Category Archives: Crime Coverage

Crime Bonds

The Importance of Crime Bonds.

Crime bonds protect against loss from dishonest employees

White-collar crime should be of great concern to business owners. It can be occurring now, right in front of us by people we trust. How many times have we read in newspapers of the kind old bookkeeper, polished senior executive, well-respected city manager, and other people we deal with day to day who are arrested for stealing from their employer or otherwise taking funds that did not belong to them.

 

The two major types of Fidelity bonds:

The first is known as a First Party Fidelity Bond, First-party fidelity bonds protect businesses against intentionally wrongful acts (fraud, theft, forgery, etc.) committed by employees of that business.

The second type is a Third Party Fidelity Bond, Third-party fidelity bonds protect businesses against intentionally wrongful acts committed by people working for them on a contract basis (e.g., consultants or independent contractors).

White collar crime can have serious financial consequences, even threatening a private company’s survival. Bernard Fleischer & Sons, Inc. offers a solution to handling crime losses such as dishonesty, forgery, robbery, safe burglary, computer fraud and other criminal acts committed by employees, leased employees, volunteers or someone required to be bonded under ERISA, through a Crime Insurance Policy.

For more information about Fidelity/Crime Bonds Click here, call 1.800.921.1008 or visit our website to get a free no obligation Fidelity/Crime Insurance quote.

Workplace Crime costs $50 Billion a year, protect your business with Fidelity Bonds.

There is a hidden risk facing small businesses across the country that often goes unnoticed until it suddenly rips through a firm’s finances: employee theft. It’s a crime that is costing U.S. businesses $50 billion annually, with 7% of annual revenues lost to theft or fraud according to Statistic Brain.

Studies found that U.S. businesses affected by employee theft lost an average of $1.13 million in 2016. Small and midsize businesses were hit disproportionately, representing 68 percent of the cases. Their median loss in 2016 was $289,864.

Despite the alarming levels of embezzlement taking place, it isn’t top of mind for many small-business owners.

When one hears the word “Bonds” it brings to mind an investment. But there are other types of bonds that have nothing to do with investing; they relate to business operations and function similarly to insurance.

Surety Bonds are like insurance. They back up a promise to do something; if the promise is breached, the bond pays off to complete the promise.

One common Surety Bond type is a Fidelity Bond (or Crime Bond). Fidelity bonds provide insurance against loss from employee misconduct, such as theft or embezzlement, which is not otherwise covered by a company’s regular insurance coverage. A bond can provide blanket coverage for the actions of all employees or can be tailored to cover one or more specific employees.

When safeguards like thorough employee screening and careful supervision aren’t enough, fidelity bond coverage to protect against employee theft is recommended. If one or more of your employees are entrusted to handle cash or other valuable assets, a Fidelity Bond can protect your business.

Coverage can include:

  • Employee theft – Stealing merchandise.
  • Forgery or Alteration – Checks, gift cards etc.
  • Theft of Money and Securities –  Registers etc.
  • Robbery of safe, burglary of other property, stones, bullion, etc.
  • Computer fraud, funds transfer, diverting funds to personal accounts.
  • Money orders and counterfeit money.
  • Theft from third parties, on loan, deliveries, on customer’s premises.

 

The cost of Fidelity Bonds: There is no fixed rate for bonds. There are many factors that impact cost, such as the extent of coverage, whether there is a deductible (if allowed), and the surety company that issues the bond. As a rule of thumb, a fidelity bond can cost about ½% to 1% of the coverage obtained.

Surety and fidelity bonds are a risk management tool, it is helpful to discuss your business requirements with an experienced, trusted agent like BFBond/Bernard Fleischer & Sons Inc. We can advise you what coverage is best for your business when traditional insurance doesn’t provide the protection you want or require.

Would a crime policy cover this?

Strange way of stealing Gold from the Royal Canadian Mint.

Via the Anus!

goldbullion1717128The case against Leston Lawrence, 35, in an Ottawa courtroom presided over by Justice Peter Doody on a number of smuggling-for-cash charges may seem like a joke, but the risk of employee dishonesty is all too real. Mr. Lawrence is accused of theft, laundering the proceeds of crime, possession of stolen property, breach of trust and he was fired from the Mint. Would a Fidelity Crime Bond cover this?

 
During testimony it was revealed that Mr. Lawrence set off the metal detectors more often than the other employees (Except for the ones with medical implants), requiring manual scans using a metal detecting wand but they never seemed to find anything on him. Investigators say that he used Vaseline and rubber gloves that they found in his work locker to aid in smuggling the cookie sized pucks of gold.

 
Four of the pucks were found in a safe deposit box owned by Lawrence and he had sold 18 of them for approximately $6,800 each from November 2014 to March 2015. Subsequently, an obviously dedicated security employee tested the idea that the pucks could be concealed in an anal cavity and not be detected by the wand.

 
Curiously, the mint never noticed any gold missing. After a bank teller noticed Mr. Lawrence had been cashing several checks from a gold dealer and then transferring the money out of the country is when the teller looked up the man’s place of work and alerted the mint to the suspicious activity.

 
Jaw dropping statistics from the ‘Statistic Brain’ website, trusted research provider for Forbes, CNN, ABC News, and many others reveals that the amount stolen annually from U.S. businesses by employees is $50,000,000,000 and 7% of annual revenues are lost to employee dishonesty and fraud.

 
Although a minority of employees becomes dishonest, they can rationalize their theft in many ways: ‘the company won’t miss it,’ ‘they’re not paying me enough,’ or the person succumbs to gambling or some other addiction. Protecting a business with a Fiduciary bond aka Crime bond or Fidelity bond is the most effective way of preventing these losses. The definition on a Travelers Insurance policy for Employee Theft reads

 

“The Company will pay the Insured for the Insured’s direct loss of, or direct loss from damage to
Money, Securities and Other Property directly caused by Theft or Forgery committed by an
Employee, whether identified or not, acting alone or in collusion with other persons”

 

In addition to the employer being protected from covered losses due to theft and forgery, the exact definition of “who” is covered is defined in the policy, but should include all current or former employees, partners, members, directors, volunteers, trustees, seasonal employees and temporary employees. If the mint had one of these bond policies they would be insured against the conservatively estimated $180,000.00 loss.

 
Some of the typical exclusions to these policies are accounting or math errors, vandalism, Governmental action, restatement of a profit and loss statement and theft by the employer itself. You cannot steal from yourself; however coverage extends to partners, directors, members, and trustees.

 
To learn more about fiduciary bond products or any other types of bonds visit our website at www.bfbond.com, our blog at www.bfbond.com/blog , call us at 800.921.1008, email jward@bfbond.com with your inquiries or download the application here.

 

 

In a former Swing State $5.5M embezzlement case, does your crime bond cover this?

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An Indianapolis woman will learn her fate after admitting to six counts of wire fraud and money laundering in a $5.5 million embezzlement scheme.

No longer a swing state (The state typically votes Republican with an exception in 2008) Hoosiers will head to the polls as Kristi Espiritu will be headed to sentencing in U.S. District Court at 10 a.m. on Nov. 8. She worked at Network Storage Inc., a data storage company based in Indianapolis, from 2008 to 2014 as a bookkeeper.

Court records show that with access to the company’s bank accounts she used their money to pay for shopping trips to purchase luxury items such as diamonds, handbags, electronics, furnishings and travel. A common occurrence in employee theft losses. According to a plea agreement reached back in May she admitted to lying to company executives and falsifying books and payroll systems. Even the best managers,  can be over trusting and never spot check or have a system to verify the monies in their bank account to avoid crimes like this.

As a part of a plea deal she agreed to pay $5.5 million in restitution, if she can’t pay that amount before sentencing, federal officials will use asset forfeiture to recover the funds. If the company purchased a dishonesty bond to cover this crime, they would become whole and not be concerned if the employee had the monies to repay the theft.

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Espiritu could face up to 20 years in prison and a $250,000 fine on four wire fraud charges, and 10 years in prison and a $250,000 fine on two money laundering charges. White collar criminals steal through position and influence and quite often get away with their crimes for many years before getting caught.

It is unsure whether Network Storage Inc. had a fidelity bond (aka Crime Bond, Dishonesty Bond) which is a form of insurance protection that covers losses incurred as a result of fraudulent acts by specified individuals, usually insuring a business for losses caused by dishonest acts of its employees. Learn how fidelity bonds and surety bonds from BF Bond provide your growing business with the protection you require. Visit us at BFBond.com to fill out an application or call us at 800.921.1008

 

Dishonesty Bonds for Art Galleries

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In a scene from the 1937 movie “Good Morning Boys,” Mark Daly and Lilli Palmer swap the real Mona Lisa for a copy. Hulton Archive/Getty Images

Recently I had been interviewed by the Wall Street Journal. The topic was Mysterious Disappearance of art work in a gallery. The reporter was investigating if a standard Art Gallery/ Art Dealer Insurance policy would cover this. I delved into the policy form and began to realize there was no coverage for mysterious disappearance and work stolen by employees.
I do recall a story of a Gallery, that gave a print to an employee to deliver a few blocks away. Neither the trusted employee nor the print ever arrived to the destination. When the gallerist looked to his insurance policy for coverage, all he found was the exclusion, hence not covered for this type of loss, the same exclusion was found in the collector’s policy. It cost the Gallery 100’s of thousands of dollars, which he had to pay to the collector. Employee Dishonesty Bond is the correct form to protect from these types of losses.
As I ponder more about this subject, I realize the Art world, conveys millions of dollars without properly risk managing employee dishonesty. It may be the bookkeeper who is wiring money to a fake account, writing forged checks, or the salesperson selling off inventory, unbeknownst to the owner. The exposure is real, buy a Bond.
Collectors should start asking to see if the person handling the Art has a fiduciary policy. This protects the collector from misappropriation of funds earmarked for purchase in his behalf. Lawyers cannot touch the escrow accounts; Insurance agents have trust accounts for policy premiums, but for Art dealers there are no laws just pure exposure to you losing all.

Follow the link to the Crime bond application and make sure to ask for the loss of stock, forgery and other crimes by the employees.

 

William Fleischer CIC

Bernard Fleischer & Sons / BF Bond / Art Insurance Now

 

I Trust My Employees, I Don’t Need Crime Insurance.

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Trust and morals are  a core element of any type of relationship—business or friendship. And no one hires, at least knowingly, a dishonest employee. Sometimes people change, however. Employees can become dishonest, albeit only a minority of them do. Employees can rationalize their theft in many ways: ‘the company won’t miss it,’ ‘they’re not paying me enough,’ or the person succumbs to a gambling or some other addiction.

Unfortunately businesses do go bankrupt because their employees’ steal large amounts of money, or smaller amounts over a period of years, or in some other way commit computer fraud or some other type of fraud. This has an impact not only on your business but also on your other employees and those who count on your services or products.

To learn more about commercial crime insurance and how to protect your business, visit us at www.BF Bond.com. We’ll work with you to:

  • Assess the risk potential for external or internal criminal actions
  • Determine the precise insurance coverage you need for your business
  • Click here to learn more about Crime/Fidelity Bonds

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Typical Fidelity/Crime Insurance coverage highlights include:

Typical Fidelity/Crime Insurance coverage highlights include:

Comprehensive coverage for:

  • Employee theft
  • Money and securities while on premises or in transit
  • Forgery
  • Funds transfer fraud
  • Computer fraud
  • Money order and counterfeit currency fraud
  • Credit card fraud
  • Optional client coverage
  • Coverage for investigative costs for covered losses
  • Responds to Employee Retirement Income Security Act of 1974 (ERISA) plan bonding requirement.
  • Broad definition of employee, including directors and officers; employees, including part-time, leased, temporary, and seasonal employees; and volunteers.
  • Worldwide coverage.

Complete the EZ application for a quick quote

 

Why do I need Fidelity/Crime Insurance?

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Why do I need Fidelity/Crime Insurance?

Fraud and embezzlement in the workplace is on the rise, occurring in even the finest work environments.

  • 82% of workplace crime is carried out by employees
  • 1 in 4 employees has either committed or witnessed workplace fraud and abuse
  • 1 in 4 employees committing fraud against their employer has been with the company for more than 10 years
  • Only 1 in 3 of those who have witnessed a workplace crime bother to report it

These crimes can go on for years and when discovered the impact can be huge. Smaller companies are especially vulnerable to Fidelity crimes because the trust factor is increased due to the closeness of the employees.

Most business insurance policies either exclude or provide only nominal amounts of coverage for loss of money and securities as well as employee dishonesty exposures.

Employee dishonesty causes as much as 20% of the nation’s business failures.

White collar crime can have serious financial consequences, even threatening a private company’s survival. Bernard Fleischer & Sons, Inc. offers a solution to handling crime losses such as dishonesty, forgery, robbery, safe burglary, computer fraud and other criminal acts committed by employees, leased employees, volunteers or someone required to be bonded under ERISA, through a Crime Insurance Policy. For more information about Fidelity/Crime Bonds call 1.800.921.1008 or visit our website to get a free no obligation Fidelity/Crime Insurance quote.

Overview of crime coverages

 

Today’s business environment is constantly evolving, and executive liability and crime exposures are rapidly changing
right along with it. Making sure your client’s insurance coverage is keeping pace is now even easier with the new
enhancements:
Multitude of coverages to suit every need
Below are some of the highlights of coverages
Loss from forgery or alteration of covered

instruments (including business credit card
instruments)
• Loss of money, securities and other property
on your premises or banking premises
• Loss of money, securities and other property
while in transit
• Loss from acceptance of unpaid money orders
and counterfeit money (including coins and
travelers checks)
• Loss from computer crime (including computer

Fidelity
Includes coverage for employee theft, ERISA fidelity and
employee theft of client property for direct loss of, or
direct loss from damage to money, securities and other
property.
Claim example:
An employee leveraged her role as
executive director to procure payment to fraudulent
vendors and to procure gift cards and other goods for
personal benefit.
Forgery or Alteration
Includes coverage for loss sustained through forgery or
alteration of outgoing negotiable instruments made or
drawn by you, or drawn on your account(s), or made or
drawn by one acting as your agent.
Claim example:
A signature of another person was
fraudulently signed on a check and cashed at the
insured’s bank . An affidavit
of forgery was executed claiming that the person’s
signature that appears on the check was not placed on
the check by that person.
On Premises
Includes coverage for direct loss from damage, money or
securities located inside the premises directly caused by
theft, robbery or safe burglary.
Claim example:
Rent checks from eight different
residents were stolen from inside the insured’s
premises. Loss was discovered after notices were sent
out to residents advising that payments were overdue
and one of the residents advised that his check had
already been cashed.
In Transit
Includes coverage for direct loss of money or securities
directly caused by theft, disappearance, damage or
destruction while in transit outside the insured’s
premises and in the care and custody of a messenger or
armored vehicle company.
Claim example:
A company lost money was stolen from its messenger’s
truck while in transit.
Money Orders and Counterfeit Money
Includes coverage for direct loss caused by the insured’s
good faith acceptance of worthless money orders or
counterfeit money.
Claim example:
A company received a counterfeit
cashier’s check for payment of delivered equipment.

Crime Insurance what is it?

Crime Insurance
For Private and Non-Profit Organizations

 

Crime insurance AKA Fidelity addresses the most common fidelity threats, including losses due to employee dishonesty, credit card forgery, computer fraud and theft and disappearance and destruction of property.  With crime protection from Bernard Fleischer & Sons, Inc, you can obtain a wide range of coverages to help protect your business against financial loss due to certain crimes.

You know and trust the people who work for you, but
that trust may be misplaced. After all, one third of all
employees admit to stealing from their employers. And
we’re not talking about the pens and paper: The median
loss from employee fraud is $175,000.*
Maintenance of strong, enforceable internal controls
should be a priority for any entity. Yet even the best
internal controls, no matter how well conceived,
frequently fall short of stopping a trusted employee
from engaging in fraudulent activity. In fact, the
median time length of occupational fraud schemes is
18 months, and the number one way that an employer
discovers a crime is by accident.*
Fidelity and Crime Coverage provides an important
backstop against the actions of a thieving employee. With
this coverage, your company’s assets are protected at
the time of a crime’s discovery, regardless of whether it
occurred prior to or during the policy period.
Why you need protection
Employee dishonesty is costly and pervasive.A high
percentage of business revenue was lost as a result
of occupational fraud and abuse. And, when it comes to
occupational fraud and abuse, your business’ size doesn’t
matter — no business is safe.
Claim scenarios
Stolen inventory –additional inventory of
products for alleged seasonal sales pushes. In reality, a
portion of that inventory was sold “out the back door”
unbeknownst to corporate headquarters.
Embezzlement
An employee altered company deposit slips after
the owner of the company had approved them. The
employee would prepare two deposit slips: one
depositing funds into the company’s account, the other
depositing funds into the employee’s bank account.
Payroll fraud
A payroll employee had access to payroll checks and
vacation checks. Over an eight-year period, the clerk
issued duplicate checks on all legitimate employee
vacation pay.
False payment
In less than a year, a sales supervisor located outside
of the United States When customers legitimately purchased
and received goods, the employee stole their payments
for his own use. The employee attempted to cover up
the loss by substituting fraudulent checks drawn upon
other third party entities.
Billing scheme
Four employees colluded to defraud their employer
through a phony billing scheme. The employees, including
a supervisor, established fictitious vendors and submitted
bills for work performed by other, genuine vendors.
Innovative risk management services

 

To learn more about our fidelity and crime coverage,
talk with us 212 566-1881