Taking a little cream off the top

Restaurant Skimming

By By John Hughes, CFE

With a little cash register magic, restaurant employees and owners can slyly skim receipts and decrease taxes. Here's how to catch them at their game.  

Sally, the cashier, was a happy woman. Her salary at the successful Cap'n Buddy's seafood restaurant wasn't large but she had found ways to "supplement" it. One of her favorite schemes was to cut out Cap'n Buddy 10 percent discount coupons from the newspaper, apply them to diners' bills, and then pocket the cash later.

But she wasn't the only one stealing. Cap'n Buddy's owner, Fred, was routinely underreporting sales to the state and local tax authorities and realizing a fine profit. Both Sally and Fred were skilled in the fine art of "skimming." 1  

Restaurant skimming by employees and owners amount to thousands of dollars annually in losses both to restaurants and citizens. Often fraud examiners, auditors, and investigators fail to recognize the many criminal violations that can be found in this type of transaction. In addition to the obvious tax violations, the skimming often involves more serious violations (such as postal infractions, and banking, structuring, and conspiracy violations) that are often easier to prosecute than income tax violations.

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