How a business owner overcame half-a-million in fraud just months after inheriting her business

Natalie Hiddlestone still cannot fathom why her former business partner stole from their business. 

Her father passed away 8 years ago, leaving the family business to her and Tim (whose name has been changed for his privacy). In the months that followed, Tim stole almost half a million dollars from the business, in a case of fraud that rocked their suburb of Subiaco, in Perth, WA.

Today, the business is thriving. But the steps Natalie had to take to bring the business back have taken a toll on her health and personal life.

Good, reliable service

Hiddlestone Electrics has been a staple in the Subiaco community from inception in 1920. The business provides electrical services – maintenance and installation for industrial, commercial, and residential premises – all over the area. Natalie’s grandfather, Howard Hiddlestone, founded the business and it quickly flourished alongside its reputation for consistent quality.. 

Today, the business operates with 7 permanent employees including a team of four electricians, an apprentice, and administrative employee, and Natalie. The business provides a wide range of installation and maintenance services, from smoke alarm installations to data cabling and annual inspections for smoke alarms, building access, and remote controlled devices.

The business has developed a reputation for being punctual and reliable, says Natalie. Her team can reach the customer within the hour for most jobs, and Natalie is able to send out an electrician to fix faulty products free-of-charge because any company responsible for a faulty product will pay Hiddlestone Electrics to install the replacement.

Natalie took a more permanent role at the Hiddlestone Electrics in 1990, after nearly two decades of running her own photography business. 

She began interviewing for a journalism course at The West Australian newspaper straight out of school, but soon realised it wasn’t for her and transitioned into applying for a photography role at the same paper.

“At the time I wanted to do anything but work with dad,” she says, “He wasn’t easy to work for.”

But just as the Daily News was about to make its hires, it closed down. This was when Natalie went to TAFE, and from there she landed a job with journalist Robbie Burns, taking sports photography. The job dried up after three years but Natalie had built strong relationships with the junior sporting associations she had been working with so she offered them all one free job.

“So of course, everybody took [me] up on it because it’s not going to cost them anything,” she says, “and I probably kept about 80% of that work and then had a very successful career in photography for the next 15 or 17 years.”

Natalie found her way into the business by helping her father out during the week, while on weekends she worked on her own (photography) business. “I had a very close relationship with my father and I think he had respect for my desire to stand on my own two feet through my photography.”

Natalie had her second child in 2002 and soon after her father came to her resolved to agree a succession plan for his business.  “It was then that I chose to give the photography away to focus on Hiddlestone Electrics.” Natalie credits this career decision as the best she’s made to date.  .

Half a buck defrauded

Natalie (Managing Director) and her head electrician, Jason (a paid employee), now lead Hiddlestone Electrics together as nominees for the business. It is a legal requirement that Natalie has an electrician to run the business with her.

But her father left the business with her and with Tim as nominee when he passed away in 2014. Tim also had shares in the business – Natalie’s father had trusted him to that degree – and Natalie never thought that Tim was capable of stealing money from the business he inherited. She was glad that he had come into it alongside her.

But not long after her father left the business to them, she discovered messages on Tim’s phone that blew his secret wide open. 

“The reason… I found out about the deceit and the lies was I upgraded the company’s phones…. So he gave it to me [and]… he’d forgotten about what was on the phone,” says Natalie. “I lent it to my sister to borrow… and she said oh there’s photos still on the phone.”

There were thousands of messages to customers too, regarding jobs where Tim had worked for cash and then been paid by Hiddlestone Electrics for his time.

“I didn’t know that he was not happy with the way the business was running because it was running well,” says Natalie, “but looking at the messages, him and his wife hated me, absolutely hated me.”

Natalie began to piece together things she had noticed in the previous few months. Customers had mentioned credit accounts to her, for example, which was not part of Hiddlestone Electrics’ policy. But she had just brushed it off at the time, with no idea that her business partner could be so dishonest. 

“I was glad that we found out when we did, because we wouldn’t have made it to 100 years… we would have gone bankrupt,” says Natalie.

Natalie’s first point of call was to confront Tim herself. She thought she needed him in order to run the business and she was willing to forgive if he showed remorse, so she told him that the only way they could move forward was if he threw his wife under the bus.

But Tim simply told her that he would get a private phone so that she couldn’t access it, and continue what he was doing, so Natalie had no choice but to dismiss him. Master Electricians, an industry partner, knowledge source and advocate through which Hiddlestone Electrics had purchased business insurance, investigated the fraud and stood Tim down, and Natalie fired him, after 33 years of service.

“We would have gone bankrupt”

The recovery phase following this was lengthy and difficult. Tim wanted to sell his shares back to them for $10,000 but Natalie’s mother hired a lawyer and began to fight for his shares free of charge.

“Mum said “I will spend your dad’s last cent before we give him one more cent”,” says Natalie.

“So she footed the lawyer’s bill for the next… four years [while] we gathered mountains and mountains and mountains of paperwork,” Natalie continues. “We… created a paper trail between… the mobile phones, the customers calling into the office, and lined up those phone calls with his mobile phone records.”

Natalie was working every other night on this paperwork, accumulating eight or ten lever arch files that were “absolutely full to the brim.” It took a serious toll on her family life, her marriage, and her health. 

Natalie’s lawyers set up a mock trial, after several years of work and $180,000 in legal fees. They put her on the stand and asked her endless questions.

“At the very end, when they [asked me] “did you see him receive the money from the customer?” My answer was no… So they said [the case will] fall over,” says Natalie.

So Natalie wrote a letter to Tim listing all the information she knew about what he had done. She wrote that her mother had enough money to see the case through to the end, but it would be mentally and emotionally taxing on both sides, and very costly, and she gave him the option of ending the proceedings by giving back his shares without receiving any money for them. 

Tim responded through his lawyers within half an hour, saying he would accept and that would be the end of it. He wanted Natalie’s family to sign a non-disclosure agreement, they refused, and the conflict was finally laid to rest.

But not without damage to Hiddlestone Electrics. They would have had to take out an overdraft, says Natalie, had they not had such strong relationships with their suppliers who extended their payment plan from 30 days to 60 days. This gave them “a bit of breathing space” to bring in some money before having to pay for the goods they sold.

“[We have] monthly accounts of somewhere between $13,000 and $18,000 each,” she says, “so it was quite a bit to carry!”

Luckily, Hiddlestone Electrics didn’t lose any staff after the incident, or many customers. Natalie explained Tim’s actions to her other employees as soon as she had dismissed him and they took her side, and once the truth was out in the open Natalie’s customers were “very sympathetic and understanding”.

Business operations then returned to normal because Tim was no longer meddling behind the scenes and they were able to bring in the money to get the business back on its feet again.

Still strong, 8 years on

Hiddlestone Electrics is now in its hundred and second year of operation and just as strong as ever.

Natalie took steps to protect her business from future cases of fraud after Tim left. Jason, the trusted electrician who stepped in as a nominee just after Natalie’s father passed, is now the official nominee for Hiddlestone Electrics. Natalie put trackers on all her company cars, so that she could know where her electricians were at any one time. She installed security cameras and asked any new employees she took on to sign contracts against fraudulent behaviour.

“I didn’t instigate them with existing employees when the fraud was discovered, because… I’ve been working with them for five and seven years, I felt that just because Tim stole from us… I didn’t want to brand them as doing that,” she says, “and I felt like trying to get them to sign an agreement was tarnishing the trust I had with them.”

Natalie has also changed the way she approaches after-hours work, and the contact details she provides her customers. Everything comes through the office now, it’s her number or the office numbers on the advertising, stickers and invoices, whereas before it was Tim’s number because he was the one doing the work.

“That allowed him to circumvent any new jobs that came in that allowed him to keep them for himself,” says Natalie.

The electricians on Natalie’s team are also not allowed to handle payment. There are no cash or eftpos facilities on the Hiddlestone Electrics vans, and her electricians give rough quotes to customers after which they bring all the paperwork back to Natalie, who prepares the invoices and sends them out via email. 

Hiddlestone Electrics is now thriving once more, focussing on maintaining its reputation as Subiaco’s most reliable, quality electricians. The business has recently expanded its once minor lamp repair and restoration branch. Natalie’s father used to offer the service but it was always something that the Hiddlestone team did between jobs. Now, Natalie has one dedicated team member in the workshop 4 days a week just doing repairs.

“All of that is still word of mouth,” says Natalie. “I don’t think there’s anybody in the surrounding areas that offers that service, we don’t advertise for it, but we get, we’d have 20 lights come in a day for repairs.”

This part of the business could ensure the longevity of Hiddlestone Electrics should they ever lose the ability to do their other work, says Natalie, but after over a century of success she doesn’t think that will happen. 

For now, she says, she will continue to operate the business herself, emphasising the same service Hiddlestone Electrics has always been known for, and see where the future takes them.