I Caught My Employee Stealing. What Should I Do? | Ep 980

**SPEAKER_1** (0:00)
I recently caught one of our main employees stealing. What would you do in that scenario?

**Alex Hormozi** (0:06)
I would not want to sneak in my business. But there's $100, $1,000 they stole.

**SPEAKER_1** (0:12)
Wild.

**Alex Hormozi** (0:13)
Question is, number one, why can't you do more? This is why we do this. This is why we do this. The good shit, right?

**SPEAKER_1** (0:21)
Hey, so 8.7 million, trailing 12 months, 1.2 million profit. We, my brothers and I, own a designer handbag resale company.

**Alex Hormozi** (0:31)
Interesting. Okay.

**SPEAKER_1** (0:32)
A pawn shop specializing in gold, silver, jewelry, and luxury. It's a tricky one to grow right now because an added caveat to this is we're in the process of selling and we're in the later process. So we...

**Alex Hormozi** (0:46)
The whole thing?

**SPEAKER_1** (0:47)
LOI signed...
Yes, sir. Okay. APA signed, LOI both signed, waiting for the lenders to get SBA approval.

**Alex Hormozi** (0:55)
Okay.

**SPEAKER_1** (0:55)
And then I have a hyper-specific question.

**Alex Hormozi** (0:58)
Okay.

**SPEAKER_1** (0:59)
I recently caught one of our main employees skimming off the top, stealing. What would you do in that scenario?

**Alex Hormozi** (1:11)
Is it the guy, or is it like, what guy is... I mean, it's not really going to change my answer, but I'm just curious.

**SPEAKER_1** (1:18)
It's someone who is replaceable, but it would be a huge hit.

**Alex Hormozi** (1:24)
What is it? What is a hit?

**SPEAKER_1** (1:28)
Like we would have to...

**Alex Hormozi** (1:30)
Well, the financials are worse because they're stealing, correct?

**SPEAKER_1** (1:34)
Not significant. So it's like, it's small.

**Alex Hormozi** (1:38)
Let me give you the TLDR on this. Let me give you the TLDR on this.
When you're 85 looking back, you're going to want to have been honest, period. Also, you expose yourself to liability because as soon as you know or it's demonstrated in any way that you knew about something, all of the reps and warranties that you're doing in the sale are going to be flipped. And so if you basically are knowingly giving somebody an organization that has some liability that you have not came forth with, you take on that liability and they could basically take back, not take back the money, but you sue you and it's suck.
The good news is this, is I think that all of this is going to be how you frame it when you're telling the buyer. I just say, hey, you know the business you're getting into. We deal with some nefarious characters. That being said, it's a very profitable business and it's a good business. I've got good news and bad news. The good news is we're slightly more profitable than we've let you know, and we're willing to honor the existing price. The bad news is I have to replace one of the people because I found out he was skimming. But fundamentally, you have to be upfront, state the facts and tell the truth. I don't think it's going to blow the sale up.

**SPEAKER_1** (2:42)
Yeah, I agree. I agree. And truth be told, I already did talk to this person. I'm more interested in what you would do because I spoke to them, met them middle ground, didn't ask for any money back.
We changed the-

**Alex Hormozi** (2:58)
Oh, I mean, I'll kick them out....

**SPEAKER_1** (2:59)
moving forward.

**Alex Hormozi** (3:01)
Dude, they stole.

**SPEAKER_1** (3:02)
Before the sale?

**Alex Hormozi** (3:03)
Yeah, they stole, man.

**SPEAKER_1** (3:05)
That's interesting. They stole. Okay, would you say that from, if it was like $100 versus 10,000?

**Alex Hormozi** (3:13)
Have you seen Ozarks? The show?

**SPEAKER_1** (3:16)
No.

**Alex Hormozi** (3:17)
Okay, I'll give you the scene. I'll give you the scene. So, Drug Lord finds out the main character and his partner are skimming in some way, right? So, Drug Lord shows up, the guy, the main character is an accountant, his partner is also an accountant, they have a legit accounting firm, they also do this drug cartel stuff on the side.
The main character doesn't know what's going on because he's not the one skimming. The Drug Lord tells a story about when he was growing up, they ran a grocery store, and he says his father called Lupita, everybody loved Lupita, Lupita was amazing, right? And he caught her pocketing like a $5 bill on her way out the door. And so the Drug Lord then goes to the secretary of the account, who's the main character, and says, what would you do? And the secretary says, you know, it was just $5, not a huge deal. And so then he kills her. And then he goes to the next one and says, what would you do? And he's like, well, I mean, hey, we've got to understand the situation, blah, blah, blah, blah, blah. And so finally, he goes to Marty, who's the main character. And he says, what would you do, Marty? And he says, well, I'd get rid of her. And he says, why? He said, because it's not the first time she stole. It's the first time you caught her.