An attorney’s dream is a wealthy plaintiff who pursues a weak case with irrational vengeance. Similarly, many judgments are awarded for money damages that are never collected. In these cases, is the favorable verdict enough to justify the time and expense? How much can you reasonably hope to recover if you win? These are important questions.

In summary, should you take legal action? Only you can decide. But as with anything, make sure you know why, what you hope to gain and what the cost will be. Legal action, whether civil or criminal, will take a very heavy toll on your time, money and emotions. Many who “win” end up with very little money and a lot of disappointment.