COLUMBUS, Ohio - It was a disaster of epic proportions, every contractor's nightmare. A trusted employee embezzled almost half a million dollars from a heating supply company. The owner, Harold Squire of Squire Heating Supply, was gracious enough to tell about the experience at a meeting of the Central Ohio ACCA in the hope that others would learn from it, and maybe avoid the same situation.

His story began with the hiring of a new accountant. A former employer, when called, verified employment history and revealed no problems. Squire even contracted for a background check, "as we do on all employees we hire. It came back clean. We still don't know why."

The new employee soon began to forge checks and failed to pay company bills, including one to the IRS. A substantial cash balance in the bank quickly disappeared. At first, neither the bank nor Squire's company found anything amiss.

Squire places some of the blame on the bank, for failing to note discrepancies and screen signatures on the checks. A change in the law no longer requires banks to return checks. Many financial tasks now are left up to the employer to prevent forgeries, including proper supervision of office employees. "This can be very difficult in a small office," Squire notes.

While Squire personally reviewed the company's monthly financial statements, he never saw the bank statements themselves. "In our company, we left it up to our trusted accountant to do this."

The losses eventually totaled $492,000, which can be devastating for a small company. Fortunately, some of the money was recovered - about 50%, part of it covered by insurance. "In this respect, I think we were quite lucky."

Squire's conclusion: "I hope I have given you a better understanding of some of the ways you could be vulnerable for losses through forgery or embezzlement and that you now have more knowledge of current banking laws as they pertain to your relationship with your bank."

The ex-employee is now in prison serving a minimum three-year sentence.