Former bookkeeper accused of stealing $400K from B.C. company

The owner of a Surrey, B.C., business who claims he was defrauded of more than $400,000 is suing one of his former employees and his bank, according to a notice of civil claim filed in B.C. Supreme Court.

In the lawsuit, L-M Equipment Co. owner Rick Weihs alleges that Maria Smith made dozens of transfers from the company's Royal Bank of Canada account to her personal account between February 2016 and May 2018.

He says the alleged thefts almost sunk the business that he bought from his father in 1996.

"We could have had 27 very well-paying jobs that could have gone down the tubes," Weihs said.

"For a little while there, it was pretty tough."

The lawsuit claims that in her position as bookkeeper, Smith had control of the company's bank account, which allowed her to make several transactions — ranging from $824 to $27,800 — without being detected.

None of the allegations against Smith or RBC have been proven in court and Smith has yet to file a response.

CBC News was unable to contact Smith, who is also facing criminal charges of fraud over $5,000 and theft over $5,000.

'It was shocking'

Weihs first suspected something was wrong in May of 2018 when he noticed a double payment to one of his suppliers.

When he looked into the matter, Weihs found the name of the supplier didn't match the bank account the money was transferred to, according to the lawsuit.

Instead of going to the supplier, Weihs alleges the funds went to Smith's personal RBC account.

"I just about fell off my chair," he said. "It was shocking."

When Weihs brought in an accountant to investigate, they discovered $410,972.29 in fraudulent transactions, according to the lawsuit.

Theft over $5,000

The lawsuit alleges Smith would mask the L-M Equipment Co.'s transfers to her personal account by listing the payee on the transaction as a company that Weihs frequently did business with.

Smith is also accused of linking her personal account to false company names and previous employees' payroll files that she reactivated.

Smith made 96 fraudulent transactions using those methods, according to the lawsuit.

Weihs's lawyer argues that RBC should have security measures to ensure the name of the payee matches the payee's account number.

He accuses RBC of negligence and breach of contract, which the bank denies.

In its response to the claim, RBC says Weihs should have had a procedure in place to detect fraudulent activity within his company.

RBC also says that L-M Equipment put Maria Smith in a position of trust without investigating her character.

"The plaintiff failed to have in place any appropriate safeguard policies and procedures within its accounting system to prevent employees including Maria Smith from committing fraud," RBC argued.

Restitution

The lawsuit claims that in June of 2018, Smith agreed to pay back all the money that was taken from the company, plus expenses, which added up to $450,000.

Weihs says he received two lump sum payments totalling $44,647.98, as outlined in the payment agreement.

He alleges, however, that Smith hasn't made any of the monthly payments that were agreed to.

Lessons learned

Vancouver-based technology writer Graham Williams recommends that companies use financial management computer programs or bring in a third party to review documents.

"Even if you do have a bookkeeper looking over things, having a second set of eyes who may understand how those systems work, would probably be helpful," he said.

"It may have caught something like this."