Operations

GM gets prison time for scamming his restaurants' loyalty program

Mancino's 30-year employee ran the con for 4 years, embezzling $100,000 before being found out.
loyalty program embezzlement
Lake figured out how to game Mancino's rewards program for his personal enrichment. | Photo: Shutterstock

A manager of two pizzerias in Michigan has been sentenced to at least 15 months in prison and fined $134,000 for using the restaurants’ loyalty program to embezzle $130,000.

James Lake, age 55, would retroactively reclassify for-cash transactions as product giveaways supposedly earned by guests as rewards for their repeat business, according to the state police. He would then remove the money that had been paid for the items from the till and pocket it.

Lake pled guilty to the charge last Tuesday, the result of a two-month investigation earlier in the year.

In January, Michigan’s state police were contacted by the owners of the Mancino’s Pizza & Grinders units because they’d noticed a puzzling pattern in product redemptions through the loyalty program. One of the stores was providing far more freebies than its sister unit, and the proprietors couldn’t explain the gap in redemptions. They suspected someone was embezzling.

The authorities discovered that 99% of the giveaways had been logged through one computer at the store with the high redemption rate, and that device sat atop Lake’s desk. The reclassification scam had been going on since 2019, the investigation revealed.

Lake was arrested in March and acknowledged his guilt as part of a plea bargain.

He’s worked for Mancino’s since the operation first fired up its pizza ovens 30 years ago. Ironically, the local brand pays tribute to the loyalty of Lake and his wife on the website for its Traverse City branch.

Their son Andrew grew up with us and worked at one of our stores until he left to go to college,” write proprietors Linda and Billy Gutowski.

The conviction comes as loyalty programs are spreading rapidly through the restaurant business. In recent years, many operations have either added one or updated the programs they already offered.

In addition to fostering repeat business, the programs generate customer information that can be used to personalize the marketing aimed at those guests.

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