History of Hotel Fraud
Fraud takes many forms ranging from retail fraud, expense fraud, purchasing fraud, book keeping among others. It may involve providing untrue information, stealing money, taking or offering bribes, taking merchandise without informing management among other forms. Hotel Fraud has been in existence from the time when hotels were started until present day. History of Hotel Fraud During the late twentieth century, most hotel frauds were characterized by prominent personalities. Most of them were characterized by swindlers who used wrong checks to pay their way out of hotel bills.
In the year 1902, F Mathers was wanted by the police for defrauding Hotel Heudlein (Hartford Courant). Also in the same year, there was a common hotel Swindler who was arrested. (Hartford Courant) 8 years later some two fraudsters were arrested in Hotel Vendome where they tried to pass an invalid check. (Washington Post, 1912) In the early nineteenth century i. e. the 1920s and 1930s, most cases were characterized by peculiar groups such as clergymen and women. These groups were previously not known as fraudsters.
In the year 1924, a woman by the name Vera was arrested in relation to the loss of thirty thousand dollars from her former employer. She used to work for the Savoy Hotel as a cashier but lost the job after the arrest. (Los Angeles Times, 1924) Seven years later, a clergy man was arrested for hotel fraud too. He was accused of trying to defraud Montclair Hotel off a one hundred dollar bill. This fraudster was sentenced by a Magistrate Weil for a period of three months in a workhouse (New York Times, 1931). During the 1970s and eighties, courts handled cases that were quite historical.
Some decisions were made and they still apply today. In addition, most of the cases were on hotels trying to defraud their clients. It meant that large sums of money were involved. This departed from the norm because most of the cases that had been handled previously were against individuals. In the year 1971, the first felony hotel charge was made. This was done after a law had been passed fifteen months ago. This was done after insistence from the Washington’s Hotel Association. (Washington Post, 1971)It served as an example for other cases that followed because it determined what the shortest jail sentence could be.
In the year 1971, there was a lawsuit against Marriot Corporation; this was one of the largest chains of hotels in Washington. The company faced damage charges of about two hundred and fifty million dollars for Fraud. (Washington Post, 1971) In the year 1982, a hotel was accused of fraud after acquisition of land unlawfully. (New York, 1982) This was followed by some hotel apartments that faced fraud charges. They did not disclose what kind of services which they offered in order to secure more customers and to avoid taxes. The case was tried by Attorney Lee Daniels.
(New York Times, 1982) In the 1990s and in the year 2000 and beyond, most cases were wire fraud cases although there were also other cases that involved only manual swindling. Such cases include a case by Marriot Hotel Management against Burton. He tried to cheat the hotel off two thousand dollars in payment. (Rocky Mountain News, 1990) Six years later, another criminal was arrested on a similar charge. Norling was caught red handed by hotel staff and confessed to the crime. (St. Paul Pioneer Press, 1996) A man was sentenced to three years in prison after he was found guilty of Fraud.
He received this sentence after appealing. (High Beam Research, 2001) One year later, a former foreign minister was arrested for Fraud to enable him to pay for food and accommodation. He was sentenced to a period of four years in jail. (Kyodo World News Service, 2002) In the year 2006, hotels in Orlando conspired with the AG’S office in a wire fraud attempt. (News Bank, 2006) Specific case on fraud Birmingham Crown Court Argued: September 17th 2001 Decided: October 30th 2001 Full case name: Allied Wholesale vs. Wattiez Subsequent history: none Holding
The law against fraudsters was passed in order to protect hotels and hospitality companies. It was upheld in this case. Court Membership Justice: His Honor Orme Counsel for the prosecution: David Farrer QC Alison Clare Counsel for the defendant: Henry GrunWald QC Anthony Orchard Case opinions Majority by: Orme The case of Allied Wholesale and Admiral Contracts vs. Wattiez resulted in a ruling against the defendant. He was found guilty of twenty four counts relating to each of the two companies. He was sentenced to a total of eight years for both counts of fraud.
A surety of thirty thousand dollars should be surrendered to the court for bail. The indictment was on obtaining property and money transfers through deception. Legal analysis of the case Wattiez had a history of fraud- he was convicted in the year 1994 of offences relating to fraudulent trading for which he served a jail sentence of four years. This goes to show that he had a criminal record and the charges against him were similar to those he had faced. This same person used the identity of another person- Fox to conduct business on his behalf. It was illegal for a convicted felon like him to conduct business.
It was therefore a deliberate act on Wattiez’s part, when he used his associate Fox (proprietor of Allied Wholesale) as a signatory to his bank account. Wattiez was guilty of booking orders twice when supplying furniture to hotels; he was also guilty of not guaranteeing payments for any stock contracted. Wattiez did not deliver what he had promised and constantly faced balance of payment. He then left his partner with a debt that amounted to a million pounds. He then started another company with a similar mode of operation. It was called Admiral Contracts.
How to prevent Hotel Fraud Management should create a culture of ethics and strict moral standards. It can do this by prosecuting any serious offenders who will serve as an example to other potential offenders. In addition it can give training on the hotel’s cod of conduct. This is possible through regular workshops or talks from experts. Hotels should ensure that they do not tolerate fraud of any kind. Tolerance will only encourage potential criminals because they will know that their organization is lenient. Fraud can also be prevented by establishing serious systems of control.
This can be done by accurate record keeping. It is a known fact that numbers never lie. Any company can be able to detect missing finances by sealing up the loop holes. Payment systems need to e upgraded and should not be entirely dependent on one individual. This is because it would increase the temptation to defraud. Hotel managers should also create a system that enables workers to report any criminal or fraud activity in the company. It should keep its doors open to whistleblowers. In addition to this, management could also provide a suggestion box where anonymous messages can be placed.
In this era of technology, it is quite common to hear about wire fraud in the hotel industry. Hotels can prevent this kind of fraud by advertising their web pages frequently so that other scams may not be able to pose as staff members of the hotel. Customers should also be informed about the address. This means that any yahoo addresses should not be accepted by customers as legitimate. Customers should also be warned about some tell tale signs on Phishing- internet crime where one person posses as a company representative. Some of these signs include: threats that one’s email account will be closed if no response is made by customers.
Spelling mistakes are sure give away because they prevent spam blockers. Lastly, customers should be very aware of requests for credit card information and bank account numbers because hotels should have safer ways of settling payments. Management can exercise careful observation of its employees. It should know what each member of staff can and cannot afford. This is because their income normally corresponds to their expenditure, although some may have extravagant taste. What management should ensure is spending patterns for each employee is consistent.
A sudden change is normally an indictor that an employee could be getting their income in an unlawful such fraud. Hotel managers should be suspicious of employees who frequently complain about their finances. This is because they are the ones who would be tempted to look for other sources of income. Since their situation is so desperate, such employees would not mind bending the rules to earn an extra buck. It should be noted that this does not mean all needy employees should be charged. Management should consider them and charge them only after proper evidence has been gathered.
Managers should also watch out for employees who have no regard for the rules in the organization. This indicates that these very individuals are quite capable of breaking the law or to commit fraud without feeling any guilt about it. Such individuals have criminal tendencies and would most likely cause a lot of trouble for the company by committing numerous fraud cases. Management can prevent this type of fraud by keeping an eye on such individuals. If such employees feel that they work for strict management, then they may be discouraged from committing crime.
New York Times, (1880): A Broker Charged With Fraud; Accused on Embezzling Funds of A .. , Jul 31, 1880 New York Times (1887): Conscience Spoke At Last. – Feb 9, 1887 Proquest Archiver (1896): The Hotel Fraud Hartford Courant – – Jan 30, 1896 Proquest Archiver (1902): Slick Hotel Fraud Hartford Courant – – Jul 26, 1902 Proquest Archiver (1902): Hotel Fraud in Jail Hartford Courant – – Jul 28, 1902 Proquest Archiver (1912): Two Held for Hotel Fraud. Washington Post – – Jan 28, 1912 Proquest Archiver (1914): Hotel Fraud Charged Boston Daily Globe – – Feb 19, 1914