A “Ghost Employee” is an employee that is on the payroll and receives payment but does not actually work for the company. In fact, the employee may not exist at all. While verification methods of employees at the time of hire have become more thorough and sophisticated, so have methods of falsifying records. Companies with multiple remote offices are especially vulnerable to this type of scam.

The first step in the Ghost Employee scam is to get the ghost on the payroll. This may be a person working in collusion with the scammer. In this age of rampant identity theft it is more likely to be the name of someone totally unaware of how their I.D. is being used.

The fraudster then has to falsify hours worked. Timecards must usually be approved by a supervisor, so if the fraud is being perpetrated by a non-supervisor, then approval must be forged and directly to payroll without the supervisor’s knowledge. Salaried employees aren’t usually required to track time so this problem is bypassed but since salaried employees tend to be management, this trick may be harder to conceal.

Assuming timecards are sent electronically to payroll, a password is required. There are plenty of methods for hacking into a supervisor’s computer and stealing a password. However, in a remote office with few employees and a more relaxed atmosphere, a less high-tech approach may work better. Simply rifling the supervisor’s desk while he is at lunch can net that small piece of scratch paper. Most companies warn employees not to write down passwords but very few obey.

The next concern is where does the paycheck go? The home address of a co-conspirator is one option. A personal mail box is another. A mail box is easy to disguise as a home address using the street address and writing the mail box number as if it were an apartment number.