Corporate Loss Prevention Programs
Comprehensive Investigations
Litigation Support
Security & Safety Site Assessment
Insurance Claims Investigations
Surveillance Services
Loss Prevention Training Seminars
Background Investigations
Digital Security Systems
Physical Safety & Security Programs
Loss Prevention Consultation
Private Investigations
General Services
Expert Witness / Guest Speaker
 
 
 
 Summit Editorial
Employers Must Create Correct Environment to Prevent On-the-Job Time Bomb

Click to Learn More

  Stop the Abuse
Internal Theft
Embezzlement
Robbery
Burglary
Fraud
Shoplifting
Employee Substance Abuse
Workplace Violence
Intimidation
Sexual Harassment
Staged Accidents & Resulting Litigation
Insurance Fraud
Worker Compensation and FMLA
Shrink Due to Poor Inventory Controls or Vendor Theft
Inappropriate Cash Handling Procedures
Poor Audit Controls and Paperwork Errors
Deposit Discrepancies
Other Criminal Acts
Click to Learn More
Click to Learn More
 
Home > Cases > Internal Theft Case Study: The Disappearing Discs

Internal Theft Case Study: The Disappearing Discs

Internal Theft Case Study - The Disappearing Discs: Case Studies, Summit Loss Prevention Consulting, Inc., Indianapolis, Indiana (IN)


The Summit Investigative team has successfully conducted thousands of internal theft investigations of all types and sizes, from cashier fraud within a small family owned hair salon chain to the pre-release theft and sale of a holiday season DVD release from a major Hollywood motion picture studio.

The case study below is an example of our ability to handle the "Big Ones," major cases involving millions of dollars of potential loss, potentially hundreds of witnesses and months of intensive investigation. Tony Jarana acted as lead investigator throughtout this entire case.

Internal Theft Case Study: The Disappearing Discs

A law firm contacted an investigative agency on behalf of their client, a manufacturer of audio Compact Discs (CDs) and video discs (DVDs). An event occurred that brought to light a major internal theft issue within the manufacture's company.

The manufacturer had been contacted by the company's largest customer, a major Hollywood motion picture studio concerned that an unauthorized copy of one of their as-yet unreleased holiday season blockbuster DVDs was being screened at a local branch of a national video rental chain almost three weeks prior to the DVDs official distribution and release.

Taking Action at the First Sign of a Problem

The video company’s Loss Prevention (LP) manager contacted the studio’s LP department when he became aware that the disc was being shown and that it might be a bootleg copy.

By backtracking where it came from, the video chain investigators were able to determine the source of the illegal disc within 72 hour. The video store’s assistant manager had received the disc from a friend who had purchased it from an employee of the DVD manufacturer.

The studio contacted the disc manufacturer to inform them there was a major security breach at their facility and they had possession of the illegal disc confiscated from the video store to prove it. The manufacturer was told to immediately stop production on the $9 million DVD order.

Finding Larger Problems Than can be Handled Internally

Upon conducting an cursory initial investigation, the manufacturer provided local police with the names of three employees suspected of being involved with the internal theft. A short time later, the police located G.D., one of the primary suspects, and found 57 of the unreleased DVDs in his car.

While finding there was a good chance that this was not a single, isolated incident, and there were probably more employees involved, the police were unable to continue an internal investigation for the company. Their primary focus was the distribution of the stolen property.

Concerned about the potential loss of the $9M order, as well as any future business from the studio – not to mention the legal issues involved in a potential Loss of Sale suit – the manufacturer realized a bigger problem existed than could be handled internally. Having decided they would have to make an official response to the situation, they contacted the investigative agency immediately.

Combating the Environment of "Take Whatever You Can Get Your Hands On!"

Prior to these events, the DVD manufacturer's management had been acting under the unofficial position of overlooking the "occasional" removal (theft) of single discs for employees’ personal use.

Management's philosophy was that they threw away more discs than employees could ever take home, and security to prevent this kind of theft was more expense than the material they were losing. This was the beginning of the workplace environment of  “take whatever you can get your hands on!”

We began preliminary investigation by talking to parties already involved, the local police detectives and suspects already arrested. The suspects, G.D. included, began to give up names of sources and other people involved in an attempt to cooperate and lessen charges against them.

G.D. was asked to submit a written statement summarizing his activities, but he declined.  He also initially agreed to a second meeting with investigators at the company's facility, but later called and cancelled.  The investigators are now working with the FBI in an effort to prosecute G.D. for theft and interstate distribution of stolen goods. [Note: Here is link for complete summary of events surrounding the attempts of our investigators to interview G.D.: Report of Ongoing Suspect Investigation / Interviews]

Internal Investigations: Immediate and Decisive Action Secures Future Business

Based on the information provided, we were able to recommend a course of action for an internal company-wide investigation, to which the manufacturer agreed.

  • Within four weeks of implementation, the investigation showed enough significant results that the movie studio felt confident the situation was being addressed and the problem was being controlled. The movie studio decided to allow the disc manufacturer to resume production of the new DVD.
     
  • The manufacturer's quick response to the situation saved the $9M project, and their willingness to make changes to prevent a reoccurrence maintained future relations with the studio that last to this day.
     
  • Ten weeks of investigation netted more than a dozen admissions of theft, as well as numerous other felony arrests of company employees.
     
  • Based on our findings, the manufacturer implemented numerous policies and security procedures changes, including the hiring of more security officers.

Internal Investigations: Snowball Effect Can Lead to Unexpected Benefits

The cost of conducting an investigation will pay for itself via its affect throughout the company, whether you solve the particular case or not. It is important to understand the "snowball effect" an internal investigation can create within your company.

When you decide to conduct an investigation, you are doing more than just solving the one case. The more you investigate, the more that seems to be discovered, uncovering problems and issues you were not even aware of, like finding a convicted sexual predator that lied on an employment application when conducting background checks for an internal theft issue.

More importantly, you want to ensure that all of your employees are aware that the company will vigorously respond to any loss issue it sustains in a very methodical, concrete manner. The initial investigation acts as a deterrent and helps create a safer, more worker-friendly environment and a "Culture of Honesty & Integrity.”

This type of corporate culture empowers people that normally wouldn’t come forward when they should to be more conscientious and speak up more quickly, and more often – a concrete result of the snowball effect that can generate a very positive effect to the business.

As an added bonus, when undesirable elements get weeded out of the workforce, employees feel the company is trying to do something to improve the working environment, which tends to cause improved morale and increased productivity.

For an In-Depth Look at This Case...

For a more detailed, in-depth look at this case, you can read:

How to Prevent Situations Like This

For more information our our abilities to conduct internal investigations, call 317-363-8312, send email to info@SummitLossPrevention.com. or submit the short form below:

   
Name:
Phone:
Email:
Questions 
    and 
Comments:
 

 

 
 

Top of Page   

 
Home   Services   Products   Industries   News   Cases   FAQ   Tools   Company Profile   Contact Us   Site Map

Summit Loss Prevention  •  1427 West 86th Street, #404  •  Indianapolis, IN 46260  •  317-363-8312  •  info@summitlossprevention.com

Copyright 2006 Summit Loss Prevention Consulting, Inc. All Rights Reserved.


The local and Midwest markets we serve in and around Indiana include Batesville, Bloomfield, Bloomington, Boonville, Brownsburg, Carmel, Chicago, Cincinnati, Columbus, Derby, Detroit, Edinburgh, Elkhart, Fishers, Fort Wayne, Fortville, Gary, Greenfield, Greensburg, Indianapolis, Kokomo, Lafayette, Lebanon, Louisville, Marion, Mooresville, Muncie, Noblesville, Notre Dame, Peru, Plainfield, Richmond, Rockport, Rockville, Rushville, Smithville, South Bend, Syracuse, Terre Haute, Topeka, Union City, Valparaiso, Wabash, Warsaw, West Lafayette, Westfield and Zionsville.