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home : news : county/state news August 16, 2017

(River News graphic by Sasha Case)
(River News graphic by Sasha Case)
Fast facts
• Christopher T. Marquet, the author of an annual report on embezzlement and CEO of the security consulting firm Marquet International, says the desire to obtain and maintain a lavish lifestyle is a primary motivation to embezzle.

• Gambling is an underlying factor in many embezzlement cases, including smaller ones.

• Generally speaking, the average embezzler is in his or her 40s.

• Women are more likely to embezzle than men, though men steal significantly more than women when they do embezzle.

• Embezzlers are most likely to be individuals who hold financial positions within organizations, and the financial services industry suffers the greatest losses from major embezzlements.

1/26/2015 7:30:00 AM
Profile of an embezzler: You'd be surprised
Second in a series

Richard Moore
Investigative Reporter

Embezzlement is big business in the United States - in both large firms and small, in both urban areas and rural - and it has been getting bigger all the time.

There's no doubt the Great Recession helped to spike the numbers, not only because more employees steal during tough times but also because employers exercise more oversight. But embezzlement numbers were growing even before the recession began: According to the FBI, embezzlement arrests rose by about 30 percent between 2003 and 2007.

And while embezzlement statistics may fall back from the peaks of the recent recession, the long-term trend is expected to continue upward. As it is, 2013 was a record, up 5 percent over 2012, which itself was a record.

A big question is, why the prevalence of this particular crime? Many experts do indeed point to the economic downturn, while others finger individual financial stress in any economy, good or bad. Still others believe the persistence of light sentencing is a factor.

All of those elements no doubt play a role, but Christopher T. Marquet, the author of an annual report on embezzlement and CEO of the security consulting firm Marquet International, says it is more complicated than that.

"I do think that more significant sentences might have some added deterrent effect - but that goes only so far," Marquet told The Lakeland Times in an interview. "I think that this crime in some cases becomes almost like an addiction that is hard to stop once it has gotten going and a lifestyle established - irrespective of sentencing."

The good life

Indeed, Marquet stated in his 2013 national report, according to the data, the primary motivating factor causing perpetrators to undertake long-term embezzlements is not dire financial circumstances but rather a desire to obtain and maintain a lifestyle beyond what they would otherwise be able to attain.

"In some of these cases, the thefts actually began in good economic times, prior to the late 2008 market crash, and they continued over many years," he stated in the report.

Marquet says his firm has also found that, during boom years, employee theft can easily go unnoticed since the victim organization may be making healthy profits and the perpetrator begins by taking relatively small, regular amounts that fall under the oversight radar screen.

"A small embezzlement case is only small because it hasn't had the chance to grow because it was discovered or the perp moved on," Marquet told The Times. "So they always start out small and only grow depending upon their longevity, magnitude, frequency and types of methods of theft employed."

If they do it long enough, embezzlers get caught, Marquet stated in his 2013 report.

"We have also learned that many embezzlers accelerate their thefts over time - as well as increase the magnitude of their thefts over time - leading to a higher probability of getting caught in later years," he said. "This fact is also exacerbated by the fact that over time, it becomes more difficult to hide significant thefts. We also believe that in difficult markets, employee theft and other corporate frauds are more likely to be revealed since business stakeholders tend to be more attentive to finances and to the bottom line."

Not that embezzlement cases don't surface in poor economies, Marquet wrote.

"Nevertheless, the bottom line is that people will always steal from their employers no matter what the economic circumstances - it is just the degree and frequency that oscillates," he wrote.

In addition, gambling is definitely a factor in many embezzlement cases, including smaller ones, Marquet told The Times.

"I have an old college buddy who is a state prosecutor in Milwaukee County, and he tells me that he automatically subpoenas the local casinos for records related to an alleged embezzlement case," Marquet said. "For him it is every case. As far as demographic strata is concerned, we see it at all ages, states and genders. States with more access to gambling seem to have a bit more of a problem with it."

In the 2013 study, in the cases in which the company was able to assign a primary motivating factor, the vast majority was a desire to obtain and maintain a better lifestyle than otherwise, the report stated.

"In addition, gambling continues to be a major factor for many embezzlers," the report added. "In some cases, the gambling problem was also part of an overall extravagant lifestyle."

More specifically, using aggregate data for the six years the study has been conducted, Marquet and his researchers were able to determine the primary motivating factor with reasonable certainty in 448 cases. Of those, 57.5 percent could be attributed to a lavish lifestyle; 29.1 percent could be traced to a gambling addiction.

True need could only be established in 2.5 percent of the cases.

"Clearly lifestyle is the primary factor for major embezzlers," the report stated. "However, nearly one-third of those known motivators involved gambling. Cases of true need were frankly few and far between."

Interestingly, the vast majority of those who embezzle have no prior criminal history. The six-year aggregate data showed only 5.1 percent of perpetrators had a definitively criminal past, but Marquet estimates the number to actually be between 5 percent and 10 percent, in part because not all criminal matters are prosecuted.

Portrait of an embezzler

The lack of a criminal past raises another question: Just what is the profile of a typical embezzler?

While there might not be one profile overall, over the six years of studying data, Marquet has been able to construct a vivid portrait of an embezzler. Generally speaking, the average embezzler is in her 40s, Marquet reports.

"Based on the available data, the average age of the perpetrator in 2013 was 47.9 years - consistent with our prior reports," the 2013 study stated. "Likewise, the median age was 47, also consistent with our prior reports. The average adjusted age, which is the average age, minus the average duration, was 43.25 - again consistent with our prior years' analysis."

But while the 40-49-year-old age group accounted for the greatest number of cases - followed closely by the 50-59-year-old age group - the 60-69-year-old category accounted for the greatest losses.

In addition, women are more likely to embezzle than men, though men steal significantly more than women when they do embezzle. In the 554 cases studied for 2013, there were 551 perpetrators, of which 236 were male and 315 were female.

"That is, 43 percent were male and 57 percent were female," the study stated. "Like last year, these numbers are not as skewed in favor of females as we have seen in earlier study years, but women are clearly more frequently the perpetrators in these major embezzlement cases, consistent with our overall data."

Why do women embezzle more often? Marquet points to multiple reasons, none of which are conclusive by themselves, he says.

"This is a tough one," he told The Times. "It surprised me the first year I did this analysis, but not any longer. It has been consistently about two-thirds of the cases involving female perpetrators."

Marquet says he believes one reason is because there are more women in bookkeeping and finance positions within organizations.

"We know from our analysis that this is by far the most common type of position a major embezzler holds," he said. "This may be part of the answer. I'm not sure if there is some other gender-based explanation. I will leave that with the psychologists."

In any event, he says, the conventional wisdom that your usual fraud artist is a middle-aged, white male is only partly true. They are middle-aged, he says, but not men, for the most part.

On the other hand, he said, the ratio is far different when the amounts stolen are considered.

"Interestingly, the average loss caused by males was $1,638,506 compared to $644,524 for females," the report stated. "In other words, men stole more than two-and-a-half times more than women, on average. Males accounted for about 66 percent of the total losses and females accounted for 34 percent of the total losses. These findings are consistent with our overall conclusion that males on average embezzle more than females in a given case, while females are more likely the perpetrators of embezzlement."

And men are more likely to engage in a conspiracy to commit fraud rather than women, who are more likely to prefer to act alone.

"Another noteworthy finding from the 2013 data is that males are more likely to engage in embezzlement schemes that involve a conspiracy of individuals (29 percent of the time), as compared to females (17 percent of the time)," the report stated. "The 2013 data also found that men are 5 times more likely to engage in vendor fraud than women. Men also preferred inventory theft/conversion and bogus loan schemes over women. Whereas we found that women were more likely to engage in forgery/unauthorized checks and payroll fraud schemes."

The 2013 statistics were also true for the six-year aggregate data.

"An analysis of our six-year aggregated data (which includes 2,682 cases in which the sex of the perpetrator is known) reveals 1,639 females and 1,043 males or 61.1 percent female and 38.9 percent male," the report stated. "These results conclusively demonstrate that women are predominantly the perpetrators of major embezzlements in our society at this time (again with the caveat that there appear to be more women in bookkeeping/finance positions than men). Nevertheless, our data also shows that men stole an average of about $1,832,000 per embezzlement case while women stole an average $799,000."

In other words, the report states, while women were 1.6 times more frequently the perpetrator of major embezzlements, men stole 2.3 times as much as women, in a given case.

Who is targeted?

And what kinds of establishments and businesses are most often victimized?

By a significant margin, the report found, embezzlers are most likely to be individuals who hold financial positions within organizations, and the financial services industry suffers the greatest losses from major embezzlements.

Following closely behind the financial services industry as the most victimized are government entities, along with nonprofits, including religious organizations. The most common embezzlement scheme is the forgery or unauthorized issuance of company checks.

Beyond the type of industry, the architecture of the firm is important, Marquet reports.

That is to say, those firms with secure financial control structures are less likely to be victimized, regardless of the business in which they are engaged, while firms with fewer control structures are more likely to be embezzled.

Those latter firms include such businesses as credit unions, which historically have fewer internal accounting controls than banks and other financial institutions, and family-owned or very small firms, in which one person controls the finances with little or no oversight.

Those firms also compose many of the businesses which are victimized by embezzling in Wisconsin, and in particular in northern Wisconsin.

Finally, what does the future hold? Marquet says he has not yet fully analyzed the numbers for 2014, but he says he expects they will be similar or slightly less than 2013.

"Perhaps closer to 2012," he said. "Just a guess. Remember, our data clearly shows that these cases span an average of about 4.5 years. So if the economy tanked in late 2008, then the peak should be in 2013. However, given the anemic recovery since that time, I would not expect the drop off to be very dramatic."

If the numbers from northern Wisconsin are any indication, then Marquet is right. This past year has continued to reveal a high rate of embezzlement in the Northwoods, and those cases will be examined next.

Richard Moore may be reached at

Reader Comments

Posted: Monday, November 9, 2015
Article comment by: Wayne Howard

A glaring omission from your analysis is the racial makeup of these serial criminals that affect the lives of millions. In most crime reports there is a rush to identify the perpetrator if they are black to keep the ol stereotype writer moving along. I chuckle when I see an article like this because I can hear the desk drawers of the writers slamming shut as they hurry up and hide the stereotype writers. Let me take a wild guess most the perpetrators of mega fraud are white and the ones that do the most damage to society are white males. I am sure that the concerns about light and ineffective penalties its all just a coincidence. But that Jamal the black guy who is killing himself with the crack pipe we better get him off the street with a 15 year penalty. Wow unbelievable but very predictable. When people with this type of view get on juries how does our criminal justice system fair? That's would be one helluava book or story to write wouldn't it?

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