Author Topic: Embezzlement in Ukraine  (Read 522 times)

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Offline sosednik

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Embezzlement in Ukraine
« on: 08:01 16-Feb-2017 »
Not my own business ... but my fiancee started a business in Kyiv about 15 months ago.  She had invested an enormous amount of effort, ingenuity, worry, anxiety and sweat into it.

By the 12-month mark, it was making enough revenue to pay all of its bills with a paid administrator to run its day-to-day operations, which is really exceptional.  Often (in the USA, at least) it takes 2 to 5 years to reach this level, if the business is lucky enough to survive.

What makes this even more impressive to me, is that even though she knows a lot about the subject of her business, she has no business education, and was unaware of what I think of as some basic business concepts.

We made a family decision to move to her home town before the little one started first grade.  It was very hard for her to let go of Kyiv, but the administrator she found was a colleague with whom she had previously worked for two years, who is very knowledgeable and experienced in the field, and just at retirement age.  We often discussed how lucky we were, to have Miss Lyudmila running the firm.

Today, the owner of the commercial space housing the business called my fiancee to ask, "when will you pay the two months' rent you owe me?"  We had understood that the rent was fully up-to-date.  We even paid January out of our own pocket, because it's a slow month for the business and Lyudmila said there wasn't enough revenue to cover it.

Probably you can imagine the state of shock my fiancee is in.  She also found out from another source that the volume of the business has been about twice what Lyudmila reported to her.  Of course, Lyudmila is not answering phone calls.  We now understand, her "retirement plan."

My fiancee borrowed a lot of money (considering her circumstances, and that it's Ukraine) to start the business.  I have poured a few thousand dollars of my own into getting it afloat.  We're lucky that our losses are relatively small, but it really stings (we are far from rich).  And the business had real potential to give us a nice income stream for years to come.

Now our task is to work out how to close it down as smoothly as possible.
_______________________________________________

My dear fiancee often says, "f*cking Ukraine."  She feels deeply the stresses of her homeland.

Moderators:  If this isn't the right place for this topic, please move!  Thanks.



Offline kyivkpic

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Re: Embezzlement in Ukraine
« Reply #1 on: 08:48 16-Feb-2017 »


I'm sorry about your fiance's business but trusting a Ukrainian employee with anything more than a few kopecks is a bad idea.

« Last Edit: 13:12 17-Feb-2017 by kyivkpic »
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Online Vitaliy50

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Re: Embezzlement in Ukraine
« Reply #2 on: 08:58 16-Feb-2017 »
Really? Cut out that "Lyudmila", let go of the crook landlord and keep going. Why do you want to close a very profitable business? If your business has any connection with the US market, have you considered consulting the USCC? I am sorry that this is happening, but I recommend you keep going and don't give up. There are many upstanding property managers and honest people in Kiev that will do the work once you pay them a fair wage.

It's a lot worse having one administrator than supporting a whole team and office. One person is a huge risk and once you fall out with them, you fall too. A team means stability. Teams stay loyal especially if the business is growing and they have room for advancement. It's like that anywhere.

Beware of some selo scum. Once they see dollar signs they will skin you alive.
« Last Edit: 09:05 16-Feb-2017 by Vitaliy50 »

Online ace123

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Re: Embezzlement in Ukraine
« Reply #3 on: 09:21 16-Feb-2017 »
Cut her out, pay the missing rent and move on.



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Online David Rochlin

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Re: Embezzlement in Ukraine
« Reply #4 on: 10:54 16-Feb-2017 »
This often happens in America and is common in many countries.  If you want to be able to leave a business like that for any length of time, you have to have external controls, bookkeeping, direct monitoring of cash registers, pay the bills yourself, and be comparing cost of materials and labor to what is sold.  It is great to have a trusted employee, but a mistake to just hand the keys over to that person and not look over her shoulder or make her accountable for cash.
   Here in my town, a convenience store  had a problem just the other day.  The night cashier apparently finished his shift by grabbing about $1000 of lottery tickets and cash and went home leaving the store unlocked all night.  The owner has many of the above controls, but operates as an absentee owner, from out of State.   
I am worried, because that dishonest cashier has a relationship with an employee at my store here in Washington State.
When you have a business, you are shackled to that business to some degree.   it is very, very unusual to be able to leave a business for months, rely on one person and have no cause for concern.
I am trying to work toward living in Ukraine, physically visiting my business infrequently in the U.S. and doing so without a catastrophe requires years of work and preparation.  "Trust, but verify."

Online Tiancai

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Re: Embezzlement in Ukraine
« Reply #5 on: 11:04 16-Feb-2017 »
Two years is a rather short period to get to know someone well enough to trust them with stuff like that, even people you've known for decades can turn out to be quite different from what you imagined. Not to mention that greed blinds people, and when it comes to money, sadly, even relatives might betray you. Unless this person caused some sort of irreparable damage to the business, you shouldn't give up, it might be a major setback, but it's the price you gotta pay for learning this lesson.

Online BobLviv

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Re: Embezzlement in Ukraine
« Reply #6 on: 11:42 16-Feb-2017 »
Sorry to hear this sad story. Especially since a fellow country man here had a similar experience recently. They stole his company of which he and a friend were the founder members. Thanks to certain mistakes the thief made and a big thanks to the good lawyer who was invited to jump onto this case, it all came back in good shape and order.
Strangely enough, mentioning this story to a local Ukrainian friend here, the simple but clear answer was: This is quite normal here. Give them a finger and soon they will take the whole hand.
Be aware of the realities of live here ....  :(

Offline sosednik

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Re: Embezzlement in Ukraine
« Reply #7 on: 07:05 17-Feb-2017 »
Thanks to all, for your interest and comments.

At present, we don't see any way to continue the business, which would be compatible with our other needs as a family.

Obviously, we look back and wish we had done some things differently ... it is water under the bridge, now.

It seems to me that the best resolution we could hope for, would be selling the business to another operator.  At this stage, we wouldn't be looking to make a profit, but rather to cover some of the losses.

We would be very grateful, if anyone can offer advice about selling the business.  It is a kindergarten, but not yet certified, so it classified as a детский клуб (children's club) instead of детский садик.  Because we no longer have an administrator, the buyer would need to be someone willing to hire their own administrator, or to take over the day-to-day running themselves (a full-time commitment).  So basically, someone with knowledge and experience of teaching small children.

If a buyer were to run it as conscientiously as my fiancee did, they should be able to pay themselves something like USD 3,000+ per within a few months.  This is not such a big salary for Kyiv, but on the other hand a lot more money than many teachers earn, to my knowledge.

My fiancee has been looking for a buyer for some time, so far without success.  I don't know how she has been advertising it ... but the general aura of instability and unpredictability in Ukraine at this time likely discourages investors.

Offline jbenet

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Re: Embezzlement in Ukraine
« Reply #8 on: 10:34 17-Feb-2017 »
Sorry to hear this dude, but you really do need to sit on the neck of any worker to make sure they aren't screwing you... here more than anywhere else I've worked. I do all my own books and measure COGs vs expected revenues and if it varies more than 3% I'm all over their asses.

You really can control all your monetary movements yourself from most anywhere... for example, parents pay via Privat bank to YOUR account, and then YOU pay the landlord. You really should NEVER have done that, and what the others say, spend a month cleaning house and fixing that shit. We put cameras with mics all over my small restaurant, wife loves to watch in and we catch ALL bad behaviour and nip it in the bud. Great thing is, these cameras are so small (and mics even smaller) you can see/hear everything. You'd be surprised how quickly you can see who has your back and who doesn't.

But just leaving it all in the hands of ANYONE else was foolish, but easily correctable.

jb

Offline sosednik

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Re: Embezzlement in Ukraine
« Reply #9 on: 16:08 18-Feb-2017 »
A little fresh information:  the wayward administrator made phone contact with my fiancee, who travels tonight to Kyiv where they will meet tomorrow.  My fiancee didn't ask any probing questions, intending to save that for their meeting.

We learned that her husband, who has a long history of heart disease, is on his way to Germany for surgery ... so we have a pretty good guess where the money went.

Perhaps if we're lucky, she will agree to a little repayment when she will be able.

As my fiancee often says, "what we can do?"
_____________________________________________

PS  Thanks for all of the sensible suggestions, which may be valuable to other readers of this thread.  I don't anticipate that we'll have the opportunity to apply them to our present case, because of the obstacles to continuing this business.

Offline kyivkpic

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Re: Embezzlement in Ukraine
« Reply #10 on: 19:09 18-Feb-2017 »
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A little fresh information:  the wayward administrator made phone contact with my fiancee, who travels tonight to Kyiv where they will meet tomorrow.  My fiancee didn't ask any probing questions, intending to save that for their meeting.

We learned that her husband, who has a long history of heart disease, is on his way to Germany for surgery ... so we have a pretty good guess where the money went.

Perhaps if we're lucky, she will agree to a little repayment when she will be able.

As my fiancee often says, "what we can do?"
_____________________________________________

PS  Thanks for all of the sensible suggestions, which may be valuable to other readers of this thread.  I don't anticipate that we'll have the opportunity to apply them to our present case, because of the obstacles to continuing this business.

You can prosecute because excuses don't matter when it comes to criminal behavior. Suppose your child or loved one also had needed that money for emergency medical care? How do you know it's a true story? I don't mean to be harsh or cruel but you shouldn't reward criminal behavior.  She could have asked or even begged but stealing is wrong, regardless of circumstances.
Твоя голова всегда в ответе за то, куда сядет твой зад.

Offline sosednik

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Re: Embezzlement in Ukraine
« Reply #11 on: 19:56 18-Feb-2017 »
@kyivkpic:

Have you had good experiences, getting help from Ukrainian police?  My personal interaction with them has been limited to paying a little extortion.

When my fiancee first told me the news, and I asked about reporting this to the police, her first reaction was to laugh (which was a bit startling, as she was so shocked and depressed).

In addition to The Problem Of Police In The Former Soviet Space ... business was handled informally (a big mistake, as several people have commented above).  For this reason, we don't have documentary proof of wrong-doing.  It would be a case of one person's word against the other.

I certainly don't wish to reward wrong-doing.  Having worked in technology for 40 years, I try to understand what is practically achievable, and what is not.

Ironically, this thief "killed the goose that laid golden eggs" ... had she conducted herself honestly, she might well have ended up with substantially more money than she embezzled.  In this sense, perhaps there is some natural justice.
___________________________________________

My sister also has a business (in the USA) and has been robbed by employees, though not by such a large percentage of revenue.  She also suffers from customers making outrageous claims against her, at least once or twice a year.  She understands that she is running a business, not a Ministry of Justice, and does her best to settle things quickly and efficiently, no matter how unfair.

Online calmissile

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Re: Embezzlement in Ukraine
« Reply #12 on: 03:52 19-Feb-2017 »
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A little fresh information:  the wayward administrator made phone contact with my fiancee, who travels tonight to Kyiv where they will meet tomorrow.  My fiancee didn't ask any probing questions, intending to save that for their meeting.

We learned that her husband, who has a long history of heart disease, is on his way to Germany for surgery ... so we have a pretty good guess where the money went.

Perhaps if we're lucky, she will agree to a little repayment when she will be able.

As my fiancee often says, "what we can do?"
_____________________________________________

PS  Thanks for all of the sensible suggestions, which may be valuable to other readers of this thread.  I don't anticipate that we'll have the opportunity to apply them to our present case, because of the obstacles to continuing this business.


I am waiting for hear if the meeting was to offer repayment for the fraud, or a request for more money for her husbands 'surgery'.

Offline kyivkpic

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Re: Embezzlement in Ukraine
« Reply #13 on: 08:42 19-Feb-2017 »
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@kyivkpic:

Have you had good experiences, getting help from Ukrainian police?

The old police, oddly enough, yes. I was stolen from and the guy tried to sell my stuff back to me. I paid some berkut guys to beat the shit out of him and they did.

The new police, I haven't had any experience with.
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Offline kyivkpic

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Re: Embezzlement in Ukraine
« Reply #14 on: 09:00 19-Feb-2017 »
If you don't want to involve the police. I would recommend you find out where she lives and find someone who would be willing to enact some justice if you want to keep your hands clean.
Твоя голова всегда в ответе за то, куда сядет твой зад.