PARTICIPATORY ACCUSATION

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1 PARTICIPATORY ACCUSATION A. Introduction B. Ask Subject to Describe in Detail How He/She Handles Transactions, i.e., Check, Cash, Credit Card, or Other Incident to Lock in Details OR Slide into Continue with Introductory Statement Participatory 1. Who We Are and What We Do 2. Type of Losses 1. Story Which Allows the Subject to Agree With Point of the Story 2. How Investigations are Conducted 3. How We Investigate 3. Rationalization 4. Rationalization 4. Soft Accusation 5. Soft Accusation 5. Development of the Admission 6. Development of the Admission

2 TRANSCRIPT OF A TAPE Good morning, Doug. I'm Fred Marks from the corporate office. I just wanted to cover a few areas with you regarding the store. What do you think of the training you received here? Do you think the training is good? Not really. The only training I've ever had is when Mr. Thompson, the District Supervisor, brought in a little VCR and played it when the store was slow, but it's better than what I've had before. Do you think you pick things up pretty quick? How do you handle a check sale? A customer comes in to make a purchase. They ask if I'll ring up the sale and sometimes I will ask beforehand if it is cash or a check. If they say it is a check, I will say fine. I will tell them the amount. They would write out the check and give it to me. Then I would say, I need to see your driver's license. Then I write down the driver's license number and the state that it is from. Where do you do that, on the face of the check, back of the check? Oh, it should be on the back of the check. Oh, is there a stamp or something you should use? Do you always do it that way? I mean, do you do the same thing the same way all the time? You're consistent when you do the job and you always do it the same way whenever you take a check? So you always do it that way? (INTERVIEWER MAY ALSO COVER CHARGE SALE OR OTHER TYPES OF TRANSACTIONS)

3 How about like another sale, a cash sale, how do you ring up a cash sale? Customer comes in and they give me the pair of shoes. I then ring in my sales number, then I ring in the number on the ticket, and then the amount. Okay - and then the customer gives you a $20.00 bill and then what do you do? Then I give him change for it. Do you ring that $20.00 bill into the register? No, I ring up the sale. As the amount tendered - $20.00 amount tendered? Oh, yes. And then when you count the money back, do you count it once, double count it, do you count it as it is coming out of the till and then count it again when you're giving it to them or what? Well, if they give me a $20.00 bill, I put the $20.00 bill right on top of the register. And let's say it's a $5.50 item and the register obviously shows that there's $14.50 in change. Then, I'll take out the bills and the 50 cents and then I'll count out their change to them again. Okay, and you always do it that way? I mean you do the same job. You sound like a guy that does the same thing the same way all the time. Okay, let me do this another way. Say you and I own a store, okay, Doug and Fred's Shoe Store. We had this store and we open it up and after a year we really watch the overhead; we watch the rent; we watch how much we're paying for the merchandise; we watched our advertising costs; we watched everything. I mean, you and I really busted our bottoms to really go and do a good job here and make a lot of money. At the end of the year, what happened was instead of making money, we lost money. We take the inventory and all that stuff and it turns out we lost $30, What would you do? Probably have a heart attack, I mean... Try and find it?

4 Yes, I mean I'd... Hire a bookkeeper or something, maybe hire an auditor to try and find it or... Well, I don't know if I'd do that. I'd go back and I'd review my sales, and I'd review the paperwork and a... Are you an accountant? No. Neither am I. If I was a partner in the business, we'd hire auditors. Okay - so say we had the auditors and they came and looked at all the books and all the records. They then said, "You know, there's a couple of things where you're receiving the merchandise here and you're not counting it right. There are some markdowns here and they're not taking care of all of them the proper way. Therefore, there is a little more of this shortage. There are also a couple of other things that I saw that really bothered me. I mean, I'm an independent auditor talking to you and I have to tell you, Doug, that I saw you take a couple of bucks out of the cash register and buy milk on the way home when I rode home with you that day. It's your store and you had a right to, but it sets a bad example for your employees. And Doug, you know, you got these guys that keep coming in and you keep giving them discounts all the time. It's your store, you have a right to do it, but it causes shrink and it sets a bad example for your other employees. Furthermore, I've got to tell you that I think your employees are probably responsible for most of your loss. Then we say, "There's no way." He said, "Yes, I'm pretty sure that it is. I can't prove it, but I think it is." What would you do? Well, if I'm paying the auditor for his advice, obviously I have to change my procedures, so I'm not setting that bad example. Hopefully, I can turn the profit picture around. But he brought up something else. I mean we ask him what to do? You're telling us we got this problem and what we do about it. He says here's what you do, hire some consultants. These consultants come in and they put a video recorder over the front cash register and record everything for three months. They also put a video recorder in the back with time and date generator over the back door. They have a couple of investigators that do surveillance and look at everybody that comes in and what they're bringing when they come in and what they're leaving with when they take it out. They then pull the documentation and go through the detail tape and make sure that everything was rung up and paid for. They gather all of this documentation and after three months, they come to you and give it to you and they say, "Yes, we found that your niece is taking cash and my nephew is taking merchandise". What would you do then?

5 Boy, I don't know. If you could prove it, I would probably have to sit down and talk to him about it. They've got it. They have the documentation. That's the case. You can do anything with the case that you want to do. You can take it to criminal court. You can take it to civil court. You can do anything in the world that you want with this case. The case is cast in concrete. It's not a question of whether they did it or not. You know they did it. You've got the tape. You have the tapes and you watch them take the money, all right? Okay. And not record the sale and put the money in their pocket. You have the detail tape to show that they didn't record the sale. You have the video tape to show the shoes went out and you have the video tape that shows the guy handing the money to the sales person and putting it in his pocket. I mean, it's not whether they did it or not. They did. You have it on tape. You have the detail tape. You have the whole thing. Okay. So that isn't the issue. The issue is what do you do about it? Well, I'd still want to find out why they did it. So you sit down and talk to them? Okay, you talk to the niece and you say, "Niece, I understand that you've been taking some cash out of the cash registers," and she says, "Sure, nothing wrong with that. I saw you do it. You took $2.00 out of the register and bought milk on the way home; and Doug, he's been giving discounts to friends. I didn't think there was anything wrong with it." What would you do? I guess it probably depends on how much she's done or I don't know... I don't know what I would do. Well, at least she was honest, right? I mean, that means something. Sure.

6 I mean, do you suppose that if you and I changed our ways and if we set some black and white examples and we followed those examples ourselves, she might make a good employee in the future? Yes, she could - I would hope so. Well, let's go the other way, we talk to my nephew and say, "Nephew, you've been taking merchandise out the back door" and he says, "No, I haven't. I say, Listen, you know I'm as embarrassed by the situation as you are but you've been taking merchandise out the back door and he says, Screw you. Okay, what would you do with him? I'd probably say Screw you back to him and I'd probably have to get rid of him. I'm the Director of Loss Prevention for the company and my responsibility is protecting the company assets. Now the niece is somebody that wants to work for herself. She's being honest and straightforward and you can deal with her and the nephew you can't. You see what I mean? Which brings us down to the reason that we're here today. We had to conduct an investigation in the store, and I am aware of the fact that you know that you're responsible for some of the inventory shortage here. What I'd like to do is clear up the amount and see whether or not you want to work with me on the thing or not. What are you talking about? What I'm talking about is I'd like to ask you when's the last time that you failed to record a sale and kept the money? I never have. Doug, let me explain the way we do an investigation. What we do is... I'll talk about the last one. It's one that I just finished up yesterday. We had a case where I got a call from the store manager and she says, Listen, I have something that happened. This happened a couple of months ago. She called me up saying this happened and I just can't believe it. I've been working with this assistant manager. We're good friends. We've been working together for a year. The other day, I worked from 8:00 until 5:00 and she worked from 1:00 until closing. That afternoon, we got in some merchandise. There was this pair of sandals, a hot seller on the market. I ordered a case and I only got one pair in each size. I know that because when I got them, I marked them myself. I put them out. I was just fuming that I only got one in each size. I left at 5:00 and then I came back that night because this store was in the mall and there was a theatre in the mall and I went in the store. This gal and I have been trading each other's make-up all along. She's got permission to go into mine and I have permission to go into hers.

7 Anyway, there's this bathroom in the back of the store that we use, and I noticed I didn t have my make-up, so I went into her purse to look at the make-up. The bottom line is there's a brand new pair of these sandals that were still ticketed, that I ticketed, in her purse. The manager says to me, I couldn't believe it. I went up to the registers to look at whether or not they had been rung up. They hadn't been rung up, so I went back into the stock and a pair was missing from the stock and they were a pair that I had just received, so I stayed until we closed that night to see whether or not she took them out or paid for them or anything. She didn't, I could still see them bulging through the purse. What would you do if you were me and you got that call? I'd have to go and investigate it. What would you do? Talk to her. You'd go talk - so you talk to her and you say, Listen, you know, you took that pair of sandals last night that you didn't pay for and she denied it. Then finally you convinced her that you knew and could prove the truth and so she finally said, Okay, I took the pair of sandals. Now you ask, Have you ever done it before? And she said, No. Is she telling the truth? I don't know. You don't know - so you know what we did was put a video camera and recorder in the back stockroom and we saw her take three pairs of pumps, two pairs of sandals, 14 different cans of shoe polish and the last thing that she took was with her boyfriend. She put a case of shoes out in the trash and picked it up later in a '57 Chevy and drove it over to the garage. So when I talked to her, I talked to her about that case of shoes. I didn't even let her know how the thing started, okay. I just talked to her about the last thing and I explained to her about the case of shoes and she said that she didn't. She finally understood that we had it sealed up tight and she said, Yeah, okay, I did it. And I asked her if she'd ever done anything before and she said, No and then you know after a little conversation I convinced her, and she said Okay, this is what I've done. She told me about this, this, this, this and this. Then she told me more than I knew about. I'll tell you that right up front, she told me more than I knew about. She told me about every single thing that I knew about over that three month period of time without me having to coach her. Is she telling me the truth? Yeah. She probably is, right? Right.

8 That's the way we do it here. This isn't something where anybody flies out 2,000 miles to talk to somebody about if one little iffy deal happened. It's not a question of whether or not something is or isn't provable or whether it is or isn't just one time. You and I both know the extent of this and the only question is whether you want to resolve it here or not. I think that you do. You know it's like when I go home and I find cookie crumbs around my son's mouth and I say, Mark, you been in the cookie jar and he says, No, I haven't. I mean, I got a problem there. It's my own son, I can't work with him. I can't believe what he's telling me because I know the truth - I got the proof. With him, it's the cookie crumbs - with this, it's something else. I go home and say, You've been in the cookie jar and he says, Yes, Dad, I'm sorry. I didn't get lunch and I couldn't wait till supper and I was hungry. That's a whole different ball game. I'm able to deal with that one. I really would like to resolve this one with you today. Now, Doug, when was the last time you took money from the store; no matter how recently?

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