In the language of retail, it’s called shrinkage—the percentage of loss experienced by a business due to theft. Co-ops and condos may not use the same term for it, and they don't have displays of handbags or jewelry to safeguard, but they are not immune to the problem. Equipment, supplies, and other assets all cost buildings and their residents money—and the stalled economy has made certain types of thievery more attractive to the unscrupulous (and the desperate).
“Currently we are seeing quite a bit of copper—such as piping and decorative ornaments—being stolen from buildings,” says Karyl Dicker Foray, CIRMS, CRIS, an insurance broker and risk management consultant for Rosenthal Brothers, Inc. based in Deerfield.
Copper-snatching may be a relatively new development, but Craig Greene, CPA/CFF with McGovern & Greene, LLP, a forensic accounting firm in Chicago, explains that more traditional forms of theft have never gone out of style. “My experience includes an on-site management agent establishing a fictitious vendor—a repair and maintenance company—and directing payments to it,” he says. “He then created fictitious invoices that he approved and had the accounting department deliver the checks to him, which he then kept.”
Another issue involved the chief financial officer of a management company who conspired with a painting contractor to embezzle from a number of properties. “The painting contractor issued fictitious invoices that were paid to the contractor by the CFO, who in turn split the profits of the payments with the painter,” says Greene.
The scenarios don’t stop there. Greene recalls both on-site property managers and board members skimming revenues. “I have had several cases where people pocketed cash revenues such as clubhouse rental fees, deposits for automatic gate openers and vending machine collections.”