Bermuda Telephone Company ,Yvonne Simmons, 54 and Jacqueline Laidlow, 67 – admitted operating an unauthorised lending scheme.

The swindle involving at least seven employees came to light when two of them – Yvonne Simmons, 54 and Jacqueline Laidlow, 67 – admitted operating an unauthorised lending scheme.15-year fraud resulting in a $1.29 million loss to the Bermuda Telephone Company landed two women with year-long jail sentences yesterday.
They were the only people prosecuted, pleading guilty to stealing more than $140,000 from the company during a court hearing last month. Five other employees have been fired but not brought to court.The circumstances of the theft, which involved lax accounting procedures, prompted criticism of BTC by a judge during the sentencing yesterday for letting it go on for so long."You would like to believe that public companies are doing right. You like to know that they are properly managed and you can trust them," said Puisne Justice Carlisle Greaves."You like to know that when you pay your telephone bills or your interest rates our whatever the product is, that you're paying a fair price because the company's managed properly."Detailing the case yesterday, Crown counsel Brett Webber told Mr. Justice Greaves: "Yvonne Simmons and Jacqueline Laidlow were employed by the Bermuda Telephone Company for many years as banking administrators."Together, they controlled the department that was responsible for banking the cash that had been received by the cashiers at the Hamilton office of BTC. They were supposed to account for, and bank the receipts on a daily basis. In September 2005 it was reported that a deposit of $142,233.06 was missing. Following inquiries into where the money had gone, it was discovered that there were no procedures in place to reconcile cash receipts with money that had been banked."As a result, in October 2005 new procedures were installed in an attempt to tighten financial controls. The prosecution's case is that these new measures would have inevitably lead to the discovery of the defendant's role in the loss to BTC of $1.29 million."Mr. Webber said on October 13 2005, Simmons called JoAnne Raynor, the Assistant Vice President of Finance, and told her that she and Laidlow needed to speak to her.During the meeting, Simmons admitted that for the past 15 years, she and Laidlow operated an IOU scheme whereby cash would be loaned to staff for IOU's or post-dated cheques."She had hidden some of the IOU's and others would be torn up and thrown in the trash. She personally borrowed sums of money between $200 and $300 but would pay it back."On October 19, 2005 she wrote a letter of apology to the Chief Executive Officer, enclosing her un-banked severance pay cheque," said Mr. Webber.Laidlow admitted that she also operated the scheme for 15 years and had been covering up the shortages of loans that were made but never repaid."She herself had stolen about $30,000, but she did not know the exact amount," said Mr. Webber, explaining she admitted making false entries in the accounts to ensure that the excel spreadsheet agreed with the summary report.He continued: "As a result of the admissions, the desk and work area of the defendants were searched. IOUs and large quantities of cash were discovered in the drawers of both defendants."The cash totalled $139,783. There was no legitimate reason for the cash to be kept in this manner as it should have been banked."An internal audit by the company revealed a shortfall of $1,292, 940, almost exactly the sum agreed by Yvonne Simmons."Mr. Webber told the court that a KPMG accountant commenced an external audit of the accounts. There was a shortfall of no less than $1.29 million discovered by the internal audit pre-dating April 2005."The scheme depended for its success upon weaknesses in the accounting system that enabled the timing of depositing cheques and cash to be manipulated, and with reconciliations occurring on a monthly basis, there was enough time for large quantities of cash to be held back."He told the court that it was not possible to identify an exact amount of money taken from BTC prior to April 2005 as internal and external audits arrived at different figures. The $1.29 million represents the lowest sum."This is in part due to an accounting system called Virtuoso that had been introduced and then later abandoned several years before."The first charge that the duo pleaded guilty to, conspiring to defraud BTC between December 21 1989 and April 1 2005 was, said the prosecutor "designed to reflect the agreement made between the two defendants to risk BTC's money on an unauthorised and badly monitored private lending scheme" through to April 2005."Save for the amounts the defendants admitted to taking for themselves, the prosecution do not allege this scheme was designed to enrich the defendants personally."Rather, they set out to lend cash dishonestly and were forced to cover up their losses as more people defaulted, and the paperwork became lost," said Mr. Webber."But as things spiralled out of control, the defendants should have called a halt to it, rather than continue."The second charge, stealing $140,0371.85 from the company, relates to the period between April and August 2005, said Mr. Webber "for which there were no excuses regarding the accounting system. In this phase the shortfall was readily identified."Defence lawyer Rick Woolridge said: "These ladies come before you not as young people who made silly mistakes but as people who began their careers at the Bermuda Telephone Company and were indoctrinated into an existing culture of deceit, mismanagement, misappropriation and fraud."He complained that five others had been allowed to pay the company back and were not prosecuted.He said the women were "almost as much victims as they are culprits" and were "not criminal minds" but rather "spokes in the wheel" of a wider enterprise reflecting the culture they worked in at BTC.The IOUs, he said, were for employees "paid a pittance for the service that they did" who spent the money on feeding their children and paying their bills. He begged the judge to consider non-custodial sentences that would enable to women to work with youths at risk of crime.Both women apologised for what they had done, but also blamed others.Laidlow, a mother of three, said two accounting systems made it impossible for them to get the books to balance, and complained about managers who would not help them."No, we wasn't taking for 15 years. We was covering for 15 years but we wasn't taking for 15 years," she told the judge.Simmons said: "It was not 15 years taking for ourselves. It was 15 years of us trying to balance a system, going home, pulling your hair, and not knowing what to do."She said she knew they had not taken $140,000 but had pleaded guilty for their part in the scheme. The women have never been before the courts before.Mr. Justice Greaves said he viewed as "a sad case" and described the pair as "righteous thinking people" without "any real criminal intent."He told them that looking at them in the dock hurt him, especially as Laidlow, at 67, is just two years younger than his own mother.He said that for 15 years at least, BTC allowed itself to be ripped off, "not by one or two employers but it appears that so many must have participated in this programme that it became an epidemic."

However, he said that although he had looked hard at imposing a non-custodial sentence, having given the women credit for admitting to the con, there were no exceptional circumstances that would allow him to do so.The laws about embezzling employers, he told the women, were based on the principle that doing so "is to put in danger not only your employer but others in society who may be affected by your acts. Companies crumble, people lose their jobs, people you may not be thinking about".In addition to a one year jail sentence, each of the women must complete 300 hours of community service within six months of their release.In a statement after the case, a BTC spokeswoman said: "In October 2005 BTC discovered irregular activity that had been carried out over a period of years by some long-term employees who had acted together to overcome BTC's system of internal controls over the handling of cash."The full financial impact to BTC of the fraud was recorded in BTC's financial year to 31 March 2006."The subsequent investigation and review by an external forensic auditor resulted in the implementation of a further enhanced internal control framework designed to mitigate the risk of any recurrence of such an event."The staff involved were dismissed and additional follow-up to this incident included strengthening the anti-fraud environment by reviewing controls in a number of related operational areas, and re-emphasising BTC's policy regarding zero tolerance for fraud."