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Theft from the inside: what to do.

If you do your job well, you can keep a crook from getting on board," according to Jon M. Smalley, assistant vice president of security control for Aetna Life & Casualty in Hartford, CT. Smalley, who specializes in internal affairs, addressed his comments to attendees of the ASIS-sponsored Insurance Fraud Workshop held in Atlanta earlier this year.

Internal fraud can be broken down into three areas, Smalley noted-preventing, detecting, and handling. While he acknowledged that some of his advice may seem elementary, Smalley is surprised how many times even the basics are not followed.

Prevention begins with pre-employment screening. "Start by reviewing the person's application. Is it signed? If it's not," Smalley warned, "you've got a problem.

"Are all the questions answered?" he continued. "Do the answers make sense? Do the time frames the applicant has listed make sense?"

Smalley also strongly believes in getting an applicant's driver's license information before ordering a Department of Motor Vehicles check. "I get a lot of flack for that," Smalley admitted, "but it's just one more way to get more information on someone."

And what can information on a person's driving record reveal? More than one might think, said Smalley. For example, he said, convictions for reckless driving are often driving-while-intoxicated, or DWI, charges that have been reduced, an indication that the person may have a chemical dependency problem.

Smalley divides potential employees into three risk groups: low, medium, and high. High school graduates, he said, usually fall into the low-risk group, while college graduates fall into the medium-risk group.

"I think you should spend your money on what I call 'retreads' - people who have been in the business a while," said Smalley. People with experience pose the highest risk to a company, he added, because they have had more time to do bad.

The pre-employment screening process is only the beginning. "Once you bring people on board," said Smalley, "you've got to keep them honest." To do that, a company needs to have controls in place and make sure they are operating correctly. "Controls are the backbone to deny opportunity and enhance detection," he emphasized.

When it comes to detection, a company needs to have established a norm, then look at the highs and lows in addition to reviewing the employee's work. "A person who has always been on time to work and is now always late is a key signal that something is wrong," said Smalley.

Other signs may include living above his or her income, experiencing financial problems, exhibiting performance problems, and undergoing emotional problems. Divorce often falls under the latter category, and Smalley stressed that a manager should not underestimate just how traumatic a divorce can be.

How should the company handle a situation where it thinks an employee may be involved in wrongdoing? To begin with, Smalley said, the company should have a clearly defined policy that has senior management's backing and has been communicated to all employees.

The policy should include guidelines for termination, prosecution, and civil recovery, among others.

"If you have those things," said Smalley, "handling a situation involving wrongdoing is relatively well assured."

The process of terminating an employee begins with gathering and reviewing all evidence. "I often review the evidence with our law department," adds Smalley.

If the evidence supports the claim that an employee has been involved in theft, the individual needs to be confronted. Smalley cautioned that while a manager's first instinct may be to barge into the person's office and let him or her have it, the confrontation needs to be done in private - perhaps even after work when most of the staff have left for the day.

As a last bit of parting advice, Smalley said a company needs to consider whether it can recover its losses. He urged security directors not to overlook the fact that RICO (Racketeer-influenced and Corrupt Organizations Act) is designed to help companies in recovery.

"When I can," said Smalley, "I almost always put together a civil RICO case. I know some companies haven't had much success with RICO," he added, "but it has worked well for me."
COPYRIGHT 1992 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:ASIS in Action
Publication:Security Management
Article Type:Column
Date:Jul 1, 1992
Previous Article:Award for outstanding industrial achievement.
Next Article:Are old-fashioned ways for the old-fashioned days?

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