Manager manipulates inventory figures to cover evidence of theft

CASE STUDIES

MANAGER MAKES $148,OOO OF INVENTORY “DISAPPEAR”

The Theft

This 12 year employee was living way beyond his means and needed a way to supplement his income. As warehouse manager, he was entrusted with keys and alarm codes to the distribution center. Consequently, he was able to enter the distribution center after hours and remove pallets of product.

However, the manager knew that significant inventory shortages were sure to be noticed, so he used two methods to lower his on-hand inventory numbers. By falsely claiming that certain inbound shipments were short, as well as inflating the amount of damaged inventory that was supposedly discarded, he was able to decrease his on-hand inventory figures and conceal a large percentage of the theft for well over a year.

The Investigation

An anonymous tip was called into the Danbee Hotline, at which point a decision was made to place an undercover investigator into the warehouse. No one other than two top company executives knew about the investigation.

During the course of this investigation, the undercover operative observed the warehouse manager enter false information into the computerized inventory system. He also overheard a telephone conversation in which the warehouse manager reported shortages on deliveries that the investigator knew had been received in full.

The distribution center was subsequently placed under surveillance 24 hours a day. Soon thereafter, the warehouse manager was videotaped entering the facility with an accomplice while it was closed and loading a rented truck with large quantities of inventory.

The Outcome

The warehouse manager was confronted with the evidence and confessed to grand larceny. Using the proof compiled by Danbee investigators, the company received reimbursement from their insurance company for the loss.