A legal action filed in the British Columbia Supreme Court alleges that three employees at a Denny’s restaurant in Kamloops embezzled over $500,000 from the establishment between 2023 and 2025. The Northland Properties Corporation, which owns Denny’s in Canada, uncovered the scheme during an audit that revealed $11,000 had been unlawfully transferred from the restaurant’s electronic tip system by two workers. Another employee is implicated in the scheme, having reportedly stolen more than $494,000 in the past.
The lawsuit, consisting of five pages, lacks specific details about the fraudulent activities and how the tipping system was exploited. Denny’s utilizes a digital tip distribution platform called Tips Today for collecting and disbursing funds to its staff.
The legal action was initiated on December 16 after unauthorized digital transfers were identified from the tip system to an account linked to one of the accused individuals. The identities of the defendants are not disclosed pending their response to the allegations and legal proceedings. No formal response has been submitted to the civil claim.
Northland alleges that the first two employees collaborated in transferring tips by sharing access codes to the tip platform. One employee would transfer funds to the other, who retained a portion and returned some to the initial individual via e-transfer.
During discussions with one of the defendants, Northland claims that the scheme was reminiscent of a former employee’s actions. Records suggest that the third defendant, who resigned in November, may have misappropriated around $494,533.01 during the mentioned period.
A former employee unrelated to the lawsuit mentioned that cash tips were given directly to servers, while electronic tips were managed through an online system. The suit asserts that the defendants violated their duties of honesty, fidelity, confidentiality, and lawful use of employer resources, leading to unjust enrichment through the misappropriation of funds.
Northland is pursuing damages for theft, conversion, civil fraud, breach of employment obligations, contract violation, and breach of fiduciary duties. The company seeks restitution for the allegedly stolen funds by the accused individuals.