Why Business Owners Should NEVER Hire Family Members
Under no circumstances should a business ever hire family members of current employees. I don’t care how good the current employee is or how good the potential employee seems. No “wife of the CFO to help with the books.” No “son of a sales guy to help with office work.” No “brother of our VP to work in sales.”
No matter what position either family member is in, it’s not a good idea to hire more than one because the chance of collusion for the purpose of committing fraud skyrockets. Is there a study that says so? Not that I’ve seen. I’m just basing my statement on my practical experience and the number of cases I’ve seen with family members committing fraud.
Take this Milwaukee area fraud at Parkview Title Service. Mom (Bobbi Moths) hired her daughter (Jamie Wilson). The daughter had serious financial troubles, and I’m sure the business owner had no idea.
The fraud came to light in mid-2006, and the owner of Parkview, Bill Molkenthen filed a civil lawsuit against Moths. The suit was dropped on a technicality, but Molkenthen was free to re-file the suit and was planning on doing so. Until he decided instead to go to the police.
Molkenthen’s wife says that the funds embezzled by Wilson and Moths paid mortgages and many personal expenses. Jamie Wilson committed suicide as it looked like the case was going to be blown wide open.
Molkenthen’s wife initially thought that the theft was only about $11,000, but after Wilson killed herself, she started digging into more records. That’s when they discovered the theft was more like $200,000. The attorney for Moths says that allegations of embezzlement are “totally without merit.”
Oh, and Bobbi Moths now operates Excel Title Services. Buyer beware.
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