Cashier at top hotel jailed for £108k fraud
A cashier who stole more than £108,590 from the Caledonian Hotel in Edinburgh when she paid bogus wages for 10 fake employees into her own bank accounts has been jailed for two years.
Janet Davis, 48, registered the made-up employees and paid their scam wages into two of her own bank accounts over four and a half years between April, 2000 and October, 2004.
In the complex scheme, she falsified paperwork, forged signatures and even invented time sheets.
Sheriff Andrew Lothian told her: "This is a very large sum of money taken by you in an elaborate, careful and deceitful scheme. There is no question you should should go to prison. It would have been for three years but for your co-operation."
A financial auditor became suspicious when she noticed that 10 different so-called Hilton Group employees had wages paid into only two different accounts.
She realised that all the signatures were in the same handwriting and that some of the payment forms were incomplete.
"This was highly irregular," Fiscal Depute Lucy Proctor told Edinburgh Sheriff Court at an earlier hearing. "Mrs Davis was asked for an explanation, but could not provide one."
Davis, of Kirkfield View, Livingston, West Lothian, who worked for the hotel for 17 years, telephoned managers to say she would not go back to work and admitted the scheme.
"She outlinted exactly how she had carried out the fraud and said it had gone on for between four and five years," Ms Proctor said. "She could not say how much she had obtained and was formally dismissed.
"She freely admitted to police that she has falsified paperwork, made up fictitious employees and time sheets. She showed great remorse throughout the dealings with the officers."
Davis, who has repaid £1400 and saved up another £2000, told constables that she had mounted up family debts when her husband was made redundant and the cash had not been spent on valuable items.
Ms Proctor said that after more than £24,000 of national insurance and other tax was deducted, the cashier had pocketed more than £80,000.
Davis, who admits that her husband knew nothing of the scheme, pled guilty to embezzling £83,703 from the Caledonian.
Defence agent Glenn Fraser said that Davis had become stressed and suffered from compulsion when she fell into debt.
"The reason for this offence taking place was extreme debt. The debt mounted and mounted when her family moved home and took on a larger mortgage. Unfortunately at the start of this offence she stopped coping.
"She suffered anxiety, stress and agitation throughout this period which led to compulsive behaviour. She was not thinking clearly and her ability to make proper decisions was affected by her stress.
"She is repaying as much as she can as quickly as she can and has co-operated fully with the investigation. This can be distinguished from other cases in that it did not support a luxurious life style. It was simply to pay off debts. No luxurious items were bought."
The 251-room, five star hotel, which stands at the foot of Edinburgh Castle, was built in 1903 and has been a favourite with a host of famous names including Sean Connery and Elton John.
A spokesperson from Hilton Hotels Group said: "It is a very regretable incident. At the time we worked closely with the police and the hotel in question and helped with the investigation. It is now a matter of legal proceedings. Since the incident the hotel reviewed its internal pay roll process to restrict such incidents in the future."
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Posted by: RAMRAJ BALLOO, Sutton on 10:46pm Tue 1 May 07
This is a classical case in hotel accounting and the steps that Hilton took to address the fraud is to be respected.
It is important to implement and review systems and procedures so that such fraud does not take place.Again there was an element of trust among the staff and one broke that element.However,it is crucial that finance staff is reminded of the code of ethics and the employer resposibility to implement it through constant reviews
This is a classical case in hotel accounting and the steps that Hilton took to address the fraud is to be respected.
It is important to implement and review systems and procedures so that such fraud does not take place.Again there was an element of trust among the staff and one broke that element.However,it is crucial that finance staff is reminded of the code of ethics and the employer resposibility to implement it through constant reviews
Posted by: RAMRAJ BALLOO, Sutton on 7:58am Fri 8 Jun 07
Hilton’s spokesperson about this fraud describes how serious the company is in developing innovative operational and auditing techniques that will bring more confidence among the hotel accountants.
CIMA own research on Ethics as a dependent variable in individual and organisational decision-making, by Professor Fisher and Lovell is creating more awareness on the needs of implementing the code of ethics in the management and accounting professions.
The MARG’s conference on “Risk Management, Cybersecurity and Financial Control” in April 2006 defines the interdependencies between risk management and management accounting in conjunction with the ever growing importance of security technology and computer assurance to management and management accounting processes.
CIMA & ICAEW ‘s seminar in June 2007 on Operational Risk Management on the needs to develop effective strategies to combat fraud and the importance to set a strong internal auditing team will bring more confidence among hotel accountants.
Unfortunately there are much more serious cases that go unreported in the hotel industry and hotel accountants should take the Hilton case as a learning curve.
CIMA has set confidential help line that offers guidance to those facing an ethical conflict. The helpline can also provide clarification on aspects of the Code of Ethics and how this can be applied.
The key performance indicator of the profession is embedded on the principles of integrity, objectivity, and professional competence and due care, confidentiality and professional behaviour
Hilton’s hotel approach in reporting this case should bring much more confidence among the hotel accountants on fraud reporting.
Hilton’s spokesperson about this fraud describes how serious the company is in developing innovative operational and auditing techniques that will bring more confidence among the hotel accountants.
CIMA own research on Ethics as a dependent variable in individual and organisational decision-making, by Professor Fisher and Lovell is creating more awareness on the needs of implementing the code of ethics in the management and accounting professions.
The MARG’s conference on “Risk Management, Cybersecurity and Financial Control” in April 2006 defines the interdependencies between risk management and management accounting in conjunction with the ever growing importance of security technology and computer assurance to management and management accounting processes.
CIMA & ICAEW ‘s seminar in June 2007 on Operational Risk Management on the needs to develop effective strategies to combat fraud and the importance to set a strong internal auditing team will bring more confidence among hotel accountants.
Unfortunately there are much more serious cases that go unreported in the hotel industry and hotel accountants should take the Hilton case as a learning curve.
CIMA has set confidential help line that offers guidance to those facing an ethical conflict. The helpline can also provide clarification on aspects of the Code of Ethics and how this can be applied.
The key performance indicator of the profession is embedded on the principles of integrity, objectivity, and professional competence and due care, confidentiality and professional behaviour
Hilton’s hotel approach in reporting this case should bring much more confidence among the hotel accountants on fraud reporting.
Posted by: RAMRAJ BALLOO, Sutton on 9:39pm Fri 22 Jun 07
CIMA’s recent meeting on the 20th June 2007 about Deception at Work and presented by Mike Comer was an excellent knowledge acquisition’s opportunity to deal with fraudsters. The meeting was very encouraging and explained how to tackle fraudsters. The way forward is to establish strong internal audit procedures and operational risk management by establishing key performance indicators in all departments. It is a good opportunity to increase knowledge for Hotel Accountants to familiarise themselves with the systems and procedures, the interview techniques, and to identify unethical practices in the organisation.
This is particularly helpful for hotel accountants as they continue to play a strategic role in the industry with the advent of innovative practices arising from increasing use of information technology. It is important to build forensic accounting knowledge and computer fraud detection techniques. As information technology continues to play a tactical role in finance in the hotel industry where labour cost tends to be high, it also means that there should be premeditated computer auditing guidelines to combat fraud. Sarbanes Oxley Act has become an essential element in hotel accounting .It will become common for Hotel Accountants /Financial Controllers/Finance Managers to familiarise themselves with the concepts to enable them to navigate the operational platform and dignify the role they hold in the industry .It also enables them to deal with challenging circumstances as the Hilton’s case.
Hotel /Financial Controllers/Finance Managers should get involved in operations management. This would assist them to question on head counts and assess the result. The Hilton case offers the opportunity to design effective internal control questionnaire in every aspect of the hotel operations, particularly where there is cash handling and transactions. Job rotation is another mean to identify deception at work, particularly in front office where reception and concierge perform multitask. This offers more opportunities where deceptive personnel may be employed. Some companies employ the concept of employee empowerment to implement a leaner operational structure but it is also important to implement a strong operational risk management system and effective internal audit techniques.
Overall, the dignity of the finance team rests on the code of ethics of the accounting and management profession. CIMA’s road show on the value of the code of ethics along with the support of other chartered professional bodies is helping the finance profession to excel. The stronger is the leadership skill of the senior financial and operational management team, the more transparent and valuable information is shared through the media. Hilton’s case is a unique example to follow as it offers financial and operational managers more confidence in the pursuit to offer the guests a unique experience and for shareholders to put more trust in the company.
CIMA’s recent meeting on the 20th June 2007 about Deception at Work and presented by Mike Comer was an excellent knowledge acquisition’s opportunity to deal with fraudsters. The meeting was very encouraging and explained how to tackle fraudsters. The way forward is to establish strong internal audit procedures and operational risk management by establishing key performance indicators in all departments. It is a good opportunity to increase knowledge for Hotel Accountants to familiarise themselves with the systems and procedures, the interview techniques, and to identify unethical practices in the organisation.
This is particularly helpful for hotel accountants as they continue to play a strategic role in the industry with the advent of innovative practices arising from increasing use of information technology. It is important to build forensic accounting knowledge and computer fraud detection techniques. As information technology continues to play a tactical role in finance in the hotel industry where labour cost tends to be high, it also means that there should be premeditated computer auditing guidelines to combat fraud. Sarbanes Oxley Act has become an essential element in hotel accounting .It will become common for Hotel Accountants /Financial Controllers/Finance Managers to familiarise themselves with the concepts to enable them to navigate the operational platform and dignify the role they hold in the industry .It also enables them to deal with challenging circumstances as the Hilton’s case.
Hotel /Financial Controllers/Finance Managers should get involved in operations management. This would assist them to question on head counts and assess the result. The Hilton case offers the opportunity to design effective internal control questionnaire in every aspect of the hotel operations, particularly where there is cash handling and transactions. Job rotation is another mean to identify deception at work, particularly in front office where reception and concierge perform multitask. This offers more opportunities where deceptive personnel may be employed. Some companies employ the concept of employee empowerment to implement a leaner operational structure but it is also important to implement a strong operational risk management system and effective internal audit techniques.
Overall, the dignity of the finance team rests on the code of ethics of the accounting and management profession. CIMA’s road show on the value of the code of ethics along with the support of other chartered professional bodies is helping the finance profession to excel. The stronger is the leadership skill of the senior financial and operational management team, the more transparent and valuable information is shared through the media. Hilton’s case is a unique example to follow as it offers financial and operational managers more confidence in the pursuit to offer the guests a unique experience and for shareholders to put more trust in the company.
Posted by: rajballoo, Surrey on 2:38pm Wed 9 Jan 08
Fraud is very common in the hospitality industry. Every pound that is lost through fraud is more than ten times the sales value. Some companies lose much more than £100,000 annually. This is attributable to a tolerance from Senior Management Team .The defects per million of opportunities in fraud reporting are so high that fraud reporting should be appropriately protected so that Financial Controllers working in the hotels are able to report them without being victimised. A recent article compiled by Danielle Cohen and published in CIMA’s Financial Magazine is a stepping-stone. CIMA ‘s innovative approach on ethical guidance will help the finance staff to safeguard professional and professional values.
Hilton’s approach to fraud reporting is unique so far. Developing appropriate Balanced Scorecard in operational and financial management becomes meaningful with Six Sigma, as the value creations from these two models are greater than the Seven Habits that are implemented by some companies.
Fraud will continue in the industry if the proceeds of crime act are not used to prosecute fraudsters, be it payroll, tips/service charge, stock valuation or more sophisticated fraud through identity theft, acquiring theatre tickets by manipulating guests’ accounts. Finance, Commercial, Operations and HR Directors should empower Financial Controllers to use Fraud Reporting Techniques and comply with accounting and management bodies’ guidelines .The Hilton’s example should be promoted and hotel companies should use Proceeds of Crime Act. Serious Organised Crime Police Act and Money Laundering Regulations to prosecute fraudsters like the controversial John Darwin’s case when the wife was arrested before landing the aircraft from Panama
This will bring more transparency in Financial Crime Reporting
Fraud is very common in the hospitality industry. Every pound that is lost through fraud is more than ten times the sales value. Some companies lose much more than £100,000 annually. This is attributable to a tolerance from Senior Management Team .The defects per million of opportunities in fraud reporting are so high that fraud reporting should be appropriately protected so that Financial Controllers working in the hotels are able to report them without being victimised. A recent article compiled by Danielle Cohen and published in CIMA’s Financial Magazine is a stepping-stone. CIMA ‘s innovative approach on ethical guidance will help the finance staff to safeguard professional and professional values.
Hilton’s approach to fraud reporting is unique so far. Developing appropriate Balanced Scorecard in operational and financial management becomes meaningful with Six Sigma, as the value creations from these two models are greater than the Seven Habits that are implemented by some companies.
Fraud will continue in the industry if the proceeds of crime act are not used to prosecute fraudsters, be it payroll, tips/service charge, stock valuation or more sophisticated fraud through identity theft, acquiring theatre tickets by manipulating guests’ accounts. Finance, Commercial, Operations and HR Directors should empower Financial Controllers to use Fraud Reporting Techniques and comply with accounting and management bodies’ guidelines .The Hilton’s example should be promoted and hotel companies should use Proceeds of Crime Act. Serious Organised Crime Police Act and Money Laundering Regulations to prosecute fraudsters like the controversial John Darwin’s case when the wife was arrested before landing the aircraft from Panama
This will bring more transparency in Financial Crime Reporting
Posted by: rajballoo, Surrey on 3:02pm Wed 9 Jan 08
Fraud is very common in the hospitality industry. Every pound that is lost through fraud is more than ten times the sales value. Some companies lose much more than £100,000 annually. This is attributable to a tolerance from Senior Management Team .The defects per million of opportunities in fraud reporting are so high that fraud reporting should be appropriately protected so that Financial Controllers working in the hotels are able to report them without being victimised. A recent article compiled by Danielle Cohen and published in CIMA’s Financial Magazine is a stepping-stone. CIMA ‘s innovative approach on ethical guidance will help the finance staff to safeguard professional and professional values.
Hilton’s approach to fraud reporting is unique so far. Developing appropriate Balanced Scorecard in operational and financial management becomes meaningful with Six Sigma, as the value creations from these two models are greater than the Seven Habits that are implemented by some companies.
Fraud will continue in the industry if the proceeds of crime act are not used to prosecute fraudsters, be it payroll, tips/service charge, stock valuation or more sophisticated fraud through identity theft, acquiring theatre tickets by manipulating guests’ accounts. Finance, Commercial, Operations and HR Directors should empower Financial Controllers to use Fraud Reporting Techniques and comply with accounting and management bodies’ guidelines .The Hilton’s example should be promoted and hotel companies should use Proceeds of Crime Act. Serious Organised Crime Police Act and Money Laundering Regulations to prosecute fraudsters like the controversial John Darwin’s case when the wife was arrested before landing the aircraft from Panama
This will bring more transparency in Financial Crime Reporting
Fraud is very common in the hospitality industry. Every pound that is lost through fraud is more than ten times the sales value. Some companies lose much more than £100,000 annually. This is attributable to a tolerance from Senior Management Team .The defects per million of opportunities in fraud reporting are so high that fraud reporting should be appropriately protected so that Financial Controllers working in the hotels are able to report them without being victimised. A recent article compiled by Danielle Cohen and published in CIMA’s Financial Magazine is a stepping-stone. CIMA ‘s innovative approach on ethical guidance will help the finance staff to safeguard professional and professional values.
Hilton’s approach to fraud reporting is unique so far. Developing appropriate Balanced Scorecard in operational and financial management becomes meaningful with Six Sigma, as the value creations from these two models are greater than the Seven Habits that are implemented by some companies.
Fraud will continue in the industry if the proceeds of crime act are not used to prosecute fraudsters, be it payroll, tips/service charge, stock valuation or more sophisticated fraud through identity theft, acquiring theatre tickets by manipulating guests’ accounts. Finance, Commercial, Operations and HR Directors should empower Financial Controllers to use Fraud Reporting Techniques and comply with accounting and management bodies’ guidelines .The Hilton’s example should be promoted and hotel companies should use Proceeds of Crime Act. Serious Organised Crime Police Act and Money Laundering Regulations to prosecute fraudsters like the controversial John Darwin’s case when the wife was arrested before landing the aircraft from Panama
This will bring more transparency in Financial Crime Reporting
Posted by: rajballoo, Surrey on 3:27pm Wed 9 Jan 08
Hotel Financial Controllers guidelines as per Hilton case
(1) Take appropriate note of what is discovered. Credit card misallocation? Is it a mistake or fraud? Establish the core facts? Analyse the reconciliation and double check. If no establish training programme from the analysis-Like a BSC.Identity fraud? Establish the fraud and get samples of cash collected. Follow auditing guidelines and report appropriately as per ethical principles. Establish amount to report as per Fraud reporting techniques. Service charge overpayment where the computation is based on turnover and performance. Relying on Seven Habits will not define integrity. Investigate and report .
(2) Establish the core facts and dates. Make sure that there is accountability and responsibility. Refer to CIMA Fraud Reporting Guidelines
(3) Report to professional institute, report the findings as per the regulations
(4) Follow the Chart
(5) Make sure to write down what is said, the meanings, terms of reference and what is being discussed and the purpose.
(6) Feel confident as Fraud Reporting Technique comes rarely ,unless employed in the capacity of Internal Auditor or Performance Manager
(7) Make sure the fraudster’s interview is logged and take a copy for reference. The Fraudsters’ should be explained that they would be arrested as per Proceeds of Crime Act and Fraud Act. Show them evidence and inform them the accounts be frozen, as per Money Laundering rules. The SOCPA covers this and the accountant is protected by PIDA.
(8) When fraudsters are interviewed by HOD, GM, FD, OD and HRD and external consultants make sure to check the notes and cross reference them with initial notes. Where there are discrepancies invoke MLR and Fraud Act.
(9) Report to the Police and ensure immediate arrest for personal safely. In the recent past accountants lost their life for reporting fraud and criminal activities as per articles published by CIMA
(10) Ensure Finance, Commercial, Human Resource, Operations and People Development Directors are working with the same objectives as per Proceeds of Crime Act, Serious Organised Crime and Police Act and Protection from Harassment Act. Refer to professional guidelines
(11) Seek internal and External assistance on ethical guidelines
(12) Confirm the facts in writing of what has been discussed and ensure each party understands the terms.
(13) Be well prepared with documents and explain the fraud
(14) Follow Darwin case and Ex WorldCom Finance Director and Natwest Directors.
(15) Seek professional guidance
.
(16) Ensure that fraudsters are arrested as Hilton’s case.
(17) Understand ethical and legal rights and follow all fraud cases. Hilton’s case established that the Payroll Manager had to be prosecuted. Eton House’s General Manager was prosecuted as the External Auditor and Project Accountant noticed the fraud. The case at Cumberland Hotel, the Deputy Financial Controller was prosecuted for fraud as he had a taste for BMW.There are many more unreported cases that are worst than the Payroll’s case exceeding £108k
(18) The most recent case is Travel scope, although there are no immediate findings .A company with forward booking cannot technically be insolvent, unless there is a fraud or its pricing model is wrong
Hotel Financial Controllers guidelines as per Hilton case
(1) Take appropriate note of what is discovered. Credit card misallocation? Is it a mistake or fraud? Establish the core facts? Analyse the reconciliation and double check. If no establish training programme from the analysis-Like a BSC.Identity fraud? Establish the fraud and get samples of cash collected. Follow auditing guidelines and report appropriately as per ethical principles. Establish amount to report as per Fraud reporting techniques. Service charge overpayment where the computation is based on turnover and performance. Relying on Seven Habits will not define integrity. Investigate and report .
(2) Establish the core facts and dates. Make sure that there is accountability and responsibility. Refer to CIMA Fraud Reporting Guidelines
(3) Report to professional institute, report the findings as per the regulations
(4) Follow the Chart
(5) Make sure to write down what is said, the meanings, terms of reference and what is being discussed and the purpose.
(6) Feel confident as Fraud Reporting Technique comes rarely ,unless employed in the capacity of Internal Auditor or Performance Manager
(7) Make sure the fraudster’s interview is logged and take a copy for reference. The Fraudsters’ should be explained that they would be arrested as per Proceeds of Crime Act and Fraud Act. Show them evidence and inform them the accounts be frozen, as per Money Laundering rules. The SOCPA covers this and the accountant is protected by PIDA.
(8) When fraudsters are interviewed by HOD, GM, FD, OD and HRD and external consultants make sure to check the notes and cross reference them with initial notes. Where there are discrepancies invoke MLR and Fraud Act.
(9) Report to the Police and ensure immediate arrest for personal safely. In the recent past accountants lost their life for reporting fraud and criminal activities as per articles published by CIMA
(10) Ensure Finance, Commercial, Human Resource, Operations and People Development Directors are working with the same objectives as per Proceeds of Crime Act, Serious Organised Crime and Police Act and Protection from Harassment Act. Refer to professional guidelines
(11) Seek internal and External assistance on ethical guidelines
(12) Confirm the facts in writing of what has been discussed and ensure each party understands the terms.
(13) Be well prepared with documents and explain the fraud
(14) Follow Darwin case and Ex WorldCom Finance Director and Natwest Directors.
(15) Seek professional guidance
.
(16) Ensure that fraudsters are arrested as Hilton’s case.
(17) Understand ethical and legal rights and follow all fraud cases. Hilton’s case established that the Payroll Manager had to be prosecuted. Eton House’s General Manager was prosecuted as the External Auditor and Project Accountant noticed the fraud. The case at Cumberland Hotel, the Deputy Financial Controller was prosecuted for fraud as he had a taste for BMW.There are many more unreported cases that are worst than the Payroll’s case exceeding £108k
(18) The most recent case is Travel scope, although there are no immediate findings .A company with forward booking cannot technically be insolvent, unless there is a fraud or its pricing model is wrong
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