How do we recover losses from a bookkeeper who embezzled money from our business?

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How do we recover losses from a bookkeeper who embezzled money from our business?

In 08/10 we had to close our business; we suspected our bookkeeper was embezzling money. Our CPA discovered on 1/19 that about $250,000 to $400,000 may be missing from just this year. We believe there is more missing from last year as well. We also found out that our bookkeeper has not paid the insurance bills since 05/10,and was under reporting to the IRS. I am confused on who to contact or who can help me with me issue. Where do we start? Do I need to call the local police dept for a police report first? Do we hire an attorney first? Does the insurance company look into the books for us? Since we closed our business we have lost everything; we don’t have much money to pay people to help us recover our losses.

Asked on November 23, 2010 under Business Law, Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) Embezzlement is a crime; to seek justice, you can and should report it to the police, though this will usually not help you get the money back.

2) If you have insurance that covered employee dishonesty, you can and should report it to your insurer. If  you didn't have that kind of insurance, you will not be covered; if you had it, then you might be able to be compensated by your policy, at least up to the policy limits. So take a look att your policy.

3) Embezzlement is a civil tort as well as a crime. You can sue the bookkeeper for the money he or she took. You might be able to find an attorney who will take the case on contingency, or for a share of the recovery.


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