Embezzlement is described as - theft or misappropriation of funds placed in one's trust or belonging to one's employer. A recent uptick in the theft of funds, equipment or property from the fire department is creating an embarrassment to the fire service as a whole.
Recent cases in New Hampshire (Chief accused of stealing over $200,000), Ohio (firefighter charged with stealing over $1.5 million), Pennsylvania (Chief takes $45,000) to Texas, South Dakota, Connecticut and many other states to include a recent issue in Lakewood Washington where the trustee of a Trust Account created in memory of four police officer who were gunned down in a coffee shop, steals the money, is an affront to public safety officers and violates the Honor Code of the fire service and firefighters.
It seems as though there are many more reported cases of fire chiefs, treasurers and firefighters stealing from their departments. Why is this happening one would ask? The simple answer is, “it’s because they can”.
Embezzlement is a crime of premeditation and opportunity. The charge of embezzlement must consist of four factors: 1) There must be a fiduciary relationship between the two parties; that is, there must be a reliance by one party on the other like the fire chief or treasurer of the fire organization given responsibility for the money. 2) The fire chief or treasurer (now called the defendant) must have acquired the property through the business relationship of the fire department. 3) The fire chief or others must have taken ownership of the property or transferred the property to someone else or for personal use, and 4) the actions were intentional.
In every one of the cases of embezzlement in the fire service all four factors were present on all of the cases and those caught were convicted of those crimes. How many hundreds of additional cases are out there yet undiscovered. For the more important question as noted above, why do they do it? Mostly it is for personal use: health care issues; gambling; wanting a nicer house, vacation or car. In almost no cases is this a Robin Hood situation (steal from the rich and give to the poor) it is all about personal gratification. In many cases, the theft starts out small: few hundred here and few hundred there and pretty soon, you are into the thousands of dollars and no one seems to miss that money. Because no one in the organization is watching those funds, as they TRUST the fire chief, treasurer or firefighter no one in the organization is providing an oversight function.
Eventually the embezzler gets caught and most will go to jail, lose their positions in the department and have to repay the department for this breach of fiduciary responsibility.
There are some simple remedies to preventing embezzlement: Audits – audit department funds annually with a certified accountant. In many states, the Auditor General or State Auditor will provide that service for free and in many states it is a requirement for the fire department as a public entity. Two Party Checks – there must be two signatures on all checks written by the department and reconcile those checks with the invoice. Do not have Debit cards as a part of your accounting practices. Credit cards are OK as most departments have a policy for the use of a credit card. Validate your Vendors - Many times, those embezzling money will create a dummy corporation or service or even phantom employees and make monthly payments to those fraudulent companies or individuals. Annually, send out confirming inquiries to all of your vendors to ensure they are legitimate entities the department is in business with. Background checks – perform a background check on those managing your money. Even if it is the Chief or a treasurer, perform those checks. Bonding – bond your employees managing your money. If there is a loss, you may be able to recover the loss through this insurance mechanism. The insurance company will go after the theft directly with the individual. Policy – have or create a policy related to the accounting practices of your organization. Run it by your department’s attorney to ensure you have addressed all areas of concern.
The most interesting part of discovering embezzlement is pure observation of those managing your money by you or by others in your organization. The embezzler may have a new car, they live in a house they cannot afford, they are taking numerous vacations, and other signs of wealth. It should not take D*** Tracy to figure this out; you can do this observation.
If you become aware of this embezzlement or any theft from the fire department, be quick to report it to the elected officials, Commissioners, Chief (if not involved) or others in a position of authority to include law enforcement.
As a fire department, we are entrusted with the appropriate use of public funds. Do not squander this opportunity by allowing the theft of this precious resource.
For more on this topic, please contact me.
John K. Murphy JD, MS. PA-C, EFO, Deputy Fire Chief (Ret), has been a member of the career fire service since 1974, beginning his career as a firefighter & paramedic and retiring in 2007 as a deputy fire chief and chief training officer. He is a licensed attorney in Washington State and in New York. Mr. Murphy consults with fire departments and other public and private entities on operational risk management, response litigation, employment policy and practices liability, personal management, labor contracts, internal investigations and discipline. He serves as an expert witness involving fire department litigation and has been involved in numerous cases across the country. He is a frequent Legal contributor to Fire Engineering Magazine, participant in Fire Service Court Blog Radio and a national speaker on fire service legal issues.