By KATHLEEN JOHNSTON JARBOE - Daily Record Business Writer

If the wedding hadn’t been so big, a California home remodeler never would have suspected his bookkeeper was stealing from him.

But there were the ice sculptures at the reception for the employee’s daughter — you know, the worker married to a truck driver. Then there were the flowers, the swanky Los Angeles hotel and the scores of guests, including 50 from the remodeler’s business alone. The seafood was particularly troubling.

“[The owner] couldn’t afford seafood for his daughter’s wedding. He wondered how his bookkeeper could afford seafood for her wedding,” said bookkeeping and embezzlement consultant Ruth S. Crane of Auditors Inc. in Wheaton about one of the firm’s contacts over the years.

Turns out the bookkeeper had swindled $100,000 from the remodeler.

There are more anecdotes like that, too. Crane has a string of stories about bookkeepers who stole from small businesses. She keeps them in files, collected from news stories, and in her head, gathered from clients’ experiences.

There is the tale about a dentist whose bookkeeper regularly paid herself for 50 hours of work per week when other employees said she hardly worked 40 hours. In a separate case, one Robin Hood-like employee stole from the company to give to charitable causes she favored and to friends in need. She didn’t keep a penny for herself. It made her feel good to give. Another embezzler killed her boss to avoid detection.

Lots of different stories, but Crane says there is a common element when it comes to small-business theft — the person who commits the crime is rarely the one you suspect.

“If you think that embezzlers are bookkeepers either who are greedy or who for whatever reason have fallen behind the eight-ball financially, that is not the case,” Crane said. “They honestly have no intention of embezzling. They honestly see it as a loan.”

The loans often turn permanent, and success emboldens the thief to become bolder in borrowings.

When opportunity arises along with the right motivation, regular people can succumb to the temptation. Crane calls it the 10-10-80 rule — 10 percent of workers will never steal, 10 percent of workers will always steal and 80 percent of workers will steal under certain circumstances when the opportunity is present.

Bad detection

The story that started Crane’s business of helping small-business owners avoid embezzlement was the one that involved an interior designer and her bookkeeper of at least five years. The two were like sisters — they socialized together, their children played together. But all along, the bookkeeper was stealing from her.

The designer only discovered the crime by stopping in the office over the weekend and finding a bank statement the bookkeeper had left open. Serendipitously, she checked it and noticed a large check she didn’t remember writing. When she looked through the pile of returned checks, she couldn’t find it. She called the bank. They sent her a copy; her signature was forged perfectly. The discovery devastated her.

“It was like something more than just money had been stolen from her. It was so visceral,” Crane recalled.

Almost one quarter of fraud at small businesses is caught by accident, according to a 2004 study by the Association of Certified Fraud Examiners. Another 39 percent is discovered by a tip from another employee.

Small businesses rarely have the internal checks and controls that permit in-house discovery. Size prevents these firms from having the number of employees needed for the best embezzlement protection: dividing accounting work among several workers. The median loss at these small companies is $98,000, enough to threaten the viability of many small firms.

The intimacy among workers that comes from working with a small group often makes firms vulnerable, according to a Prince George’s County prosecutor.

“Many times I have people in my office crying because it was their trusted bookkeeper,” said Isabel Cumming, chief of white collar crime Prince George’s County State Attorney’s Office.

“The president is making so much money. They think they should make more money. … I work harder than him,” Cumming said about the rationalization to steal.

Embezzlement is not new. It’s not going away either. According to an Auditors Inc. survey of close to 1,000 certified public accountants, as many as 40 percent of small businesses are embezzlement victims. But it can be hard to track. Only 2 percent report the crime, according to the survey.

Crane says business owners are embarrassed and worry creditors will deny them loans in the future if word gets out.

In the case of the designer, she wanted advice from Crane on how to avoid future theft. But there were few tools directed at the smallest of companies. Crane said she and three other bookkeeping associates decided to team together to create a guide that could help such businesswomen.

The guide is called “Embezzlement 101: How to embezzle from your employer and not get caught and how to detect it.” The book sells for $49.95. Crane says following the principles will only take an hour of work per week and will virtually guarantee a small-business owner can catch the fraud within 30 days. Her business also performs the oversight function for companies that are too busy.

While Crane has a degree in accounting and has more than 18 years experience, she herself has someone else do her books. When asked if Crane uses her methods to check up on the bookkeeper, she replied, “Yes ma’am.”