Amy Knox at arraignment
They always think they will pay it back. Out of all the people I have ever found fiddling the books only one actually paid it back and never did it again. Or maybe he was just a lot more clever about it.
Amy Knox at arraignment
“They always think they will pay it back. Out of all the people I have ever found fiddling the books only one actually paid it back and never did it again.”
Frank Abagnale Jr. has said in interviews and talks that if someone steals money from your business and you know who they are, one practical (and slightly ironic) step is to issue them a Form 1099 for the amount they stole.
Here’s the idea as he explains it:
1. Treat the stolen money as taxable income to the thief
Abagnale points out that under U.S. tax law, illegal income is still taxable income. The IRS requires people to report income “from whatever source derived,” including money obtained unlawfully.
So if someone embezzles $10,000 from your business, that $10,000 is technically taxable income to them.
Why this works (according to Abagnale)
His reasoning is:
The IRS doesn’t care how the person got the money — they care that taxes are paid.
The IRS has strong enforcement power.
Sometimes tax consequences create additional legal pressure on the offender.
He frames it as using the tax system as leverage when criminal prosecution may be slow or uncertain.
He goes on to explain how instead of reporting the stolen money as income, you could first set up an agreement with the thief to pay the money back. If the agreement is broken, report the income to IRS.
Of course there are lots of nuances here. Pretty cool.