Digging for Dirt on Prospective Employees

5 checks you should perform on every shortlisted candidate

Posted by Joe Gerard in Employment Law, Human Resources on May 23rd, 2011

A thorough background check can go a long way in preventing workplace fraud, by preventing problem employees from entering your organization. But most employers don’t do the necessary digging to uncover the dirt that lies below a potential candidate’s squeaky-clean references.

Only one in every nine fraud cases ends in a criminal charge with media attention, says Stephen Pedneault, fraud expert, author and founder of Forensic Accounting Services, LLC. This means that eight out of every nine cases are quietly resolved, with little chance of an arrest, restitution or any sort of record.

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“For those eight out of nine that got no press, you can do a search on their name and that’s not going to reveal anything. You can do a criminal check and that’s not going to find anything,” says Pedneault. “They’re probably not going to give you valid information to track down their history,” he adds, “but they will get rehired again. The recidivism rate for this stuff is close to 100 per cent. And they’re banking on nobody checking the information.”

Pedneault stresses the importance of being vigilant when doing background checks. He recommends a credit report and getting three good references along with the context of each reference. But that’s only the beginning.

“Do you independently corroborate those references? Do you independently corroborate past employment? Do you independently corroborate the education that they say they have?” he asks. “Or do you just go through the process?”

Pedneault recommends five thorough checks that should be done on each of your final shortlisted candidates. They are: past employment, references, education, criminal and credit checks. “Two-thirds of every resume or application has a falsehood on it. Find it.”

Bad Credit’s Not Always a Deal-Breaker

Pedneault suggests making the credit check part of the application process, informing potential candidates that a credit check is part of the process and requesting their permission on the application form. He warns against dismissing a candidate for credit problems immediately, however, especially given the recent financial crisis in which even responsible people may have had credit problems. “Just because someone has filed for bankruptcy doesn’t mean they won’t be a great employee,” he says, adding that it’s best to find out and then give the candidate a chance to explain the circumstances.

Go Beyond the Obvious

To check education, past employers and references, Pedneault recommends that you look up the information independently, rather than just calling the telephone numbers the candidate has provided. Get the context of the references and look them up to find the publicly available number to call them. Look up the address in Google Maps Street View to see what’s actually there.

He cites examples of companies and schools listed that don’t exist and telephone numbers given as work references that lead to family members or friends posing as previous employers.

“We had a controller who had a 4.0 MBA. When we tried to track down the school, we found that it’s an 800 number and for $200 you can go to a website and design your own diploma. For an extra $25 you can design your own transcript,” he recalls, adding that the controller had been working for the new company for eight months before the checks were carried out. During the same check, the controller’s previous employer revealed that he was pending sentencing for fraud.

Take References by Surprise

Pedneault also suggests asking references questions that they wouldn’t expect, but should be able to answer. For example, if a candidate lists his neighbour as a personal reference, ask the style and colour of his house, whether he has a garage, and whether he parks in the garage or in the driveway.

For employment references, people are expecting to be asked if someone is a good employee, their strengths and weaknesses. Pedneault suggests asking how the person dresses, what colours he or she likes to wear to work. “You’re looking for those long pauses when they don’t know what to say. Then you know it’s not a valid reference. That’s what’s going to trip up these people when they try to get rehired.”

Digging below the surface takes time and effort, but it can sometimes uncover dirty secrets that you don’t want in your organization. It’s worth the effort to save you and your company from financial and reputational damage.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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