A book-keeper accused of stealing

Beatrix was Mr McGregor’s book-keeper – or more correctly she was a self-employed book-keeper and Company Secretary working for Mr McGregor’s company, which was an agency supplying circus acts and finding ‘C’ list celebrities to open supermarkets and the like.  But times were tough and it seemed like, however hard Mr McGregor worked, he was just scraping by.

Fortunately Mr McGregor could rely on the faithful Beatrix to look after the paperwork and pay the bills and the part-time staff.  One Sunday Mr McGregor was wondering how much there was in the company’s accounts with the District Bank and the Provincial.  So, unusually for him, he had a look at the bank statements.

He was shocked by what he saw.  Not only was there next to nothing in either of the company bank accounts but a quick check of the bank statements showed numerous transfers in the past month or two to Beatrix and to her daughter, and payments to Rentaphone and CloudsTV (neither of which Mr McGregor knew anything about) as well as several cash machine withdrawals and petrol purchases.

 

The police

Mr McGregor phoned the police and arranged an interview with Detective Constable Carrott.  He made a formal statement alleging that Beatrix had stolen money from the company.

DC Carrott interviewed Beatrix who said that all the expenditures were legitimate and had been authorised by Mr McGregor who had agreed that the company should pay Beatrix’s phone and TV subscriptions and her petrol bills.  The cash had been drawn on Mr McGregor’s instructions.  Some had been used to pay company bills in cash and the rest had been handed over to him.  There was nothing in writing because Beatrix and Mr McGregor had a relationship based on trust.  Beatrix denied any wrongdoing.

DC Carrott met with Mr McGregor again.  He denied authorising payment of any of Beatrix’s bills and he denied receiving any of the cash.

Mr McGregor now produced to DC Carrott bank statements and voluminous accounting records going back over more than two years revealing a stream of unauthorised payments and withdrawals made by Beatrix.  In total over £40,000 had been stolen, he alleged.

Meanwhile DC Carrott did a little digging and found that, while she was working for Mr McGregor’s company, Beatrix had been receiving Job Seeker’s Allowance and Council Tax Benefit on the basis that she was not working and had no earnings.

Beatrix was charged with theft of cash and fraud by abuse of position in relation to Mr McGregor’s company and making false representations to obtain Job Seeker’s Allowance and Council Tax Benefit.

 

The solicitor

After consulting her solicitor Beatrix decided to plead guilty to making false representations to obtain benefits but continued to deny any wrongdoing in relation to Mr McGregor’s company.  She told her solicitor that Mr McGregor was being untruthful and that it was inconceivable that Mr McGregor had (as he claimed) been unaware of the payments to her (which she sometimes had made direct to her daughter’s bank account to save time) and of her bills for phone, TV and petrol.  The business was a small one and the bank statements went direct to Mr McGregor who also had an accountant check everything and prepare annual accounts.

The solicitor contacted us and asked us to prepare a report based on an examination of the prosecution evidence (amounting to over 1,200 pages) and Beatrix’s responses.

 

Our involvement

We provided a fee quotation to enable the solicitor to obtain a prior authority from the Legal Aid Agency.  We also, at this initial stage, wrote to the solicitor outlining the sort of further documentary evidence which would assist us if it were available and indicating that, in our experience of other small businesses, allegations of theft by trusted members of staff were not a rarity and that this indicated that all too often in practice business owners failed to exercise sensible supervision over book-keepers and others with control over company monies.

When we examined the prosecution exhibits we found amongst them copies of emails which had apparently routinely been sent by Beatrix to Mr McGregor each week setting out the payments she was making out of the business accounts, and the monies received from customers.  The listed payments included staff wages and payments to Beatrix (in relation to which she had submitted sequentially numbered invoices as she was technically self-employed).

But whilst the emails showed one weekly payment to Beatrix, she was typically taking a dozen or more payments per month.  Often more than one payment to Beatrix referred to payment of the same invoice.  Sometimes the same invoice had been paid out of both of the two company bank accounts.  So although the amount of any one payment was not unreasonable the number of these payments and their total value was clearly inconsistent with the information which Beatrix was emailing to Mr McGregor.

We reported that we were simply unable to say what had happened to the cash withdrawn from the company bank accounts as there was no evidence beyond the contrasting assertions of Beatrix and Mr McGregor.

However the prosecution estimate of the amount of ‘wages’ legitimately due to Beatrix was, in our view, a significant underestimate.  The prosecution figure was based on £85 per week whereas the emails clearly showed payments of up to £175 per week to Beatrix (of which Mr McGregor must have been aware and which he had, by implication, approved).  Taking that into account the prosecution figure of the amount stolen was, in our view, overstated by £10,490.

Attached to our expert witness report were schedules detailing the amounts paid from the company bank accounts to Beatrix and members of her family, the amounts reported as paid to her on her emails to Mr McGregor, and the cash withdrawals from the bank accounts.

 

The outcome

The solicitor discussed our report with Beatrix.  After thinking it over for a few days Beatrix decided to plead guilty at Liverpool Crown Court to theft and fraud in relation to Mr McGregor’s company (as well as the benefit fraud offences).  She was given a suspended prison sentence, ordered to do 180 hours unpaid work and required to pay compensation of £1,200 to Mr McGregor’s company.

That is undoubtedly a better result than she would have obtained had she gone to trial and been convicted.

David

N.B. Names and certain other details have been changed to protect client confidentiality.

(Note: This article relates to a criminal prosecution in England and Wales. There are a large number of additional issues which could be relevant to criminal proceedings in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)

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