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Stamps.com Has Nothing on This Guy!

One postal worker's massive theft of postage stamps highlights just how big a problem internal theft is for all organizations.

The "Five Finger Discount" - A Great American Tradition... and a Massive Headache for Employers!

Shoplifting is often referred to euphemistically as "the five finger discount."  According to the Urban Dictionary, the term represents "stealing" from a company. More specifically, the noun means: 

"To steal something, usually a small item that can be easily hidden." 
               -- Urban Dictionary Definition of the "Five Finger Discount"

Unfortunately, the term is often used by people as the answers to what can be troubling questions, such as:

Question: How much was that? 

Answer: I got it for a five finger discount.

Question: How did you afford those new clothes? 

Answer: I used my five finger discount.

Question: What are you eating?

Answer: Whenever I walk past the candy rack, I give myself a five-finger discount.

Question: "Hey, where did you get that candy?" Answer: "Off the shelf, of course!"

Stealing Candy from a Store - Like Stealing Candy from a Baby!

However, the "shrink"—the official term commonly used to refer to both shoplifting and internal theft in retail—is no laughing matter for companies! According to the National Retail Security Survey, conducted by the National Retail Federation, shrink costs American companies almost $50 billion dollars annually! 

Results of the National Retail Security Survey from the National Retail Federation

And academic and industry-based research on the subject consistently shows that the biggest share of that huge number can always be attributed to employee theft——not customers stealing merchandise! There's much more loss occurring from what workers take out the back door than what shoppers hide in their pockets, coats, sweats, and bags. 

The problem is not just isolated to the retail industry, of course. All organizations—both in the private and the public sectors—suffer to one degree or another from the problem of "sticky employee fingers." In fact, when you take all factors into account—including not just outright stealing from retail inventories, but the proverbial pilfering of office supplies (especially at back to school time, of course!) and the theft of time while at work (maybe checking your social media or "cruising the Amazon" shopping!), a truly astonishing 95 percent of us actually steal from our employers! Soooooo... as the Big guy said, this is a case where truly:

“He that is without sin among you, let him first cast a stone..."
                                                                              -- Jesus Christ, John 8:7

The Five Finger Discount in Action in the Store...

Studies show that employees steal far more than actual shoplifters! 

Statistics such as these show just how prevalent the problem of employee theft is! This makes the issue of internal stealing—of everything—a massive headache for all employers—and an issue that is of concern to management—at all levels—in organizations large and small, including yes, the government.

The Five Finger Discount in Action Behind the Scenes

Hey! Where did you get that new laptop?

The internal fiver finger discount in action has become nothing less than a great American tradition—and a source of entertainment! In fact, employee theft has been a recurring, popular theme in movies and TV as a way to "get back" at your employer. Indeed, research consistently shows that a perceived inequity—i.e. not being fairly compensated for one's work and/or not being paid fairly in comparison to one's peers or managers—is the leading motivation for employees to feel that it is "Ok" to steal from their company and "The Man." 

Perhaps the all-time best take on this theme was when Johnny Cash immortalized the aggrieved auto assembly line worker for GM who made his own Cadillac after taking—as with the title of his 1976 hit country song—"One Piece At A Time."

Johnny Cash sings the classic "One Piece At A Time."

And while we may laugh at this quite clever song, employee theft is really no laughing matter at all—judging by the size and scope of all the theft that goes on inside our organizations today. As a takeaway, just consider this mind-boggling statical summary, put together by the leading loss consulting firm of Hayes International, on just how big the internal stealing issue is today! Their graphical presentation on the issue shows that employee theft is a problem that involves not just low-level employees, but those who are well-educated, are well-compensated, and are quite often within the managerial ranks. 

Employee Theft Statistics from Hayes International

Source: UCreative

And so a story out of the New Orleans area shows just how easy it is for even managers to succumb to the temptation to employ the five finger discount! This is especially true when it comes to small, easy-to-hide items that can be readily taken in small quantities—and when this occurs over a period of time and the theft is constant, big, big losses can be brought about by just a single employee!  

Going Postal... with a Rogue Manager

The postage stamp is often used as a proxy for size. How many times have you yourself used or heard the expression "the size of a postal stamp" as a way to describe just how small an item might be? 

And so should it come as no surprise that now, a manager with the U.S. Postal Service (USPS) in the suburb of Kenner, Louisiana has been arrested for stealing and selling not just a few stamps, but well-over half a million dollars worth of stamp inventory from the location he was responsible for managing! In fact, this case is reported to be one of the largest cases of employee theft ever discovered in the entire history of the Post Office—which, of course, only dates back to Benjamin Franklin!

The facts of this case, as reported both nationally in Postal News (See: Postal News) and locally on NOLA.com (See: NOLA), are both amazing—and amazingly sad. 

2018 U.S. Flag Postage Stamp

2018 U.S. Flag Postage Stamp

Ryan S. Cortez of Des Allemands is a 46-year-old manager at the North Kenner Post Office in Kenner, Louisiana. According to the criminal complaint field by the government in his case, Cortez's activities on eBay  were deemed suspicious by the site though its internal controls. This was because Cortez was selling "significant quantities" of postage stamps through his eBay account. This led eBay and PayPal (the recipient of the funds) to notify U.S. Postal Inspectors about Cortez's unusual activities. A subsequent investigation by the postal service's Office of Inspector General (OIG) revealed the following confluence of facts, making things look awfully bad for Mr. Cortez: 

  • As manager of the Kenner North Post Office, Cortez increased his location’s reserve stamp stock from approximately $70,000 to more than $600,000. This was done purposely, in order for him to have stock available to access. To try and avoid detection, Cortez used another supervisor's login and password to place orders through the postal service's computer system. Additionally, he intentionally trafficked in special issue stamps, such as the Post Office's Christmas stamps, which were seasonal and thus not included in the count for his unit's reserve stamp stock.
  • eBay data showed that Cortez had stole over approximately $630,000 in U.S. stamps and sold them at discounted prices on the site, primarily to two buyers, over a period of approximately two years. Due to his suspicious activity, PayPal suspended Cortez's account in May 2018.
  • During the months of July and August 2018, Cortez continued selling the discounted Forever Stamps to the same two principal buyers, just altering how he received the proceeds from the online sales. During these months, he deposited a number of large checks to his personal bank account at Regions Bank. The memo (subject) lines of most of the checks indicated that the funds being deposited were for stamps bought from Cortez, including ones that specifically read "Invoice... Forever Stamps"  or "Inventory."  Bank records showed that in just a single month this past Summer, Cortez deposited over $58,000 from such checks. 
  • Mr. Cortez spent a great deal of time—and money—at the Harrah's Casino just outside the French Quarter in New Orleans—far more than he could have ever legitimately afforded on his annual salary of just over 70 thousand dollars from the USPS! He consistently went to Harrah's on the day after he made the illicit bank deposits, conducting large cash transactions allegedly in an attempt to launder the funds. Cortez also made large ATM withdrawals at Harrah's—and other casinos—in the New Orleans area. All of this was done by Mr. Cortez to support what was a very bad gambling problem on his part, and he proved to be a very bad gambler as well. All told, according to casino records uncovered by the OIG for the Post Office, Cortez lost well in excess of $650,000 since 2011 and over $220,000 in 2017 alone—just at Harrah's! 
  • Finally, the federal indictment showed that Mr. Cortez did not simply steal from the Postal Service to support his gambling addiction. In fact, he was also charged with—and admitted to—embezzling thousands of dollars from his church (Des Allemands Mennonite Church), where he served_unfortunately for the parishioners—as the body's treasurer. 

Analysis

The 2018 USPS Stamp Collection: Likely, a Lot of These in Cortez's Garage at Some Point...

So, what lessons can—and should—we take away from this postal manager stealing and then reselling over 1.2 million postage stamps? Well, the first thing to note is that this is a classic case of employee theft. Remember the stats presented earlier in the infographic from Hayes International? Cortez almost perfectly fits the profile of the high-earning, more educated—and male—manager who commits internal theft. Further, Mr. Cortez had the classic "means, motive, and opportunity" to conduct the criminal activity. In his administrative position, he simply manipulated the stamp stock for his location to meet his growing need for cash—increasing the supply of these very small, valuable items that could be easily hidden and removed from the Post Office there in Kenner. And remember, all of this took place over a long span of time—at least two or more years—and it continued despite all of the rigid bureaucratic controls, policies, and procedures that come with working in a government office. All of this transpired not just in any federal agency, but one that has a plethora of security measures—and cameras—in place! This is because the Postal Service handles not just reams and reams of junk mail, but highly valuable packages that have to be securely handled. Sadly too, the U.S. Post Office's history is one where workplace violence has occurred all too often. Remember, the expression "going postal" originated from a series of workplace shootings carried out by postal workers!

And so for all the focus, time, and yes, money organizations spend on preventing employee theft and the efforts undertaken to detect it when events happen, this case is a reminder that there is a "delicate dance" between vigilant and being just plain paranoid. With the alarming statistics cited earlier on just how prevalent the "internal five finger discount" is in companies today, it is no wonder that we work in an age where employers routinely impose ever-tightening controls on their employees. From the clear purses and bags that have become standard for retail employees to inventory control measures to monitoring computer actions, these are indeed signs of a reality that too many of us do indeed routinely steal—in some way—from our employers. 

Maybe it's just pens and Post-It Notes. Maybe it is just time. It might indeed be a big-ticket item. Or maybe it's small things—like a postage stamp—that can add up to a whole lot of money over time if the theft continues unabated. Harkening back to the research covered earlier in the article, the losses from the average "five finger discount" case of internal theft dwarfs that of the average dollar loss from shoplifting cases carried out by customers or other outside actors.

There are thus hard and fast reasons for all organizations to have proper and prudent controls in place to prevent internal theft. The risks posed by not having sufficient security and control processes, procedures, and technology in place are just too great today. However, at the same time, you just want to make certain that these controls do not stifle employees from getting actual work done and that they don't serve to truly demotivate your workers. Just as importantly, however, the focus of any organization's efforts in regards to preventing internal losses should not be just on the front-line, lower-level—and lower paid—employees, but on managers as well. Failing to have proper purchasing and inventory safeguards in place - such as what happened in the Cortez case where he could manipulate and access the stamp inventory without oversight—can indeed amount to quite substantial losses! 

Finally, there is, of course, a very serious, sad aspect to this story. It is one that is a reality of life in America in 2018, and a reality that employers must be cognizant of today. This is the very real issue of gambling addiction—and how it contributes to employee theft. And with the proliferation of gambling options available in almost every state and every corner within each state—along with the recent Supreme Court action legalizing sports gambling—the nexus between problem gambling and problem employees is likely to accelerate in the coming years. This is not an anti-gambling screed. Rather, it is an area that will be ripe for not just research to monitor the situation, but how employers should respond to the spread of legalized gambling and its impact on employee behavior.

Certainly, Mr. Cortez's problem gambling was a motivator - perhaps the motivator—for his nefarious actions. His rate of losses at the casino accelerated in the last year—and so too did his level of thievery at the Post Office. We may not look upon gambling addiction with the same seriousness as we do say more "acute" addictions, such as the current focus on the Opiate Crisis, but cumulatively, the results can be costly—and even deadly serious.

The addiction motive is certainly not the only money pressure that could cause employees to "go rogue" and steal, embezzle, and pocket sizable products, supplies and money from their employers that can add up to quite sizable sums. Indeed, money pressures - whether they be from accumulating bills, debt, alimony, child support, rising tuitions, family pressures, health concerns, etc.—really any causal factor—can motivate individuals to turn to criminal activity on the job as a solution to their personal problems. Other addictions—drugs, porn, sex, adrenaline, etc.—could do so as well. 

And so the reality is that we will continue to see–and need—more oversight of work and workers in order to prevent—and if not to prevent, then to detect—instances of employee theft. This will be true particularly in regards to not just small things like inventorying the office supply closet or monitoring the employee break room—but areas where workers—particularly managers—can do real, high dollar damage. This one suburban Louisiana postal manager's case demonstrates that most certainly, small things can really, really add-up to big problems over time! As such, Mr. Cortez's story stands both as a cautionary case study—and unfortunately, as perhaps a harbinger of things to come if organizations fail to proactively act to prevent personal frailties and failings from crossing over to impact the organization negatively as a whole.  

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