It appears that the toy retailer Toys R Us is the latest big business to demonstrate how easy it is for the fraudster to attack if simple anti fraud prevention methods are not observed. Embezzlement master Paul Hopes stole some £3.7 million from the toy giant in 14 sums ranging from £101,000 to £350,000 at a time.
Over a period of around three years beginning in 2005, Hopes raised fictitious invoices for Far East toy suppliers so that he was able to arrange payment into accounts that he controlled. Yes it was as simple as that! He was a company accountant of some 23 years and the company had complete trust in him. They did not expect him to be a fraudster and therefore clearly allowed him to override any semblance of controls that should have prevented the theft.
Hopes wife of 36 years did not suspect anything. She has been devastated by the revelation that her dull dependable husband had stolen money from his employers to fund a lavish lifestyle including prostitutes and high living in the City.
Hopes will probably spend up to 8 years in jail and have a criminal confiscation of assets order made against hime that will wipe out everything he owns. In addition, Toys R Us is now attempting to recover any money that hasn’t been spent through civil asset recovery. This will mean targeting the family home and assets that Hopes may have transferred to his unsuspecting wife.
The American company has more than 1,500 stores in 33 different countries, with its New York outlet being the biggest toy shop in the world. It is surprising that such a large organisation did not have the basic anti fraud controls in place to stop this simplest of thefts! How much would it cost to implement a system of supervision and review, account vetting and credit limit monitoring? The cost of implementing and regularly reviewing such a system would be a lot less than the final bill to Toys R Us for this escapade. It was not even the company’s systems that discovered the fraud, which merrily escaped both the internal and external auditors for three years running. It was the attention drawn by one of the prostitutes used by Hopes and lavished expensive gifts upon that acted as a whistle blower on the embezzlement.
There is a mature and capable anti-fraud industry that is underutilised by corporations world wide. For a reasonable sum, experts in fraud protection and fraud detection can review systems of the smallest to the largest companies. However, it appears that these concerns would rather spend 10 times the amount investigating even larger losses when the fraudster strikes.
Most fraud experts, myself as a forensic accountant specialising in fraud included, will provide initial advice free of charge that could save you huge amounts in the long run – even if we hope to get your business!