Ontario worker must pay back more than $200,000 stolen from employer

A worker must pay back more than $200,000 that she stole from her employer during a decade of employment to support her gambling habit, the Ontario Superior Court of Justice has ruled.

Steele Industrial Supplies is a commercial and industrial equipment supplier in North Bay, Ont. It hired the worker in 2002 to be a bookkeeper.

According to the worker, she began gambling in 2006, mostly at Casino Rama in Orillia, Ont., but she also visited a casino in Sudbury, Ont., and sometimes crossed the border to gamble at casinos in Michigan and Arizona. She usually made cash advances on her credit cards, transferred funds between her personal bank accounts, and borrowed money from family and friends to fund her gambling habit.

However, in 2006, the worker began stealing money from Steele to gamble. This usually involved taking cash from customers who paid for invoices or new purchases with it. According to the worker, she stole about $94,000 in total from the company, according to journal entries and notes she made.

The company discovered the missing money and the worker admitted to stealing it. An accountant investigated but was unable to determine how much she had stolen because she kept two sets of books, although Steele believed that the worker stole more than $600,000 based on the lifestyle she was living while employed with Steele.

Worker fired and charged for theft

The company terminated the worker’s employment in September 2012.

Steele also called the police, who charged the worker criminally. As part of a plea bargain, the worker agreed to pay $100,000 in restitution. Even though it was $6,000 more than she claimed that she stole, she said it was reasonable given her breach of trust.

In 2014, Steele sued the worker and her husband for damages from the theft and unjust enrichment of the husband from the stolen money.

Steele hired a forensic accounting firm, MNP, to determine how much the worker stole. MNP reviewed the worker’s bank accounts and casino records and reported in 2018 that the amount she stole was $455,470.

The worker retained another forensic accounting firm, KPMG, to review MNP’s report. KPMG investigated the worker’s cash deposits, cash advances on her credit cards, and casino records to determine that the amount the worker stole was between $119,000 and $164,000.

Amount stolen not clear

In 2019, Steele moved for summary judgment in its lawsuit. The court found that the evidence supported that the worker stole money from the company, but not how much she stole and how much her husband had been enriched, so it denied the application.

MNP conducted a “reply” report in 2021, which examined some different elements and revised its conclusion of the stolen amount to $454,318, although this went back to the worker’s hiring in 2002 to 2012.

The worker commissioned a reply report of her own from KPMG that estimated the total amount stolen to between $101,305 and $248,273.

The court found that it the worker wasn’t credible on the amount she had stolen, as she was “an admitted thief” and falsified documents to steal. In addition, she was inconsistent in when she gambled and where. As a result, the court didn’t accept her contention that she stole $94,000.

The court also didn’t accept Steele’s estimate of more than $600,000 because it was based only on observations of the worker’s lifestyle and was refuted by its own forensic accounting firm.

Inaccurate investigations

The court also found that the approaches taken by both accounting firms were flawed, as they didn’t account for borrowed money and other money that she spent that wasn’t stolen. There were also concerns with gaps in the data on bank deposits, said the court.

The court determined that the money stolen from 2006 to 2012 should be calculated through the worker’s overall cash deposits minus non-verified deposits and transactions, withdrawals, and cash advances at Casino Rama. It found that this was $148,780.

For the money stolen from 2002 to 2006, the court used half of the amount calculated from 2006 to 2012, less 25 percent because the worker likely stole less frequently early in her employment. With this amount totalling $55,890, the court set the amount stolen by the worker during her employment with Steele to be $204,670.

The court agreed that the worker’s husband was unjustly enriched by the stolen money because he held joint bank accounts with the worker and sometimes went with her to the casinos, but there was no way to calculate a value for it.

The court concluded that the worker was responsible for $204,670 of stolen money. Since she had already paid $100,000 as part of the plea deal, she was ordered to pay Steele $104,670 plus interest. See Steele Industrial Supplies Inc. v. Elliott, 2023 ONSC 5527.