B.C. bookkeeper sent to jail for fraud

Woman pilfered $3 million in payroll overpayments, expense fraud over 5-year span
|hrreporter.com|Last Updated: 08/06/2013

A bookkeeper who stole millions of dollars from her employer has been sentenced to four-and-a-half years in jail.

Ellen Norris, 64, worked for Megatech Engineering, a custom steel fabricating company in Surrey, B.C., from 1986 until 2005. Between May 1, 2000, and Sept. 1, 2005, she pilfered $2.9 million from the company’s coffers, forcing the 35-employee company to the brink of bankruptcy, according to court documents.

Her deception was caught during a Workers’ Compenation Board audit. An auditor noted that Norris’ T4 income for 2004 was said to be $78,524 but the company’s payroll ledger showed it to be $195,141. The WCB’s assessment officer contacted the company’s external accountant.

The audit revealed a laundry list of payments to her benefit, including:

• $1.2 million to American Express

• $371,000 to Diners Club

• $48,000 to MasterCard

• $532,000 to Visa.

Justice Crawford of the Supreme Court of British Columbia called some of her spending “amazing” — including $2,880 at a Toronto boutique and $5,092 at another Toronto clothing story on the same day.

Company policy required two signatures on checks in excess of $5,000, but the majority of the cheques Norris wrote didn’t require a second signature.

She inflated her own salary — writing cheques over the years for $589,665.38 when her salary should have been $323,779.

Employer confronts bookkeeper

When the findings from the external accountant were in, the employer confronted Norris. She confessed, and was terminated.

The employer launched a civil suit against her and the external accountant to recoup some of its losses, but Norris apparently didn’t keep anything of value.

“The stolen monies appear to be simply spent on herself and presumably spread around her friends and family who would appreciate the largesse,” said Justice Crawford. “Sometimes there are food bills or restaurant bills of $1,000. It may be that others had some enjoyment, but obviously Ms. Norris spent far beyond her $60,000 a year in salary.”

The court was left wondering what happened to “all the incredibly expensive clothing and valuable jewellery,” as only $16,000 was recovered from “whatever was given up” by Norris.

The external accountant, who “plainly had not done the job,” said the court, settled with the employer for $640,000 — and the company received about $563,000 after legal fees were deducted.

Sentencing

The court took a dim view of the bookkeeper’s fraud, the impact it had on the owners and the fact it nearly destroyed a successful business.

“This company has some 35 people. It was driven right to the wall, and the emotional impact on the principals who saw their pride and joy practically brought to a stumbling halt. But then they recovered, I suspect, through their own strong and combined purpose,” said Justice Crawford. “But the emotional upset of having someone they trusted to effectively torpedo their business was most evident.”

The court noted that businesses are the backbone of the Canadian economy, and that for them to succeed employees must be trustworthy.

“Without that trust, many small businesses would fail because they would not be able to operate due to the cost of monitoring and security… and thus the courts must send a strong message.”

Norris was sentenced to four-and-half years in jail.

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