The enemy within: Department of Revenue fraud case illustrates the threat of inside jobs.

• Author: Dubay, Keith
• Position: Influence and statistics of frauds

Michelle Cawthra's tearful, red-eyed gaze and curled-up lip peers out at you from the newspaper photo of her early May court hearing, but when she was allegedly stealing an estimated $10 million from the taxpayers of Colorado, she probably didn't look as pitiful.

Thieves who commit inside jobs at government agencies and businesses are impervious to the potential embarrassment and the profound sense of violation they have caused to their employers and fellow workers.

Cawthra was a manager in the Colorado Department of Revenue's tax division who was accused of using her management authority to siphon millions in phony tax refunds to her boyfriend, Hysear Randell.

The case is just another of a betrayed trust. Because of the size of the theft and the fact that the money was stolen from a public agency, it is being prosecuted publicly. Seldom, however, is that the case in the shadowy world of embezzlement of private businesses.

The latest statistics available, from 2005, show 479 embezzlement cases were reported by Colorado prosecutors to the Colorado Bureau of Investigation. Like embezzlement itself, little is known about any trends because information is limited. The CBI just started breaking out white-collar crime in its reports, and the information it collects from judicial districts is dodgy because the information is voluntarily and irregularly reported, a spokesman said.

Embezzlement and its white-collar cousins are part of a growth industry. The American Bankers Association said that check fraud alone is growing at 25 percent a year (see Cobizmag.com, "Stop the crime that keeps on stealing," by Frank Abagnale). There's also increased attack on businesses from the outside, mainly through stolen identity and check fraud.

"We're seeing an increasing number of cases of fraud against businesses by outsiders," said Mason Finks, director of fraud prevention for the 18th Judicial District, which includes Arapahoe, Douglas, Elbert and Lincoln counties. "Stealing IDs of a business is a growing crime. It can be much more lucrative than going after an individual."

But most of the big thefts are from insiders. A recent study by the Association of Certified Fraud Examiners showed that U.S. organizations lose an estimated 5 percent of annual revenues to occupational fraud, representing losses to businesses of about $638 billion. "Occupational fraud" is a nice way of saying inside job, meaning that an employee was involved.

The study, which polled 1,134...