Multi-year Embezzlement Scheme At Macy's Discovered

January 7, 2025

Macy's was forced to delay the release of its quarterly financials when it discovered a $154 million loss due to embezzlement.

A single employee set up a scheme around "small package delivery" that involved stealing $154M from Macy's. The theft is reported to have occurred over a period of three years. The employee has been identified and is no longer employed. Macy's must now amend and correct its financial reporting.

Macy's said it had found the accounting error while preparing its results for the quarter, which ended November 2. An investigation has not identified involvement by any other employee.

In the same period of the accounting issue in which the employee stole up to $154 million, the retailer said it had incurred about $4.36 billion of delivery expenses. Macy declined to comment further. "Massive embezzlement delays Macy's earnings" www.boingboing.net (Nov. 25, 2024).

Commentary

According to the National Retail Federation (NRF), a survey of 55 retailers showed that the average employer apprehended 361.6 dishonest employees in 2021 – about one every day. The retail thefts "led to an average of 527.3 terminations, 83 prosecutions, and 150.2 civil demands per retailer." https://explodingtopics.com/blog/employee-theft-stats
 

One source states "businesses annually lose $50 billion due to employee theft. This is an increase of about eight percent from last year. https://metrobi.com/blog/employee-theft-statistics-for-2025/

The losses in the Macy's case are staggering, especially because the crime was undiscovered for a long time and involved just one employee.

What are the best practices for discovering employee embezzlement or fraud early?
 

  • Closely monitor expenses and promptly review employee expense reports
  • Closely monitor gift cards/certificates or other cash equivalents
  • Closely monitor cash drawer and petty cash balances
  • Keep records of how much money is held in cash drawers and petty cash. Ensure that the correct total is accounted for each time the drawer is used or petty cash is accessed
  • Keep records of petty cash withdrawals, including, amounts withdrawn, by whom, for what purpose, and on what date the money was used
  • Closely monitor the use of organization credit cards
  • Keep credit card statements for review after they are initially reconciled in order to detect fraud if embezzlement is later discovered
  • Closely monitor all attempts to open accounts in the organization's name
  • Use video recording software to monitor cash registers, petty cash drawers, places where checks are kept, or any area in which inventory, assets, or funds are held
  • Routinely view video recordings to quickly detect any wrongdoing
  • Conduct unannounced audits of the organization's finances, accounts, credit card statements, inventory, and any other aspect of the organization's finances
  • Make certain all employees with access to any aspect of the organization's finances take the provided annual leave and have other employees outside their influence perform their job functions during the leave period
  • Routinely monitor payroll to detect abnormal amounts of overtime, unauthorized overtime, fictitious employees, improper vacation or bonus payments, or any other payroll fraud
  • Conduct periodic "eyes on" audit of employees who are currently working in order to detect those who are working and/or are collecting wages, but are not present
  • Use up-to-date accounting software that requires a unique user ID and password for access
  • Limit access to accounting software to those who must access such software to perform their job functions effectively
  • Always perform due diligence before working with vendors
  • Closely monitor invoices to detect alterations, inflated costs, charges for goods or services not rendered, or other invoice fraud
  • Watch for employees exhibiting signs of embezzlement or fraudulent behavior
  • Ensure different employees are involved in different aspects of managing organization finances
  • Provide a means for employees, customers, and other workplace participants to report suspicions of wrongdoing - including employee embezzlement and/or theft - easily, safely, and without retaliation
  • Consider a third-party mechanism for employees and other workplace participants to use to anonymously report suspicions of wrongdoing
  • If embezzlement or fraud is detected or reasonably suspected, consult legal counsel immediately
  • If an investigation is warranted, use a person trained in investigating employee crime, theft, or embezzlement and/or a person experienced in forensic accounting
  • If embezzlement or fraud is detected or reasonably suspected, consult legal counsel immediately
  • Do not terminate a person or make accusations of embezzlement, fraud, or other fidelity crimes without seeking information from law enforcement and advice from an attorney
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