What would you do

[solved]

So here is the issue and what would you do in this situation.

I’ve recently discovered, or to be correct about this, have known for about the past five years that my boss has been fraudulently taking money off people and out of the business itself. These amounts can range from anywhere from $500 a day to $25,000 a week. The amounts change frequently depending on how busy things are.

I’m in a situation where I don’t know who to exactly trust as I also suspect the accounts Lady who by the way has just qualified as an accountant is also in on it.

Due to the me the amounts involved and the amount of people this affects morally I’m having a very difficult time dealing with this.

I know there are some very clever people on this forum so what would your advice be?

PS This is a real situation!

[Lewylewylewy]

First thing to do is to go to the local dairy and buy about 30 newspapers, because you're going to need that many to cut the letters out for all the blackmail letters you'll be creating.

Is there a head office or company owner listed on the company's register that you can contact? You'll need their details so your blackmail threats have more clout.

[minimoke]

Hmmm. First post eh?

Staying quiet is not an option. That you stayed silent for 5 years should cause you to look very closely at yourself.

Given the amounts, and the time first assumption is you work for a large organisation. In which case you are likely to have some kind of internal procedure to cover this kind of thing. Your HR department ought to know where it is.

If that assumption is wrong and you dont have a procedure or HR dept then you go to the boss of your company. Go with hard evidence, not speculation or opinion. Dont meddle in the accounts - dont disturb the "crime scene".

If your boss is the boss of the organisation then the above wont work. So it sounds like a criminal act is underway so you go to the police.

If you are worried about your job you have some legal protection from the Protected Disclosures act (Whistle blowers act) which means action cant be taken against you. But in reality things get messy and there is a chance staying in the organisation may be untenable. Where possible your identity will remain secret - unless you have to be part of the investigation. But again, in reality, if you work fora small organiation it is likely people will figure out you are the whistle blower.

[Snoopy]

So here is the issue and what would you do in this situation.

I’ve recently discovered, or to be correct about this, have known for about the past five years that my boss has been fraudulently taking money off people and out of the business itself. These amounts can range from anywhere from $500 a day to $25,000 a week. The amounts change frequently depending on how busy things are.

I’m in a situation where I don’t know who to exactly trust as I also suspect the accounts Lady who by the way has just qualified as an accountant is also in on it.


The person you need to approach is the business owner. That is the person being ripped off. However, it is possible that the business owner hired the boss, and regards them as a trusted associate/employee or even business partner. So you will have to have some evidence of what is going on. You need to start your own diary of events with dates and times documenting exactly what you have seen and heard and when. If you can photograph any relevant documents you have seen on your cell phone camera that would be another way to gather evidence.

Not sure about your allegation of 'taking money off people'. Do you mean customers? 'Overcharging' to your eyes might not be illegal, even if you see it as immoral.



Due to the me the amounts involved and the amount of people this affects morally I’m having a very difficult time dealing with this.


Being immoral, however distasteful that may be to you, is not a crime in itself.

SNOOPY

[Snoopy]

Staying quiet is not an option. That you stayed silent for 5 years should cause you to look very closely at yourself.


A bit harsh minimoke. You can't know at what point a suspicion that something is awry turned into something more sure. It could be that this alleged fraud from five years ago has become firmly evident only with the benefit of hindsight. Biting the hand that feeds you is not an easy thing to do. Especially when it may not be just you who is affected. You may have family dependents you have to think about.

SNOOPY

[kiora]

Good food for thought above.
Fraud is not fraud it is financial irregularities until there is proof of the money trail.
Also consider your future "solved".
When the financial irregularities are uncovered what will be the affect on the company and your future in it?
What do you need to do to secure your financial future?
Do you need to find another job when the s***t hits the fan.Do it sooner than latter.

[minimoke]

A bit harsh minimoke. You can't know at what point a suspicion that something is awry turned into something more sure. It could be that this alleged fraud from five years ago has become firmly evident only with the benefit of hindsight. Biting the hand that feeds you is not an easy thing to do. Especially when it may not be just you who is affected. You may have family dependents you have to think about.

SNOOPY
"
I’ve …... have known for about the past five years". I stand by my comment

[Joshuatree]

Good luck doing the right thing solved ,and dont feel guilty about how long its taken, you know its wrong and that bad things happen when good people do nothing and you want to expose this without whistle blower damage which is understandable. Maybe an investigative reporter with good reputation if you feel you cant go to the top.IF you feel you cant switch to another employer for what ever reason; i can understand your dilemma here. Having as much detail accurately recorded as evidence is essential. Good luck and the truth usually has a way of getting out thanks to people like you!.

[solved]

Mini
In response to clarify a couple of things, it is a small company and there is no large HR department or any internal processes to cover this sort of thing.
Which brings me to the next part of your response. The boss is not the owner of the company and they have a very hands-off approach and to be honest would not have a clue about what is going on. Yes I have known for about the past five years and have really become aware over the past 12 months how prevalent it is.

Snoopy
Also to clarify some of your comments it is not the case of overcharging clients it’s a case of altering documents and financial records to make it appear to the client that their financial income is less than what it actually was. For example, a client did earn $20,000 for a one month period but the boss altered the accounting system to show they only earnt $10,000, the rest of the money mysteriously disappears.
With large companies most have a facility to report this sort of behaviour in confidence but the situation I’m in I feel I don’t have any options.

[Timesurfer]

Call IRD. Money doesn’t just vanish so there will be a trail somewhere.

[RGR367]

As there seems to be no auditor or auditing process as well, maybe if you can, somehow suggest to the owner that your company needs it now as you feel this company is already growing or has grown for the past 5 years. If the owner asks how do you know it has grown, then maybe you can tell him something in confidentiality. Whatever you do, good luck mate!

Keep Right When Right
Set Right When Wrong!

[minimoke]

Mini
In response to clarify a couple of things, it is a small company and there is no large HR department or any internal processes to cover this sort of thing.
Which brings me to the next part of your response. The boss is not the owner of the company and they have a very hands-off approach and to be honest would not have a clue about what is going on. Yes I have known for about the past five years and have really become aware over the past 12 months how prevalent it is.
.
Solved, OK that makes it relative straight forward.

You go to the owner (not the police or IRD or anyone else) with the hard evidence you have at hand and you leave it to the owner to make the next call. Give them a call and say you want to speak urgently and confidentially with them and when suits. At this point I personally wouldn't be leaving an email paper trial with your name on it.

You have a contractual obligation to look after your employers interests - that is the owner, not the boss. That may may make the ethical dilemma easier to figure out. Your owners likely reaction is to call in the police and a forensic accountant / auditor. No-one likes loosing large sums of cash.

To give you an idea of the seriousness, your boss, given the time scale of the offending, and the amount, is looking at 2 years in jail and payment of reparations. If he doesn't have the cash this will be the sale of his house and other assets. When the stone is thrown in that pond the ripples will head out and impact more than your boss. If the accounts lady is complicit she may also be looking at jail time as well.

Good luck. You know the right thing to do. Delaying does not make it any easier.

[winner69]

Minimokes advise is good

The owner is going to be shattered when he finds out ...won’t believe it and all that

Here’s a story about one poor bloke ....if all this true he’ll be glad you told him.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11390112

Th

[Beagle]

Solved, OK that makes it relative straight forward.

You go to the owner (not the police or IRD or anyone else) with the hard evidence you have at hand and you leave it to the owner to make the next call. Give them a call and say you want to speak urgently and confidentially with them and when suits. At this point I personally wouldn't be leaving an email paper trial with your name on it.

You have a contractual obligation to look after your employers interests - that is the owner, not the boss. That may may make the ethical dilemma easier to figure out. Your owners likely reaction is to call in the police and a forensic accountant / auditor. No-one likes loosing large sums of cash.

To give you an idea of the seriousness, your boss, given the time scale of the offending, and the amount, is looking at 2 years in jail and payment of reparations. If he doesn't have the cash this will be the sale of his house and other assets. When the stone is thrown in that pond the ripples will head out and impact more than your boss. If the accounts lady is complicit she may also be looking at jail time as well.

Good luck. You know the right thing to do. Delaying does not make it any easier.

Excellent post that sum's the situation up well. There is a clear fiduciary responsibility to the organisation you work for to act in the organizations best interests and I think approaching the owner is the right course of action.

[percy]

Two ways.
a]Should your boss be no relation to the owner, you approach the owner.
b]Should your boss be related to the owner ,you approach IRD.

[Snoopy]

Snoopy
Also to clarify some of your comments it is not the case of overcharging clients it’s a case of altering documents and financial records to make it appear to the client that their financial income is less than what it actually was. For example, a client did earn $20,000 for a one month period but the boss altered the accounting system to show they only earnt $10,000, the rest of the money mysteriously disappears.
With large companies most have a facility to report this sort of behaviour in confidence but the situation I’m in I feel I don’t have any options.


Solved, I think Minimoke has given you good advice in post 12, even if it might not be so easy to execute in practice, depending on the relationship between the boss and the owner.

My only caution is that you keep in mind that there are business practices that might be regarded as immoral, that are not necessarily illegal. For example consider the case of a clearance auction house business, disposing of end of line odd lots. Suppose such an auction raised $20,000 for a client. But the settlement paperwork was a cheque to the client for $10,000 (proceeds less all contracted fees). Let's say to get the goods for auction, our auction company charged a transportation fee, a fumigation fee, a 'check the buyer' for money laundering fee, an insurance fee (while the goods were in the auctioneers premises), an auction sales fee and debt collection insurance (in case the buyer does not pay promptly). Now let's say the total charge for all those services, as set by our Auction House business, was $10,000 (ignoring the actual cost of those services to the Auction house). Would such charging be regarded as immoral by you and I? Almost certainly yes. But is such a practice illegal? No.

To check out if a particular business deal is illegal, you really have to know the terms of the contract.

SNOOPY

[minimoke]

b]Should your boss be related to the owner ,you approach IRD.IRD just wants its tax. This is not necessarily a ax issue.

Any due / refunded tax will need to be calculated once the accountants have been through the books

[Baa_Baa]

IRD just wants its tax. This is not necessarily a ax issue.

Any due / refunded tax will need to be calculated once the accountants have been through the books

It is a tax issue if company income has been misappropriated (ergo tax avoided), but IRD won't be likely to take the lead on this (unless Special Audit get involved which is very unlikely for a few hundred grand, or even a mill or two), IRD come in after or with the Police who need to do their thing. The case can be raised anonymously with the Police. But it won't get off the ground without evidence. If 'solved' can get a copy of the cash flow accounts and the bank statements, there will be a discrepancy and misappropriation.

[percy]

IRD just wants its tax. This is not necessarily a ax issue.

Any due / refunded tax will need to be calculated once the accountants have been through the books

Too often people ,in this case the owner,may not take action against a family member.Swept under the carpet,and whistle blower ,left hung out to dry.
A good healthy tax audit will/should show up the offending,and the whistle blower is left alone.
Serious money is being stolen.

[minimoke]

A good healthy tax audit will/should show up the offending,and the whistle blower is left alone.
Serious money is being stolen.I'm not sure how IRD work nowadays. Back in the day they would audit prostitutes (which back then was an illegal activity. They didn't dob in the prostitute - they just wanted teh tax

[percy]

I'm not sure how IRD work nowadays. Back in the day they would audit prostitutes (which back then was an illegal activity. They didn't dob in the prostitute - they just wanted teh tax

So the owner gets a tax bill for $3,000,000 for revenue not declared,with penalties,as "they just want the tax"..ie not declared revenue up to $25,000 a week over 260 weeks [5 years] is $6.6mil.
That would focus the owner's attention.What undeclared revenue.?
Perhaps with IRD proof he would ask the boss a few questions,or ask the police for their help.
The whistleblower remains an innocent bystander.

[minimoke]

So the owner gets a tax bill for $3,000,000 for revenue not declared,with penalties,as "they just want the tax"..ie not declared revenue up to $25,000 a week over 260 weeks [5 years] is $6.6mil.
That would focus the owner's attention.What undeclared revenue.?
Perhaps with IRD proof he would ask the boss a few questions,or ask the police for their help.
The whistleblower remains an innocent bystander.
you dont get taxed on revenue. you get taxed on profit (gst aside). If the money is lost (stolen) then any revenue will be offset against loss - so tax neutral.

Its not the OP's business to call the police - owner is first point of call. OP doesnt make a judgement on whether an offence has occurred or not - that is for others. Likewise tax - once the accountants have been through the books there will be a better view on what tax (if any there is to pay)

Tax payable on reparations is an issue to be decided by tax specialists post event.

[Stranger_Danger]

What I'm hearing from the OP's two posts is that this is an "other people's money" business, perhaps property management, or handling investments?

This is based on your sentence "Also to clarify some of your comments it is not the case of overcharging clients it’s a case of altering documents and financial records to make it appear to the client that their financial income is less than what it actually was. For example, a client did earn $20,000 for a one month period but the boss altered the accounting system to show they only earnt $10,000, the rest of the money mysteriously disappears."

If I've understood this correctly, it isn't really the owner's business that is the victim, it is either the investment income or the investments themselves, funds managed on behalf of others, that is being stolen. If this is correct, the range of outcomes start at theft and fraud and end in ponzi scheme!

If you've known about this for 5 years and your interest is in self preservation either (a) Blow the whistle, now, and hope like hell nobody else knows you knew about it for five years or (b) Leave, now, and hope like hell nobody else knows you knew about it for five years.

[Snoopy]

What I'm hearing from the OP's two posts is that this is an "other people's money" business, perhaps property management, or handling investments?

This is based on your sentence "Also to clarify some of your comments it is not the case of overcharging clients it’s a case of altering documents and financial records to make it appear to the client that their financial income is less than what it actually was. For example, a client did earn $20,000 for a one month period but the boss altered the accounting system to show they only earnt $10,000, the rest of the money mysteriously disappears."

If I've understood this correctly, it isn't really the owner's business that is the victim, it is either the investment income or the investments themselves, funds managed on behalf of others, that is being stolen. If this is correct, the range of outcomes start at theft and fraud and end in ponzi scheme!


An 'other peoples money' business does require that business to take a cut of the earnings. The question is, is that an 'immoral cut' or an 'immoral and illegal cut'. The cut is how the business makes its money, and is income to the business. Making some of the cut 'disappear' in an illegal way is robbing both the owner of the business and the client.

SNOOPY

[solved]

Making some of the cut 'disappear' in an illegal way is robbing both the owner of the business and the client.
SNOOPY

Snoopy, nailed it!



If I've understood this correctly, it isn't really the owner's business that is the victim, it is either the investment income or the investments themselves, funds managed on behalf of others, that is being stolen. If this is correct, the range of outcomes start at theft and fraud and end in ponzi scheme!



SD, nailed it also!

Minimoke, thanks for your advice!

[Leftfield]

you dont get taxed on revenue. you get taxed on profit (gst aside). If the money is lost (stolen) then any revenue will be offset against loss - so tax neutral.

Its not the OP's business to call the police - owner is first point of call. OP doesnt make a judgement on whether an offence has occurred or not - that is for others. Likewise tax - once the accountants have been through the books there will be a better view on what tax (if any there is to pay)

Tax payable on reparations is an issue to be decided by tax specialists post event.

Agree notifying the owner is crucial, but also can't help thinking that drawing this to the attention of the auditors (if any) could be a good option?

Both notifications could be done anonymously if worried about yr personal outcome.

[Beagle]

In answer to the thread question if I were you I would go and get some good legal advice about what is the appropriate course of action.

[blobbles]

IRD should not be first port of call, they have no legal authority to investigate the fraud part, only tax evasion as a result.

Also true is that you need evidence first, so if you are in a position to get it, get it! I would also begin to make your own records of where you believe the fraud is occurring, if you haven't already. This is writing notes about date/times and actions in a notebook, taking pictures of cheques, copies of banking records etc etc. Then I would show this evidence to an accountant friend, to make sure what you are thinking is fraud IS fraud. I have suspected fraud before in a workplace, only to find out that actually it was not, merely mismanagement or strange contract conditions. Remember fraud requires purposeful deception for monetary gain.

Once you have the verified evidence, go to the owner. EDIT: First, go get legal advice, as Beagle pointed out. Hit up a lawyer. I would do this by showing up to their home or workplace, somewhere where you can tell them straight away the person they have employed, you believe is committing fraud. Have the evidence with you. You do not want to risk the owner going to your boss saying "Hey, solved rang me up and said he needs to talk to me confidentially, you know what this is about?". That will cause you a whole lot of trouble and may result in the boss getting spooked and destroying evidence or worse, pinning it on someone else. Find a way to approach the boss directly and with your evidence. Also you may need to ensure the business owner is not involved in the fraud themselves.

Understand what comes next. If the business owner is not a party to the fraud, their will be shock/anger/denial/resentment. But once this is settled, they will hopefully send in auditors from an accounting firm and contact a lawyer. Even if you have proof, it is unlikely to be fully believed by police coming from you, coming from an auditor though, is near gold standard. There may be a delay between you telling them and an audit - keep collecting proof. If the auditors are sent in, it needs to be sudden with all access to financial records (and IT systems) turned off except for the auditors. I have heard of weekend investigations happening also, surreptitiously to avoid detection from the perpetrators and or access to systems given remotely to accounting teams to review at night. If the sudden "everybody stop working" approach is taken, likely the first port of call is the IT manager to turn off all access to all systems to avoid anyone who may be a party to the fraud destroying evidence. Remember it could be bigger than you think. Expect that you will also be investigated, so be prepared to hand over your personal banking records.

[777]

If IRD suspect money is being diverted so tax is not declared then they sure do have the right to investigate.

[blobbles]

If IRD suspect money is being diverted so tax is not declared then they sure do have the right to investigate.

Only the tax evasion part, it seems this is secondary to the actual act of fraud. This is what the Serious Fraud Office and Police are for, they would pass evasion onto the IRD for investigation. Auditors would secure the evidence, who would then pass it on to the police and/or the SFO. If tax has been evaded, this would then be investigated by the IRD. But the purpose here seems to be to catch the criminals, not to detect tax evasion.

[777]

True but the IRD would be dealing with the owner about the tax evasion and thus alert the the owner as to fraud.

[Raz]

True but the IRD would be dealing with the owner about the tax evasion and thus alert the the owner as to fraud.

Been away and wished I had seen this earlier. IRD will just complicate the situation for the owner as a first port of call. They will come in after, if material and they often leave it alone unless directly highlighted to them. Get legal advice and consider you position first, this is important, I have been there when a director and fraud was committed by another director operating in another country, what your responsibilities are are likely to be broader than you appreciate.

Also get someone who is really good, a barrister with a sharp mind that has experience is this area. No one average..they cost yes.. but you own position has potential risk as you have mentioned. Not just as an employee but if this has wider public/client scope everyone in the organisation and what they knew will be considered in an investigation. I hope you are posting from a masked ISP address.

All the best..