The legal steps to take after discovering employee embezzlement can shape your ability to recover losses and prevent future incidents. Fast action helps preserve evidence, protect company funds, and stop further theft. Business owners shouldn’t wait or try to handle it quietly. A well-planned legal approach can mean the difference between full recovery and long-term damage.
If you suspect theft from within your company, contact an employment dispute lawyer near you for a free initial phone consultation. They can act quickly and protect your legal and financial interests.
What Should You Do Immediately After Discovering Embezzlement?
Start by locking down your records. Preserve digital and paper documents like bank statements, payroll records, emails, and transaction logs. Back up computer files and restrict access to sensitive systems.
Don’t confront the suspected employee right away. You risk tipping them off, which could lead to destroyed evidence or further damage. Quietly put financial controls in place to stop more money from disappearing. For example, suspend access to accounts and change internal passwords.
Conduct an Internal Investigation
Look closely at your financial statements. Track down inconsistencies and look for missing or altered entries. Follow audit trails to identify where the money went and who had access.
Interview employees who may have information. Keep records of all interviews, notes, and findings. Stay professional and stick to facts. Avoid rumors or guesses. The more detailed your internal report, the stronger your legal case becomes later.
Report to Law Enforcement
Once you’ve gathered enough proof, file a police report. Bring copies of financial records, a timeline of events, and any witness accounts.
Cooperate fully with investigators. Be ready to answer questions and provide supporting documents. Criminal charges can support your civil case and increase the odds of recovering losses.
Keep in mind that criminal prosecution focuses on punishment, while civil actions focus on financial recovery. Both paths can move forward at the same time.
Legal Remedies Available to Employers
Civil Litigation Options
You can sue the employee for breach of fiduciary duty. This means they violated the trust you placed in them by stealing or lying. You may also have grounds for claims like conversion (wrongful possession of funds) and restitution.
Through civil court, you can seek financial damages and the return of stolen assets. This process also allows you to freeze assets or accounts while the case is pending.
Criminal Prosecution Support
Your company may play an active role in the criminal case. Provide prosecutors with documentation and help prepare victim impact statements that describe the harm to your business.
If the court convicts the employee, they may order restitution. That means the offender has to repay what they stole, either in full or through a payment plan.
How Can Employment Law Attorneys Help with Embezzlement Cases?
An attorney can help you evaluate the facts and decide the best course of action. They’ll look at the strength of your evidence, explain your legal options, and estimate potential financial recovery.
You’ll also want help preparing a clear plan that doesn’t disrupt operations or risk further losses.
Evidence Preservation and Discovery
Your lawyer can guide you through preserving evidence in a way that holds up in court. That includes creating a chain of custody for documents and safely storing digital records.
In some cases, they may issue subpoenas to third parties like banks, vendors, or tech companies. Digital forensics and financial analysts may also uncover hidden patterns or concealed assets.
Litigation Management
If you sue, your attorney handles the court filings, deadlines, and legal arguments. They can also help you settle with the former employee if that leads to faster or higher recovery. They’ll coordinate with law enforcement if both civil and criminal cases happen at the same time.
Preventing Future Embezzlement in Your Workplace
Prevention starts with tighter controls. Limit access to company funds. Use approval systems for large purchases. Make sure no single person can control an entire transaction. Run background checks before hiring, especially for financial roles. Schedule regular audits and rotate job duties so no one has unchecked authority.
Employment Agreements and Protections
Use strong contracts. Include fiduciary duty clauses that clearly define expected conduct. Add confidentiality and non-disclosure terms to protect sensitive data. Look into bonding and insurance options that provide protection against fraud and theft. These policies can help recover losses if someone breaks your trust.
What Are the Challenges in Embezzlement Recovery?
Sometimes, stolen money disappears fast. The employee may transfer funds to different accounts or spend the money on assets in someone else’s name.
You may need help from forensic accountants or legal tools like restraining orders to freeze bank accounts. If funds are gone, you may still be able to recover assets like cars, jewelry, or property purchased with the stolen money.
How Our Employment Law Attorneys Can Help
Comprehensive Legal Support
The Texas employment law attorneys at Weisblatt Law Firm provide hands-on help when you discover internal theft.
Our team responds immediately to secure your position. We work with forensic experts and investigators to build a solid case. Whether you want to sue or press charges, we help you manage each step.
Maximizing Recovery Potential
We use aggressive recovery strategies, including tracing assets, filing insurance claims, and negotiating settlements. Our goal is to help you get back what you lost and prevent future incidents.
Frequently Asked Questions
Can I recover attorney fees in an embezzlement case?
Sometimes. Courts may order the guilty party to cover legal costs if you win your case. Talk to your attorney about this possibility.
What if the employee has already spent all the stolen money?
You may still have options. You can pursue any assets they purchased with the funds or seek repayment through court orders.
Should I terminate the employee before or after filing charges?
Consult with a lawyer first. Firing the employee too early may interfere with the investigation. But waiting too long could put your company at risk.
How much does it cost to pursue an embezzlement case?
Costs vary based on the complexity of the case, the amount stolen, and the legal steps involved. Many firms offer an initial consultation at no cost so you can explore your options.
Let Our Houston Employment Lawyers Help
The longer you wait, the harder it becomes to recover stolen funds and protect your company. Act quickly to preserve your records and enforce your rights.
The Weisblatt Law Firm offers a free initial phone consultation for business owners who suspect embezzlement. Our Houston team can guide you through the next legal steps and help you get back on track. Call us today at (713) 666-1981 for employee embezzlement legal help from an internal fraud attorney Houston business owners trust.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
