Although the embezzlement from re- sale documents may not be “main stream”, here are some things that are almost always present with embezzle- ment in small business, including man- agement companies:


Te employee was extremely close to the owner and felt like “family”. Te owner gave full authority to an employee to handle the company’s finances and trusted the employee completely.


Tere was minimal or no review of the employee’s work. It is a closely held company. employee embezzled from the company and nearly sent it into bankruptcy. (these are sited from reference **


True Stories from HOA Management Companies


Here are three escalating cases of resale documents embezzlement of which I have personal knowledge and permission to share.


1. Te receptionist or front desk person


2. Te person who puts together the packages and “sells” them when someone comes in to pick them up.


3. Te person (one person) in the office who is the “Escrow Department” or who “takes care of that”.


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Te company didn’t want to risk checks bouncing and didn’t have a way to process credit cards. When


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someone placed an order for the resale documents, they were told to bring cash or cashier’s check when they came to pick up the order. Te person who took the money just took about half of the cash. Tere were no checks and balances or accounting for inventory protocols in place. Te owner saw a continuous stream of revenue, not even realizing that it was 25% - 30% less than what it should have been. You know how much you make on resale documents, imagine if just 25% of that was walking out the door with an employee.


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Tis office did have protocols in place to account for the orders that were placed and packages made (by one person) and the packages that were sold (by a different person) who gave the money to accounting (third person). Tis is a good “checks and balances” as 3 people are involved in the process. Additionally, they kept “inventory” to make sure the sales and stock matched. In this case the middle person (the seller) would make a second copy of the package. Ten when the buyer came in and paid for it, they received the second copy. Te money went into the employees’ pocket while the original package sat there “ready to be picked up”. Because of the protocols, the missing money was accounted for by the package that was still on the shelf. Tis employee was stealing from the management company in 3 ways: taking the cash; using the copier and paper to complete the scheme; and doing it all on the company’s time. Too bad your employees don’t wear a mask when they are stealing from you!!


  


Tis one was quite involved and contin- ued for many years and several hundred thousand dollars was embezzled from the management company and the associations they represent.


Tis started soon after the employee was hired. Teir only job was to take, process, collect fees, and deliver resale disclosure documents. Te job title was “Escrow Manager”. Soon after being hired the Escrow Manager (EM) filed with the state for a fictitious firm name in order to open a business bank account. Te EM’s firm name was very close to the Management companies name. (example: Bora Management vs. Boro Management) Tis allowed the EM to deposit checks made out to the real management company and redirect funds into their account with no problem.


Since this employee was the Escrow Man- ager and the only one in doing this job it was easy for them to continue unchecked for years. In addition, as a trusted, loyal employee who had several years with the company the owner and other manage- ment never suspected a thing.


As mentioned, there was also money sto- len that was supposed be collected by the management company and distributed to some associations. Tis put the man- agement company at great risk. Not only were they out their money but also deeply in debt to their clients, the associations. Tankfully they did have an employee dishonesty insurance policy that covered a large portion of the loss. Tis allowed them to payback the associations, not completely


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