In uncertain economic times, businesses must be increasingly on the lookout for dishonest schemes to steal from employers. In this installment of “Tales from the Scales,” we look at one scrapyard’s unfortunate encounter with embezzlement and how they dealt with it. Learning about the experience of other scrap dealers can help others avoid a similar situation.
Scrapyard Embezzlement Schemes
The scrapyard in this story hired a trader to increase new accounts. For readers unfamiliar with scrapyard operations, a trader is an employee who buys scrap from vendor accounts which they develop. This trader was responsible for reaching out to prospective accounts, visiting these sites, establishing and maintaining the relationships and setting up pricing.
The trader in our story successfully documented a number of lucrative new accounts. He created the corresponding purchase tickets for these accounts. He completed these purchase tickets with his own information about the material received and what it weighed. These purchase tickets made their way to the accounting department which would then settle them with payment, mailing checks to the post office boxes he had indicated as the mailing addresses.
Then one day, the trader did not report to work. In fact, he disappeared.
Immediate attempts by the scrapyard to locate him were not successful. Hence, they began efforts to follow up with his account contacts. As other scrapyard employees attempted to reach out to these accounts, efforts to locate physical addresses were proving futile. If you are guessing that this trader completely falsified all of his information and had checks sent to himself at different post office boxes, then you are correct! This “trader” set up a number of fictional accounts, wrote up tickets for fake deliveries of nonexistent material and had the money sent to himself. In the end, this thief had stolen hundreds of thousands of dollars from the scrapyard! He was one of the many different kinds of scrapyard thieves—including those engaging in internal theft, scrap metal theft and robbery.
The scrapyard in our story immediately instituted a series of checks and balances in their internal procedures to make sure this type of embezzlement could never happen again. The owners required traders setting up new accounts to fill out “new account forms” that included physical addresses. Someone else from the company had to validate and confirm the address and possibly even pay that establishment a visit. Traders were no longer allowed to fill out their own tickets, they were only allowed to review the completed ticket prior to settlement.
ScrapWare Can Help
ScrapWare Corporation of Rockville, MD, which provides software to the scrap recycling industry, has seen a multitude of scenarios resulting in theft from scrap metal recyclers. Both internal and external theft are a problem for their clients who are dealing with commodity metals and cash. During times of economic uncertainty, as we are experiencing now with the COVID-19 pandemic, all employers need to be ever more vigilant about protecting themselves from all forms of theft.
ScrapWare includes functions to deter both internal and external theft and help scrap metal recyclers comply with anti-theft laws. Manhole covers, copper wiring, and even air conditioning units are stolen and sold to unsuspecting scrap dealers. Recyclers need to protect themselves from ending up with stolen materials.
Here’s how ScrapWare can help increase scrapyard security by helping to tighten up internal controls:
- Drivers’ license scanners associate a license with a purchase ticket, along with signature and thumbprint scanners.
- A network digital camera interface, linked with a scale interface, takes pictures and permanently associates the photos with a purchase ticket. This documentation can generate anti-theft reports used to help law enforcement combat metal theft.
- To tackle internal theft and robbery, ScrapWare supports on site Automatic Teller Machines
(ATMs) and cash dispensers so employees do not have to handle cash.
ScrapWare allows scrapyard owners to have complete control over retail and commercial purchasing processes, allowing them to standardize, streamline and safeguard all purchases and settlements. Installment of some of these features can be an integral part of a scrapyard’s security solutions.
If you are concerned about the theft issues facing the scrap metal recycling industry–embezzlement, scrap metal thieves, the inadvertent purchase of stolen goods, or anti-theft compliance–especially during these times, consider ScrapWare to provide assistance to protect your scrapyard from theft. During industry slowdowns, it is important to save money, but it is equally important to protect the money and assets you have from internal and external scrapyard theft.
About ScrapWare Corporation: Since 1989, Rockville, Maryland-based ScrapWare Corporation has been the software of choice for the recycling industry. Its ease of installation and simplicity saves users time and money, while helping them achieve compliance and maintain accurate business insights. With state-of-the-art functionality that‘s tailored to each organization’s unique requirements, ScrapWare is an advanced dynamic software solution that alleviates the most pressing recycling industry worries. For more information, please call (301) 517-8500 or visit https://www.scrapware.com/.