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Why Your Business Needs a Corporate Investigator

Editor's Note: This article was written by Chris Cavallo of Cavallo Associates about historical scene canvassing using body cameras. The opinions expressed here belong to Chris Cavallo.


Why Your Business Needs a Corporate Investigator

When headlines blast that someone has been caught embezzling money from their employer, many think that it is an anomaly in the business world. The truth is that while it should be something that doesn’t happen at all, it’s actually more common than people realize. According to one report, small businesses are at the highest risk.

Most employees complicit in fraud, theft, forgery, and other illicit acts resulting in huge consequences for the company are smart enough to cover their tracks and escape the monitoring eye of surveillance cameras (where installed). In situations where employees work to defraud their employers by embezzling funds, discovering the fraud and identifying the culprits may be quite difficult. Only the intervention of a private investigator can solve the issue while also saving the reputation of the company from being damaged. Corporations and businesses will always need the help of corporate investigators.

What is a corporate investigation?

A corporate investigation can be defined as the rigorous investigation of a corporation, an organization, or a business to uncover illicit acts/activities perpetrated by staff members of the corporation or third parties that could harm the company, thereby ensuring the effective running of the organization's workflow. Investigators who specialize in this type of work can be incredibly valuable in preventing and catching these types of criminals.

Let’s explore some of the scenarios in which a corporate investigator can be beneficial.

Employee theft

Employee theft, regardless of how big or small the item stolen, can cripple a company's finances either rapidly or in the long run. It could involve a manager, a supervisor, or other superiors with or without the help of other employees. Staff members of an organization may steal large amounts of money, company items or equipment, and in extreme instances, intellectual property of the company. In some cases, employees may work in collaboration with the accounts officers to cover up their tracks. Some organizations use CCTV surveillance to catch such activity on camera but, in situations where the staff member(s) is working hand-in-hand with the security person, such footage may be deleted. Employee theft can leave a devastating effect on an organization's finances and the organization itself.

Enlisting the services of a corporate investigator will help the organization uncover and curb employee theft and fish out the culprits. Investigators are experts at surveillance and interviewing subjects so they can uncover responsible parties with or without the aid of security camera footage.

Sexual harassment

Another reason for an organization to hire a corporate investigator is to root out sexual harassment. Sexual harassment may be defined as any form of unsolicited, unrequested, and unwanted sexual behavior or misconduct committed by an individual to another individual either verbally through sexually offensive language, by asking for sexual gratification, or physically through direct contact.

According to the National Sexual Violence Resource Center, 60% of women say they experience sexual harassment in the workplace. Most of this sexual harassment is perpetrated by a superior to a junior colleague either by requesting sexual gratification subtly or making sexual comments at the individual, sexually-suggestive behavior, or full-blown unwelcome advances. Although some companies have sexual harassment policies, very few implement them, and sexual harassment at the workplace continues to go unchecked.

Because a culture of silence is still predominant even in today’s society, more than 85% of victims of sexual harassment at the workplace do not report it. This can interfere with an employee’s attitude towards work: a decrease in productivity level, cause distraction with work, and in serious cases may lead to an employee neglecting their work or resigning from the organization.

In cases where the productivity level of female employees is low or they keep turning in resignation letters without a tenable reason, the help of a corporate investigator comes in handy to help identify such culprits and put an end to such inappropriate action in the organization.

Fraudulent activities

Fraud activity is one of the major reasons that corporate organizations and businesses go bankrupt or eventually fold up. Even though it is rife, very few companies take precautions in preventing it from getting to the extreme. Examples of some types of fraud activity in an organization include:

Misappropriation of assets

Misappropriation of assets includes tampering with financial statements, cheque forgery, inflating expenses incurred, forging receipts, increasing account figures, signature forgery, defalcation (also known as skimming in which sales made are not recorded and the money is pocketed into the salesperson's hand), inventory theft (where the money is either diverted to another account not belonging to the company or is physically stolen), or theft of service where an employee uses the company's services for his own interest.

Vendor fraud

Vendor fraud happens when an employee of an organization enters into an alliance with vendors used by the organization to defraud the organization. This happens in different ways. Staff members can ask a vendor to overbill an organization for shipping and waybill costs. Bribery also happens when an agreement is made between the employee and the vendor for the vendor to pay some amount of money in exchange for a service that the company renders without the company’s knowledge.

Accounting fraud

Another type of fraud that happens is accounting fraud. Accounting fraud usually involves the participation of an employee or an accountant to mislead an organization. Instances where accounting fraud could happen include when staff members set up a fake supplier and make the company pay for nonexistent goods and services. It could also happen when an employee conspires with a supplier to bill the company for twice the amount of goods and services supplied.

Losses are incurred and debts are piled up as a result of fraudulent activities in an organization and thus, the company’s finances suffer the consequences. Plans to expand the company are put on hold and there is a struggle to pay salaries. In a situation where staff members involved have sworn to secrecy, fraud activity in an organization can continue for a long time without the root cause being detected. This is where the help of a private investigator is enlisted to thoroughly investigate the root cause of such activities.

How a corporate investigator can help

Corporate investigators act as unbiased watchdogs who can not only catch perpetrators of corporate fraud and misconduct but also help to prevent it from happening in the first place.

An investigator could perform background checks on a suspected staff member, carry out thorough research, and perform financial investigations to uncover embezzlements, bribery, accounts manipulation, etc. Investigators can also assist with surveillance, technical surveillance countermeasures (bug sweeps), and computer forensic investigation. Corporate investigators also specialize in undercover work where the investigator is given fake employment as a staff member, blending in with them in order to discover hidden activities.

Furthermore, PIs specializing in corporate investigations can assist with due diligence investigations, which are important to conduct before a company is acquired, is purchased, or goes through a merger. These types of investigations help to ensure the secondary company or new business owner is not going into business with a company that would be a severe liability.

The negative impact that fraud can have on a business is palpable. Businesses' reputations can be destroyed or at least hurt significantly. According to a 2018 Embezzlement Study by Hilcox, “Companies that were victims of embezzlement lost far more than money: they lost customers, had more difficulty attracting new customers and lost business partners. They admitted the D embezzlement negatively impacted the company’s reputation.”

Bottomline: your business needs a corporate investigator

The importance of a corporate investigator to a corporation cannot be overemphasized as it aids in both precautionary measures and in the ability to weed out bad actors in a company. And as reported, a corporate investigator can help save a company from going bankrupt or closing altogether. It's always a good idea to invest in corporate investigation as it might save your company money and its reputation.

About the Author

Chris Cavallo has been involved in every facet of the security and investigations industry for over 40 years. He started his career with the two largest security and investigation companies in the world at the time, Wells Fargo and Pinkerton’s Investigative Services. After spending two years as a management trainee with 11 months in the field as an undercover operative, he quickly rose through the ranks and became one of the most highly recognized security consultants for his first ten years. He is considered a subject matter expert in various security/investigative practices such as surveillance operations, security guard services, and background investigations. He ended his career with a Fortune 50 Company as the VP of the SE Region. He then co-founded a company, RSI Investigations (Records Search Inc.), which was one of the pioneers and leaders in the background screening industry in the late 80s. After this experience, Chris founded Cavallo Associates working with security, defense, and investigation companies to help them develop their business plans and train their personnel. Today, Chris is a Florida-licensed private investigator and security consultant and continues to dedicate himself to both the security and investigations industry. Presently, he is mentoring, developing, and sponsoring several PI interns and overseeing the CSI Security Business as well. Both business units operate under the brand name CSI Secure Solutions headquartered in Davie, Florida with offices in Bogota, Colombia.

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