Friday, April 30, 2010

Allentown, Pennsylvania church treasurer embezzled $112,000, police say

The former treasurer of the Zion Evangelical Congregation Church in Allentown stole $112,500 from the church over seven years, city police said.
Alice M. Miller, 43, of 740 S. Genesee St., Allentown, was charged today with theft and receiving stolen property for allegedly embezzling the church at 224 W. Susquehanna St.
Miller was in charge of the church's finances from 2002 to 2009. Financial irregularities came to light late last year, when the new pastor, the Rev. Gary J. Morrell, questioned the accounting and ordered a full audit, police said.
Miller is no longer a member of the Zion church.
The audit by a certified public accountant found that certain church debts went unpaid as $112,563 was misappropriated, according to the police arrest affidavit.
The money was siphoned in direct cash withdrawals from church accounts, and in church checks Miller wrote to herself and her husband, Joseph, according to the police arrest affidavit.
Police said Miller had a debit card that tapped into church funds.
District Attorney James B. Martin said there was no evidence Joseph Miller knew of his wife's actions, so he was not charged.
Alice Miller was arraigned today by District Judge John Dugan and released on $75,000 bail.
City police Detective Sgt. LeRoy Oswald investigated the case.

Thursday, April 29, 2010

Former Killingly,Connecticut school employee enters not guilty plea in embezzlement case

The former Killingly school employee charged with embezzling more than $23,000 from a student fund has decided to withdraw her application into a special probationary program that would leave her with a clean record.

Cathy A. Flerra, 55, made a brief appearance in Danielson Superior Court Tuesday, where she has a pending application for accelerated rehabilitation, which allows first-time offenders to serve a period of probation. If successfully completed, a defendant can maintain a clean record.
Flerra's attorney, Paul Chinigo, announced Flerra would be withdrawing the application. He did not say what prompted the decision though Flerra's application was likely to face opposition from both the school and state prosecutors.
Instead, Flerra entered a not guilty plea and the case was continued to May 25.
Flerra is charged with first-degree larceny in connection with the theft of money from the student activity fund at Killingly Central School, where she worked as an administrative assistant and managed the fund.

Wednesday, April 28, 2010

Clinton, Iowa School District to move forward with litigation in embezzlement case

The Clinton School District will take legal action to recover more than half a million dollars in funds allegedly embezzled from the district’s budget by a former employee.

The Clinton School Board voted unanimously at a committee of the whole meeting Monday evening at Bluff Elementary School to proceed with litigation to recover any misappropriated funds beyond the district’s $500,000 insurance policy limit.
The motion also included approval for the district to submit a claim to its insurance company for the $500,000 covered by its insurance policy.
Superintendent Richard Basden released a statement to the Clinton Herald last week alleging that Denise Babcock, a former accountant and business office supervisor for the district, embezzled more than half a million dollars from the district.
Babcock has not been publicly charged by state or federal authorities in connection with the case.
According to district officials, the specific amount Babcock is accused of misappropriating will be revealed at the conclusion of an ongoing investigation being conducted by the district, the Iowa Auditor of State, the Federal Bureau of Investigation and the U.S. Attorney's office in the Southern District of Iowa.
The school board spent nearly 30 minutes in a closed-session litigation discussion with local attorney Jerry Van Scoy, who handles legal matters for the district, before taking its vote Monday.
The school board’s motion for the vote, which names Babcock, states the district will enforce its legal rights to reclaim any funds misappropriated beyond the insurance limit and will “effectuate return of district property or assets” from “any party responsible.”
“We do not have a timetable,” Board President Jim McGraw said after the vote. “Unfortunately, that’s all we can divulge.”
The state auditor’s office has not yet released an audit report on its investigation into the district’s finances.
Mike Bladel, law enforcement coordinator with the U.S. Attorney's office in the Southern District of Iowa, has said charges in cases similar to the school district investigation are not usually released as public record until a suspect has made an initial appearance in court.

Tuesday, April 27, 2010

Port Huron, Michigan Woman to be in court on embezzlement charge

A 48-year-old Port Huron Township woman charged with stealing money from St. Edward On-the-Lake Catholic Church has a plea hearing at 1:45 p.m. Monday, April 26, 2010  in St. Clair County Circuit Judge Daniel Kelly’s courtroom.

Jacalyn O’Boyle is charged with embezzlement $100,000 or more. O’Boyle worked for the church for 15 years. The missing money was discovered during a July audit

Monday, April 26, 2010

Hawaii Church leader accused of theft resigns

The second highest ranking lay person at Kawaiaha'o Church has resigned amid a criminal theft investigation by the state Attorney General's office.

The departure represents the latest controversy for the church known as "the Westminster Abbey of Hawai'i," which also faces questions from the AG's office over its fundraising practices and is being sued for disinterring dozens of human remains.
Earlier this month, Kanani Oleole resigned as Kawaiaha'o's vice moderator, which is one of the most important, nonclerical positions at the church.
Church officials said her resignation was for personal reasons. Oleole wanted to attend another church where her husband is a member, they said.
But Oleole's resignation also comes as several church members have alleged that she misappropriated $5,000 from a local nonprofit organization.
The organization, known as the All Pacific Prayer Assembly, is separate from Kawaiaha'o Church but receives some funding and other support from the church.
The attorney general's office recently opened a criminal investigation into the alleged theft.
Pastor Michael Warren, who heads the APPA, said that the attorney general's office questioned him several weeks ago about the matter. But he declined to discuss details of the case at the request of state investigators.
Oleole could not be reached for comment.
Curt Kekuna, Kawaiaha'o's kahu, said Oleole acknowledged her wrongdoing to him even before she was appointed vice moderator and he said that Oleole is now paying the money back.
Kekuna said that as vice moderator, Oleole did not have access to church funds and had no say over the church's financial matters.
"A representative of All Pacific Prayer Assembly alerted me to the improper use of funds by Kanani Oleole," Kekuna said in an e-mail.
"I confronted Ms. Oleole and she confessed to me what she had done, asked for forgiveness and wanted to make restitution, which she has been doing."
Established in 1820, Kawaiaha'o Church is one of the state's oldest churches and is on the national and state registers of historic places.
Founded in 1991, the All Pacific Prayer Assembly is a nonprofit group that supports congregational churches in the Pacific.
The nonpaid position of vice moderator is a two-year position that's chosen by the church's council. The vice moderator assists the church's moderator in presiding over council meetings, membership meetings, retreats and special meetings of the church.
The investigation into the theft allegations is separate from the attorney general's inquiries into the fundraising for the church's stalled, $17.5 million multipurpose center.
Last year, the attorney general's charities unit told Kawaiaha'o officials that some of their annual reports contained material misstatements about the center's fundraising costs. The civil probe is still pending.
Construction on the 30,000-square-foot center was halted in March 2009 after workers dug up 69 sets of human remains at the site.
Abigail Kawananakoa, heiress to the Campbell Estate fortune, and Dana Naone Hall, a Hawaiian cultural specialist whose relatives are buried at Kawaiaha'o's cemetery, have sued the church over its handling of the remains.

Sunday, April 25, 2010

Illinois Non-profit focusing on environmental education files lawsuit over unnoticed theft

Chicago's non-profit Resource Center, which focuses on environmental education, has accused a former employee of embezzling hundreds of thousands of dollars over a period of at least six years-and it's suing the accountant it says failed to notice.In a lawsuit filed in the Circuit Court of Cook County, the Resource Center says Lee Tockman and his eponymous company didn't use accepted auditing practices that would have shed light on the embezzlement of some $600,000 by the employee.
Mr. Tockman didn't return phone calls.In its lawsuit, the Resource Center says the employee forged checks to herself and then hid the theft by altering statements from 2003 to 2009. The center's general manager eventually noticed the discrepancies.The lawsuit says the employee was fired and reported to law-enforcement officials. The U.S. attorney's office says no charges have been filed.
For its part, the 35-year-old Resource Center is emerging from a difficult financial year. With manufacturing down in the recession, its income from recyclables dropped.
But things have rebounded in the recycling business, says founder Ken Dunn: We're in good shape again.
The money lost each year in the alleged embezzlement was a fraction of its annual budget, which ranged from $1.4 million to $1.8 million during that time. It's not so much, in the big scheme of things, but we're disappointed we didn't get the best standards to catch such a problem, Mr. Dunn says.
His non-profit agency is known around town for collecting unused food from restaurants and grocery stores and delivering it to food pantries and shelters. It also runs City Farm, a sustainable vegetable garden straddling Cabrini-Green and the Gold Coast. Buyers of its produce include Frontera Grill and the Ritz-Carlton.

Saturday, April 24, 2010

Naropa says $450,000 was embezzled from school in Boulder, Colorado

Naropa University says about $450,000 has been embezzled from the Buddhist-inspired school over the past two years. Naropa President Stuart Lord says an employee suspected of taking the money was fired last week. No charges have been filed.
Lord says the university is cooperating with law enforcement. He says the alleged embezzlement was discovered by an internal investigation launched after a tip from the FBI.
An FBI spokesman declined to comment on whether the agency is investigating.
Lord says two other employees were fired for allegedly failing to establish proper controls but that neither is suspected of wrongdoing.
Naropa was founded in 1974. Its teachers have included poets Allen Ginsberg and Anne Waldman and composer John Cage.

Friday, April 23, 2010

Murrieta, California woman sentenced in school embezzlement case

The former treasurer of the Murrieta Elementary School parent teacher committee, who was convicted earlier this year of embezzling from the organization, has been sentenced to jail time and probation, court records show. Samantha Babbitt, 40, was sentenced Friday to 210 days in jail and five years probation by Judge Kelly Hansen at the Southwest Justice Center in French Valley, court records show.
Hansen ordered Babbitt to surrender June 4 to serve 30 straight days in jail, with the remainder of her sentence to be served on weekends, court records show.
Babbitt was arrested by Murrieta police in September after nearly $43,000 was discovered missing from the committee's account, police said at the time.
Though Babbitt pleaded guilty to embezzling, she said the amount taken was significantly less than reported, prosecutor Arthur Chang said.
A hearing is set for June 4 to determine the total amount Babbitt will be required to pay back.
Babbitt was the committee treasurer for two years until her term ended last summer.
The discrepancy in the books was discovered when they were handed over to the current president and treasurer, Murrieta Valley Unified School District spokeswoman Karen Parris said at the time.

Thursday, April 22, 2010

Former secretary at Fayetteville, North Carolina South Columbus High faces embezzlement charge

Discrepancies totaling nearly $58,000 in accounts at South Columbus High School in 2007 and 2008 resulted in the arrest Friday, April 16, 2010 of a former secretary on embezzlement charges.

Kimberly Clairee Williams, 40, of the 100 block of Grist Road in Chadbourn, is accused of embezzling $57,872.86 from the school during a 10-month period from September 2007 through June 2008, according to a search warrant obtained by Agent Megan Kwalick with the State Bureau of Investigation.
Problems with Williams' record keeping were noticed as early as January 2008, six months after she was hired as a secretary and treasurer for the high school near Tabor City.
By May 2008, it appeared the school's bank account was short by about $30,000. Williams missed six appointments with Terry Dudney, finance director for the Columbus County Board of Education, to discuss the irregularities, before finally attending a meeting in mid-May 2008 with Principal Dale Norris and Dudney.
Williams "began to cry" at that meeting, and told the school officials "she was not being understood by anyone."
Williams was given more time to provide corrected records and had not done so by June 2008.
Officials from Waccamaw Bank notified the school in July 2008 that the school bank account was overdrawn. That prompted Norris and Dudney to review school records again on July 7, 2008. They discovered even more money missing than during their first review. The search warrant does not say how much.
Williams was placed on paid suspension on July 10, 2008.
"On July 11, 2008, Williams sent a letter to the school system saying she would be willing to pay back any money missing from the bank account, and also requesting a hearing regarding her job status," the search warrant said.
Williams resigned July 21, 2008.
Investigators with the Columbus County Sheriff's Office were notified after Waccamaw Bank told school officials the bank account was overdrawn. Detectives decided an outside agency should take on the investigation and asked for the SBI to do so.
Williams was identified by school officials as the only one responsible for maintaining a ledger of deposits and taking those deposits to Waccamaw Bank.
Superintendent Dan Strickland said he did not know why the investigation took so long.
He said county funds were used to make up for the losses temporarily and those losses eventually were absorbed by the school.

Wednesday, April 21, 2010

Former Church Daycare Director in Macon, Georgia Indicted For Theft

A former daycare director at a macon church has been charged with more than 400 counts of forgery and theft. Right now, Paula Cowan is out on bond for one count of theft back in 2008 when the investigation first started. But as the investigation grew, so did the charges against her.

Page after Page of copies of forged checks will be used as evidence against Cowan, who is the former director of daycare at Riverside United Methodist Church in Macon.
An arraignment date for Cowan to plead guilty or not guilty has not been set. If the case goes to trial and if she is found guilty on all counts, prosecutors say she could face up to 5,500 years behind bars, along with paying back the stolen money.

Monday, April 19, 2010

Virginia Christian group officer accused of embezzling $700,000

A top officer of a nonprofit Christian missionary group has been arrested for allegedly embezzling more than $700,000 from the Northern Virginia group and using it to support a "lavish lifestyle" that included buying a Porsche sport-utility vehicle and renting a second residence, Loudoun County authorities said Friday. Eun Tae Lee, 50, is listed in an annual report as the chief administrative officer for Seed International Inc., a missionary company sponsored by the Korean Central Presbyterian Church in Vienna but funded by numerous Korean churches around the world.
Won Sang Lee, the retired senior pastor of Korean Central, is the president of Seed, and Chang Soo Ro, the senior pastor of Korean Central, is listed as Seed's secretary in the company's annual report to the Virginia State Corporation Commission.
It was unclear how many employees or missionaries Seed has, nor were there details about donations the company receives. Officials at Seed and Korean Central did not return multiple requests for comment.
F. Douglas Ross, an attorney for Seed, said the effect of the embezzlement "obviously is significant. It's an international humane organization that provides missionary services and support across the globe."
Seed's offices are in Sterling. Members of Seed first approached the Loudoun Sheriff's Office on March 26, according to a search warrant affidavit, and reported that Eun Tae Lee had "embezzled in excess of $700,000 from their organization."
The group's members told C.A. Perinis, an investigator with the sheriff's office, that Lee had gained control of the group's bank account and had written checks to accounts he had set up in his own name, Perinis wrote in an affidavit for a search warrant for Lee's townhouse in the Fair Oaks area of Fairfax County. Perinis also obtained a search warrant for an apartment on Commons Drive in Annandale, which the affidavit alleged Lee was renting with stolen funds from Seed.
The affidavit also claims that Lee bought a 2006 Porsche Cayenne sport-utility vehicle, which can cost $100,000 or more, and used Seed's money for personal expenses. When Seed members confronted Lee about the missing money, Perinis wrote, he allegedly produced phony financial documents and bank statements to show investments of the "church's funds." A bank representative reportedly later told Seed officials that the documents were counterfeit, the affidavit states.
Lee's home in the 12100 block of Wedgeway Court in the Penderbrook neighborhood and the Annandale apartment were searched April 2, and computers and documents were seized in both places, court records show. A woman who lives in the Annandale apartment said she had never heard of Lee and did not know why her computer was taken. But sheriff's spokesman Kraig Troxell said, "We have evidence obtained during the investigation that links the Annandale address to this embezzlement case."
It could not be determined how long Lee had worked for Seed, or how big the group's reach is. One church member said Seed sponsors Christian missions around the globe, but Ross did not know how many. Troxell and Ross declined to comment on how long the alleged embezzlement might have lasted. Lee first appears in the company's annual reports as an officer in 2008.
Lee surrendered to Loudoun authorities Thursday to face one charge of embezzlement. He appeared before a magistrate and was released on his own recognizance, Troxell said. He did not answer the door at his home Friday.
Loudoun Commonwealth's Attorney James E. Plowman said the case was "very troubling, given the significant amount of funds that are involved, and particularly aggravating, given the charitable nature of the work the victims perform."

Friday, April 16, 2010

Former Oklahoma church secretary pleads "no contest" to embezzlement

The former secretary of Assumption Church of Duncan, Maria Lamar, has pleaded "no contest" to embezzling thousands of dollars from her church.
While Lamar has not admitted guilt, she will not provide any defense to the charges. Monday Lamar pleaded no contest to two counts of obtaining property by false pretenses. What might complicate things is she is the wife of Stephens County Special District Judge Carl Lamar.
Lamar is not looking at prison time. She has been sentenced to one-year probation and is ordered to seek counseling in addition to paying restitution to the church for the money she embezzled.
The prosecutor says Lamar received no special treatment just because her husband is a judge. He says he sought the same punishment for Lamar that he would have sought for anyone else who committed the same crime.
Investigators say it all started at the Assumption Church of Duncan last summer. Money slowly disappeared from the church's account, about $2,000 in all.
"She used the churches accounts for obtaining some property," said Special Prosecutor George Burnett.
Burnett says Lamar dipped into the churches account to pay for personal items.
"Basically she was using the churches check book to pay for some minor things like haircuts and things like that," said Burnett.
Burnett says the church not only paid for Lamar to get her hair done, but also for maintenance to her car and home.
"The two largest things were a set of tires and an air conditioner."
Burnett says Lamar did not offer up a reason to why she took the money, other than she was going through a tough time.
"I think she had some emotional issues going on at this time."
Issues or not, Burnett says Lamar's actions cannot be justified and now she has to pay, but not in the form of jail time and there are good reasons why.
"Never been in trouble before, she's willing to make restitution, it's not a great amount of money, not like a $500,000 embezzlement."
Burnett says some people might think Lamar got special treatment since her husband is a judge, but he says this was not the case. In fact, the court made sure that would not happen by bringing in Burnett from another county.
"Because it involves a district judges wife from this district, because they work routinely with him, rather then have a conflict of interest, they refused and assigned another district attorney."
Burnett also says it would have been a conflict of interest if a judge from the same district presided over Lamar's hearing. That is why a judge from outside the district was brought in as well.
7NEWS tried to talk with officials at the Assumption Church of Duncan and called the Catholic Archdiocese Chancellor in Oklahoma City for comment, but they both declined.

Embezzlement investigated at Rogersville, Tennessee church

Rogersville police are looking into the alleged embezzlement of thousands of dollars from a local church by one of its members.
Members with the Bridge Baptist Church on East Main Street in Rogersville recently began suspecting that a member serving as the church's accountant was embezzling thousands of dollars from the church.
Rogersville Police say they have one suspect, although the investigation is far from over and criminal charges aren't expected in the near future.
No solid figure has been released regarding the amount of money missing. One church member with knowledge of the situation estimates the figure is close to $90,000.
The alleged thefts came to light after bills marked as paid in church ledgers came back as unpaid, including monthly dues to the Southern Baptist Association.

North Carolina Central University audit finds evidence of embezzlement

N.C. Central University has turned an ongoing internal audit over to state regulators after discovering evidence that a former university employee embezzled funds from a project funded in part by federal and state grants.
NCCU has found that the former director of the Historically Minority Colleges and Universities Consortium, for which NCCU was a member and fiscal agent, funneled some of its funds into a personal bank account, according to a March 29 letter to state officials from NCCU Chancellor Charlie Nelms.
“It now appears that substantial funds may have been diverted into this Bank of America account,” Nelms wrote. “The account may also have been maintained covertly by the former employee for improper purposes.”
The amount of money in question isn’t specified in the letter, and NCCU officials have declined further comment.
But over the last decade, the program has received more than $13 million in funding from state appropriations, federal and state grants and private foundations.

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Rio Grande District Still Withholds Borrego Checks

Over 500 Jemez Mountain School District checks totalling almost $3.4 million were deposited into the personal bank accounts of former business manager Kathy Borrego, despite the fact that one in five of those checks was not made out to Borrego, according to an inspection of the checks by the Rio Grande SUN.

But whether that was all the money Borrego and her co-conspirators embezzled is not clear because the District has failed to fully comply with a court order and with a separate SUN request for documents.
State District Court Judge Sheri Raphaelson had ordered the School District March 23 to comply with two 2009 requests from the SUN to provide for inspection of all check payments to Borrego since 1999, as well as any checks made out to her husband Jerry Archuleta, her daughter Rosana Lopez, Lopez’s ex-boyfriend Andrew Duran or the Abiquiú Land Grant dating back to 2001.
In response to Raphaelson’s ruling, Superintendent Adan Delgado provided the 538 checks he said were involved in the State Auditor’s investigation of Borrego. That batch of documents included what Delgado said were all District checks made out to Borrego since 2002, as well as checks made out to four other parties.
Delgado said the District failed to comply with the entire request because he was unable to get copies of the checks that cleared its accounts at Valley National Bank prior to 2002.
But Valley National President Al Hernandez said Delgado never tried to get the checks.
“I don’t think they requested them that far back, but I believe we probably do have it,” Hernandez said. “If we get a request by them, we always provide what they ask for through the legal means necessary.”
In addition, the District has failed to fulfill or respond in writing to a separate February request from the SUN to inspect check payments to 20 other individuals, some of which may have shown up in documents redacted by Delgado.
In total, the released checks’ $3.4 million total matches the dollar amount State Auditor Hector Balderas accused Borrego of embezzling in an August 2009 report.
Borrego is the only person to face criminal charges in the case so far. She pleaded guilty in February to 11 felony charges: six for embezzlement, four for tax evasion and one for committing an official act for personal financial gain. She awaits a sentencing hearing this month with Judge Stephen Pfeffer.
All but a handful of the checks provided landed in one of two private accounts: a Del Norte Credit Union account, which Borrego and Archuleta controlled, or a Zia Credit Union account, which Borrego and Lopez controlled, according to a search warrant for both accounts. A scattering of other checks bearing Borrego’s signature ended up in a different Del Norte account or a Valley National Bank account.
The only other checks provided that did not end up in one of those accounts are one to Archuleta for $28,676 dated Oct. 25, 2007; one to Duran for $6,866 dated Sept. 14, 2007; and one to the “Abiquiu Grant Association” for $27,509 dated Jan. 26, 2005.
A check for exactly that last amount was deposited into the Abiquiú Land Grant’s bank account Jan. 27, 2005, bank records show. The Land Grant had investigated Archuleta, its former treasurer, and former president Delvin Garcia in connection with tens of thousands of dollars that went missing from Land Grant coffers. However, neither Garcia nor Archuleta has faced criminal charges in connection with either alleged embezzlement.
Delgado said all of the checks in question avoided internal detection because Borrego destroyed or falsified District bank records that could have shown her unauthorized checks clearing the District’s bank accounts. The fraudulent checks evaded the notice of former superintendents Pancho Guardiola and Robert Archuleta before Delgado, in his third year as superintendent, began to suspect foul play last spring and requested copies of those checks from Valley National Bank, he said.
While Borrego avoided discovery within the District for nearly a decade, one of her banks also failed to raise questions of its own.
Borrego apparently deposited 117 checks totalling $701,597 that were made out to “Cooperative Education Services” into a personal bank account at Del Norte between 2002 and 2009. Though no such agency exists, it appears likely Borrego was approximating the state Cooperative Educational Services, a common payee on school district checks, Rio Arriba County Sheriff’s Detective Adam Archuleta said. That group is a statewide collective of school districts, charter schools and higher education institutions aimed, ironically, at saving schools money by pooling together to create economies of scale to get lower bids on common supplies.
“Apparently the bank never questioned it,” Adam Archuleta said. “She established a pattern as time progressed, and no one ever raised the red flag.”
All of those 117 checks — not made out to Borrego and lacking her endorsement — ended up in the same Del Norte account used to deposit scores of other District checks fraudulently made out to her. Where Borrego’s signature should be are the words “For Deposit” or “For Deposit Only” and an account number.
The 117 checks that were deposited into Borrego’s account despite not being made out to her also raise questions about why Delgado and District staff redacted all payee information on all checks provided other than the ones Delgado said were directly involved in Balderas’ investigation.
Delgado said the redactions were to protect vendors from being associated with the Borrego case and verbally agreed Tuesday to provide unredacted copies of all District checks in his possession for inspection by Friday.
Cooperative Educational Services Assistant Director Llew Perry denied any connection between his organization and Borrego.
“It’s clearly a fraud,” Perry said. “If she issued (the checks) to us without appropriate authorization or backup, and they were put into personal accounts, my question would be why did the bank receive them. Why would they let somebody else (other than the payee) endorse them?”
Indeed, Balderas said the endorsement issue was a major concern in his investigation.
“We referred the full report to federal authorities to evaluate if the bank had a duty to give some kind of due care or due diligence,” Balderas said. “I think that’s one of the things the (District’s) civil suit (against Borrego) will decide is if the bank has some liability, too.”
The District and the state Public Schools Insurance Authority filed a civil lawsuit in January against Borrego, Archuleta, Duran, Lopez and several unnamed John Does to recover the embezzled money. Lawyers for the District have said bank personnel may be named in the future as those John Does, but none have been formally included in the lawsuit yet.
Adam Archuleta said Del Norte officials had been questioned about Borrego but he did not know of any pending criminal charges.
But William Verant, director of the financial institutions division of the state Regulation and Licensing Department, which oversees state-charted credit unions like Del Norte, said the bank itself should be the first line of defense against fraud.
“If that endorsement has been forged, altered or is incomplete, the institution that accepts the check is responsible for guaranteeing that endorsement,” Verant said. “The question here is it looks like there was a long-standing pattern of criminal activity that implicated more than one financial institution, so it seems peculiar to me it was not chased down by law enforcement or the school district.”
Del Norte President Chuck Valenti refused to comment on how he thought Borrego was able to deposit checks not made out to her into a personal account or to describe the credit union’s standard procedure for depositing checks.
As a point of contrast, Hernandez said the scheme Borrego apparently carried out at Del Norte could not happen under ordinary circumstances at his bank because tellers would require what’s known as a “chain of endorsements” signing the check over from the payee, in this case Cooperative Education Services, to the depositor, in this case Borrego.
Still, he concocted a scenario in which tellers at Del Norte perhaps thought Borrego was the owner of Cooperative Education Services. Banks were not required to document such relationships before 2003, he said.
“It’s a small town,” Hernandez said. “Sometimes you know customers forever, and most of the time we always have those documents. But anything’s possible, and it’s hard for banks, especially when you don’t know someone is perpetrating fraud.”