Suspected Employee Dishonesty

[tvaughn]

What is the name of your state (only U.S. law)? Pennsylvania

We have an employee in a purchasing position that is suspect for setting up a fake company to sell product to our company. If our investigation reveals that is is the case, besides termination, is this also a criminal offence?

 

[patstew]

Not NEARLY enough info. What is the product, and have you received it?

 

[tvaughn]

The product is a componant used daily in our manufacturing process. This employee claimed to find a cheaper alternate source for the part and we have been doing business with the new vendor for about one year. This all came up because While the employee was on vacation, we had a problem and needed to contact the vendor - the continuing internal investigation reveals that the employee set up a fake company as the alternative supplier.

 

[patstew]

One more time: did you receive the product from the supposedly fake company??? Man, sometimes it's like pulling teeth...

I have to assume you have, since you say you've been doing business with this "fake" company for a year. So what makes you think it's fake?

 

[ecmst12]

It's obviously not fake, but it IS a conflict of interest and definitely dishonest for this employee to not tell you that she is profiting from this arrangement.

 

[tvaughn]

Thank you for responding and please be patient as I am new at this.
Yes, we have been receiving product every month for the past year. Maybe "fake" was the wrong word to use - we looked at cancelled checks to this vendor and compared it with the employee's signature/it's an exact match.

 

[ShyCat]

While such "conflict of interest" may be against company policy, it is not a criminal offense. You won't find a law that says an employee cannot also be a vendor.

 

[Some Random Guy]

1. Your employee is self dealing and obviously not to be trusted. Remove all their electronic and physical access to your facilities and follow your company procedures for termination.

2. You thought you were buying product from a reputable supplier. Now it is of unknown origin. You need to verify the authenticity of the raw materials, performing whatever quality checks are needed to ensure that your current stock is not defective, adulterated or counterfeit.

3. Contact your previous supplier or other suppliers to get a replacement source of the materials so that production is not disrupted. Also inquire if they do business with the "fake" company or another company at that address. If you find out the employee's supplier and their pricing, you should be able to find out the total amount skimmed from your company.

4. Have your lawyer File suit against the employee for your damages. Your damages would be the money that they made through the fictitous company or the money that you could have saved if the employee did their job lawfully.

5. COntact the police to see whether the activity is considered criminal. Since you actually received the products ordered, this may be treated by the police as a civil matter.