03/21/2009 05:12 am ET | Updated May 25, 2011

Small Businesses Face More Fraud In Downturn

Cash-squeezed privately held companies are facing another threat in this struggling economy: rising employee fraud.

Employee fraud -- from check-forgery schemes to petty-cash theft -- tends to rise during tough economic times, when workers are feeling financial pressure in their personal lives, experts say. And small companies are especially vulnerable because they often lack stringent internal controls to prevent fraud. Sometimes, managers at affected companies attribute lost funds to lower sales -- never even suspecting foul play.