Wednesday, August 31, 2011

Troubling Statistics behind Employee Theft and Embezzlement


Preventing employee theft is not an easy task. Today’s business owner knows that safety procedures and thorough background checks are not enough. This is a battle one must enter well-armed and the best weapon against this disturbingly common crime is information. You need to know who and what you are up against.

In order to discourage possible embezzlements, business owners must take a hands-on approach. Being a proactive member of all auditing procedures in your organization will help you detect irregularities. Make yourself visible, let potential embezzlers know that you are involved in safety procedures and updated in day-to-day financial and accounting related activities.
Every year, Marquet International, Ltd. a boutique business investigations, due diligence, litigation support and security consulting firm, publishes a study of major embezzlement cases in the United States. The 2011 study, analyzed a total of 485 cases active in the United States in 2010.

Following are some significant findings from the 2010 study:

The average loss was nearly $1 million

The most common embezzlement scheme involved the forgery or unauthorized issuance of company checks

Two-thirds of the incidents were committed by employees who held finance & accounting positions

The average scheme lasted more than 4½ years

The average prison sentence for major embezzlers was just under 4 years

Nearly 2/3 of all incidents involved female perpetrators

Nearly 20 percent of all losses were inflicted upon financial institutions

According to Christopher T. Marquet, CEO of Marquet International, “2010 was a banner year for employee theft in the United States.” “It is staggering how much money was stolen from companies last year by their employees, spanning many years in some cases before getting caught.”

Mr. Marquet also adds “Rather than stealing because they have severe financial problems, we found that most embezzlers appear to be driven by greed or a need to live a lifestyle much more lavish than they could not otherwise achieve. While the bad economy may have had something to do with the large number of cases we identified, there are other drivers motivating these white collar criminals and there is always an ambient level of fraud, theft, waste and abuse in any organization.”

The 2010 Marquet Report on Embezzlement is available at

The statistics are not very encouraging, but keep in mind that while this is a reality you will not be able to completely shield your business from; there are steps that can be taken to mitigate it. As a small business owner, you are not willing to risk all you have worked for to the consequences of an embezzlement scheme. On the other hand, you cannot afford to dedicate any additional resources to safeguard the integrity of your financial/bookkeeping functions.

Tuesday, August 30, 2011

Reported Suicide Linked to Staunton, Virginia school Embezzlement Case


Just days after she was accused of embezzling money from Robert E. Lee High School in Staunton, the school's former bookkeeper was found dead. But the apparent suicide does not mean the end of the investigation.

When Lee High School opened its doors Tuesday, grief counselors and extra substitutes were there for struggling students and teachers. The death of their school's former front-office bookkeeper came just four days after she was accused of taking money from a student activity fund.
Lisa Michelle Harrison, 39, of Augusta County was charged on Thursday with two counts of embezzlement. She had worked at Lee High School in Staunton from 2007 until this past June. The superintendent says the alleged theft may involve several thousand dollars.
Harrison was found dead of an apparent self-inflicted gunshot wound on Monday morning at a Blue Ridge Parkway overlook near Waynesboro. But police, school officials and an outside accountant continue their probe of the missing funds.
Staunton City Schools Superintendent Steven Nichols says the investigation will include anyone with access to the student activity fund. Among them is the high school's athletic director, who has been placed on administrative leave.
The superintendent says that pot of money comes from fundraising and ticket sales - not taxpayer dollars. Nichols says it could take several weeks to finish the investigation.

$27,000 missing from school in Wyoming


An embezzlement investigation involving a missing $27,000 is under way at the Village Montessori School in downtown Cheyenne.

Members of the school's board of directors have set an open meeting to discuss the probe at 6 p.m. today at the school at 214 W. 22nd St.
Board President Christen Haller said debits to the school's operating fund were noticed after the termination of former director Teresa Meadowcroft.
"(Meadowcroft) has been there almost 10 years and director for six. So we had a lot of trust in her and were very surprised by this," Haller said.
The firing came in the wake of concerns from the board regarding the school's administration, Haller said.
"We'd had some general administration issues and decided to terminate on those," she said.
Meadowcroft was in charge of paying school bills and the bookkeeping, Board Treasurer Stefanie Illingworth said.
"She applied for the debit card; her signature is on the application for card," Illingworth added. "I don't think she could have been oblivious to all of it because she was doing the bank reconciliation."
The charges to the school's account primarily came from the debit card in Meadowcroft's name that Illingworth said never was approved.
"We appointed an interim director (Jamie Beatty) who is a current teacher," Illingworth said. "Upon her going through the books and the accounting software, (she) couldn't find any of the current year's bank statements, so (she) got in touch with the bank and got copies.
"Once we got those, we looked through the January statement and we realized we had a problem."
The statement included charges at area bars and lingerie stores and for airplane tickets and hotel charges, Illingworth said.
They appear to go back at least through 2008.
School officials said they informed police of the charges on Aug. 5.
The former assistant director of the school, Madori Presley, was removed from that position but is a teacher there, Illingworth said. Presley has denied knowledge of the charges, Illingworth added.
Meadowcroft declined to comment when contacted Thursday by the WTE.
The Cheyenne Police Department confirmed an investigation is ongoing but would not release documents tied to the investigation because it is not complete.
Meadowcroft is not listed by name in the filed report, Cheyenne Police spokesman Sgt. Rob Dafoe said.
He added that he is unable to confirm or deny whether she is involved in the investigation. But he said no charges have been brought against her.
The investigation could be lengthy because of the auditing process and the time period involved, Dafoe said.

Former Baseball Coach To Be Sentenced For Embezzlement in California


A former Monte Vista High School baseball coach is scheduled to be sentenced at the El Cajon courthouse Tuesday for stealing $16,000 in team funds -- money he spent on gambling at casinos.

Larry Rinehart, 59, was convicted Aug. 2 of two felony counts related to embezzling team funds from 2005 to 2007. He faces up to three years in prison, according to the prosecution.
Prior to his arrest, Rinehart taught accounting, money matters and personal finance classes at Helix High School. He coached baseball at Monte Vista from 2003 to 2007.

A former personal finance teacher at Helix Charter High School was sentenced Tuesday to 240 days in jail after being convicted on embezzlement charges related to his time as a baseball coach at Monte Vista High School.

Larry Rinehart, who also taught accounting at Helix until earlier this year, was found guilty in early August of two felony counts of stealing $16,000 in team monies and using it to gamble at local casinos.

An El Cajon resident, Rinehart coached the Monarchs in Spring Valley from 2003 to 2007.

Besides the eight-month term, Judge Lantz Lewis in El Cajon Superior Court also sentenced Rinehart to five years’ probation and ordered him to take anti-theft classes and stay out of casinos.

Lewis told Rinehart he “abused his position of trust” with “repeated acts of deceit.”

Though Rinehart did not speak during the sentencing, his attorney read aloud a statement: “To the community, students, administration and staff of Monte Vista High School, I apologize to all of you for betraying your trust.”

He was ordered to pay back the stolen money in increments of at least $100 a month. At that rate it will take 41 years for Monte Vista to get repaid in full.

Rinehart had face a maximum of three years in state prison. He resigned as Monte Vista’s coach in June 2007 and became an umpire, according to published reports.

The San Diego Union-Tribune reported that Rinehart and his wife, Margaret, also originally charged, filed for bankruptcy in 1995 and 2008.

In December 2003, at least four students posted reviews of Rinehart’s Helix classes on

“He’s kind of weird but harmless,” wrote one. “Don’t get on his bad side. Can be a little strict but only if you annoy him (by goofing off, etc). Pretty cool otherwise.”

Monday, August 29, 2011

Auditor praises University of Washington handling of embezzlement case


The state Auditor's Office credits the University of Washington for swiftly changing employee protocols after a longtime UW Medical Center employee was accused last year of embezzling more than $250,000 from the hospital.

In a report released on Monday, Auditor Brian Sonntag recommended that the medical center better monitor employee credit cards and offer training on what the cards should be used for — changes the university said it has already made.
In reaction to Elisha Gustav Lang being accused and later charged with 19 counts of theft, UW hired an analyst to periodically examine the use of corporate credit cards by medical-center staff, according to the Auditor's Office.
The UW contacted the state Auditor's Office in April 2010 to report what Lang allegedly had done and the university instituted changes to thwart any similar activities from happening, according to the Auditor's Office. The job of the Auditor's Office is to review cases involving a loss of public funds, said Mindy Chambers, agency spokeswoman.
"We don't have any type of enforcement authority," Chambers said. "They [UW] reported the case on time and they produced an internal audit report. It all worked out pretty well."
Lang, 38, worked at the UW from July 2007 until he was fired in May 2010, around the time that UW police began investigating. On April 28 of this year, Lang, who had been an administrative manager, was charged in King County Superior Court.
There were nearly 1,900 charges on Lang's corporate card totaling more than $200,000 in spending, charging documents said. Lang used the money to buy artwork, kitchen and bathroom accessories, laptop computers, speakers, flat-screen televisions and other home electronics, according to the Auditor's Office.
Lang also used a UW travel account to purchase airfare, lodging and ground transportation totaling $39,350, charges said. He also reportedly asked the university to reimburse $1,612 worth of personal expenses and was reportedly paid more than $6,700 for taking time off that he had not actually earned.
Charging documents didn't disclose the remainder of the alleged theft, which police say totaled $252,059.
While employees assigned a corporate card would have an administrator sign off on their charges, the UW did not have anyone overseeing Lang's credit-card spending, charging paperwork said.
"The University's investigation found that the Medical Center Administration did not sufficiently oversee and review the Administrative Manager's card activities," according to the Auditor's Office.
So far, the UW has recovered more than $190,000 from its insurance company and credit-card provider.
Since the incident the UW has not only hired an Internal Control Analyst to oversee credit-card spending, it also has trained current and prospective corporate credit-card holders, according to the auditor's report

Plantsville Congregational Treasurer Arrested in Embezzlement Case in Connecticutt


The former treasurer of the Plantsville Congregational Church is facing charges of embezzlement after police said she took almost $300,000 from the church through unauthorized transactions between 2005 and 2010.

Kelly Saucier, 45, of 48 Blossom Way, turned herself into police Tuesday and was booked on one charge of first-degree larceny through embezzlement. She was released after posting a $100,000 surety bond is scheduled to appear for arraignment in Bristol Superior Court on Aug. 29.
Police said the arrest stems from an investigation into transactions she made as treasurer of the Plantsville-based church between August 2005 and December 2010.
“The investigation was initiated in January after church officials reported the impropriety following a discussion with Saucier,” said Sgt. Lowell DePalma of the Southington Police Department. “Detectives found that she had made over 100 unauthorized transactions moving a total of $293,385.15 from church accounts to her own personal account.”
Police said Saucier, who had access to all church accounts as treasurer, was able to conceal the transactions for a while before a board member eventually discovered the activity.
Church officials could not immediately be reached for comment.
This is the second time this year that a church treasurer has been arrested in connection with thefts from their parish accounts.
In February, New Britain resident Alan Jonas was charged with first-degree larceny after police said he had redirected $395,000 from the First Baptist Church accounts into his own checking account over a four-year period.
Jonas, who is also facing similar charges for incidents in New Britain over the same time period, remains in the state’s custody in lieu of $199,000 in bonds but has not pleaded to any of the charges yet, according to court records.
Police have also investigated similar thefts by bookkeepers with two separate nurseries in town in 2001 as well.
DePalma said these type of occurrences are not uncommon, especially in instances where busy officials are unable to keep a close eye on the books themselves.
“The people they hire are often seen as trustworthy but unfortunately, that’s not always the case,” DePalma said. “The best way to prevent these types of crimes is to hire a second set of eyes to look over the books. Mistakes are sometimes made, not always criminal, but a second set of eyes can help avoid that too.”

Chiles High School Teacher Tammy Bennett Arrested in Florida


Leon County school officials say a trusted teacher is behind bars for stealing money from Chiles High School.

Leon County School officials say Tammy Bennett was arrested for Grand Theft and Executing an Organized Scheme to Defraud. (8/26)
Bennett allegedly filed false reimbursement forms for expenses that didn't exist.
School officials say they only caught her because of an internal audit that turned up 'irregularities.'
Explains the schools' Chief of Safety and Security, John Hunkiar, "It appears that the items submitted for reimbursements for travel and equipment purchases that there were items that were not actually purchased and travel that did not actually occur."
Still, parents of Chiles High students say they're not too concerned about what this means for the kids.
Aaron Clark is the school's Athletic Director. He also has a daughter who's in the 11th grade. He says his daughter hasn't mentioned hearing anything about the embezzling.
Says Clark, "I think it's been contained. I think [Principal]Cox and the rest of the administration have done a good job, and I have the utmost confidence in them as a parent to run the school and do what they need to do."
Chiles Principal Alan Cox says he "hates" to have the high school's otherwise sterling reputation sullied by the "bad apple."
School officials say things like this generally do not happen in Leon County schools; however, that's the reason they have the audits in place
Principal Cox says he wants 'every penny' of the $150,000 repaid.
He says yearbooks will be printed as usual despite the thefts.

Saturday, August 27, 2011

University of Tulsa's Johnson receives indefinite suspension


Damaris Johnson’s future with the University of Tulsa football team is in doubt following Friday’s indefinite suspension.

The All-American wide receiver and punt returner drew the suspension shortly after TU coach Bill Blankenship discovered Johnson’s girlfriend was arrested Thursday on a complaint of felony embezzlement. Police are investigating Johnson’s involvement.

Chamon Jones, a Macy’s department store employee at Promenade Mall, was booked into the Tulsa County Jail at 3 a.m. Friday. She bonded out of jail at 12:40 p.m. Friday.

According to a police report, Johnson used Jones’ debit card last Saturday to pay for $1,596.09 worth of merchandise, but was charged only $12.91 by Jones. The report also states that on Thursday, Johnson paid 34 cents for $1,238.75 worth of merchandise.

Tulsa Police Department spokesman Leland Ashley said Johnson has not been charged.

“He was brought in for questioning, but released pending further investigation,” Ashley said.

Blankenship announced Johnson is suspended from all team activities pending a university review. The university said it would have no further comment.

When contacted by the World earlier Friday, TU spokesman Don Tomkalski said university officials were unaware of the situation.

Johnson is the NCAA’s career allpurpose yardage leader and was a second- team AP All-American last season.

Jefferson County Public School employee arrested for embezzlement in Kentucky


A Jefferson County Public School elementary school counselor has been accused of stealing money from a fundraiser she coordinated. According to arrest records, Kelly B. Moon, 42, was employed by the JCPS as a counselor at Middletown Elementary school

Police said while at Middletown, Moon organized a school fundraising program called, The NED Show” from All for KIDZ, a company out of Lynnwood, Washington. The Ned Show is paid for by merchandise sold at performances. Moon admitted that she knew she was obligated to pay for The NED Show no later than ten days after the show’s March 4 performance. The merchandise was invoiced by All for KIDZ at $3,367.50.

According to arrest records, Moon admitted that she made two deposits totaling $588 from the performance’s proceeds into her personal bank account. She also told police she intentionally kept checks, money order and cash from the show totaling approximately $222, and that additional checks made out to The NED Show totaling $664 remained under her control until June 2011.

As previously reported, embezzlement happens more frequently when one staff member has control over the cash flow by writing checks, making deposits, balancing the monthly bank statement, writing payroll checks and even filing tax returns. Separation of duties is highly encouraged for all companies and organizations, no matter how small the dollars may be.

Friday, August 26, 2011

Teacher accused of embezzling from graphic arts club in California


An Elsinore High School teacher, accused of misappropriating about $500 from a school graphic arts club he advised, pleaded not guilty Thursday to misdemeanor embezzlement.

Scott Bammes, 49, has been on paid administrative leave from his job at the Wildomar school since spring because of the investigation, Lake Elsinore Unified School District spokesman Mark Dennis said. Bammes was charged last month, court records show.

District officials in December reported a possible embezzlement from the Tiger Graphix program after an audit suggested several thousand dollars were unaccounted for, according to a Riverside County Sheriff's Department investigator's statement in support of an arrest warrant.

Defense attorney Matthew Singer said Bammes has provided documentation to authorities showing that much of the money the district thought was missing had been used for legitimate expenses.

Tiger Graphix is a vocational program in which students learn graphic arts and business skills, Dennis said. Students take orders for pay, primarily for silk-screening of items such as T-shirts and hats. The money the class brings in belongs to the district, Dennis said. About 150 students participate in the program each year.

Concerns were raised after Bammes asked a Tiger Graphix customer to make a check payable to him instead of Elsinore High School, the investigator's statement said. In December, Bammes tried to give a district official a check for about $500, saying "he had done some wrong things," the statement said. In April, he tried to give the high school bookkeeper a $500 check, saying he borrowed money and wanted to pay it back, the statement said. Neither check was accepted.

Former Lee High bookkeeper arrested in Virginia


Police arrested a former Robert E. Lee High School bookkeeper Thursday, charging her with stealing funds during a four-year period.

Lisa Michelle Harrison, 39, an Augusta County resident, is charged with two felony counts of embezzlement, according to the Staunton Police Department.

Police said the funds were taken between 2007 and 2011. Staunton police spokeswoman Officer Lisa Klein said Thursday that she did not have an estimate on the amount of money allegedly stolen from the school.

Klein said Harrison quit her job this summer before the start of the new school year. She made $26,596 in salary, records show.

Principal Mark Rowicki and Staunton Public Schools Superintendent Steven Nichols could not be reached immediately for comment.

Harrison is free on an unsecured bond.

If an Embezzler Confesses


In some church embezzlement cases, a person who has stolen church funds will voluntarily confess—usually out of a fear that he or she is about to be caught. Often, the embezzler will confess in order to prevent the church from turning the case over to the IRS, the police, or to a CPA firm. Embezzlers believe they will receive better treatment from their own church than from the government. And, in many cases, they are correct. Indeed, it is often astonishing how quickly church members will rally in support of the embezzler once he or she has confessed—no matter how much money was stolen from the church. This is especially true when the embezzler used the funds for a “noble” purpose, such as medical bills for a sick child.

In these situations, many church members demand that the embezzler be forgiven. They are shocked and repulsed by the suggestion that the embezzler—their friend and fellow church member—be turned over to the IRS or the police! But is it that simple? Should church leaders join in the outpouring of sympathy? Should the matter be dropped once the embezzler confesses?

These are questions that each church will have to answer for itself, depending on the circumstances of each case. However, before forgiving the embezzler and dropping the matter, church leaders should consider the following points:

1. A serious crime has been committed, and the embezzler has breached a sacred trust. At a minimum, the church should insist that the embezzler:

•Disclose how much money was actually taken.

•Make full restitution by paying back all embezzled funds within a specified period of time.

•Immediately and permanently be removed from any position within the church involving access to church funds.

TIP: Closely scrutinize the amount of funds the embezzler claims to have taken. Remember, you are relying on the word of an admitted thief. Is it a realistic amount? Is it consistent with the irregularities or discrepancies that originally aroused suspicion in the first place? If in doubt, consider hiring a local CPA to review the amount the embezzler claims to have stolen.

2. In many cases the embezzler will insist that he or she is not able to pay back the embezzled funds. The money has been spent. This presents church leaders with a difficult decision, since the embezzler has received unreported taxable income from the church. The embezzler should be informed that the embezzled funds must be returned within a specified time (or that he or she must sign a promissory note promising to pay back the embezzled funds within a specified period of time).

The embezzler should be informed that failure to agree will force the church to issue him or her a 1099 (or a corrected W- 2 if the embezzler is an employee) reporting the embezzled funds as taxable income. This is not a vindictive gesture on the part of the church, because failure to do so would subject the church to a potential penalty (up to $10,000) for aiding and abetting the substantial understatement of taxable income under section 6701 of the tax code. In other words, if the embezzler does not return the funds, and the church does not report it, the church could be punished.

TIP: Ordinarily, an embezzler’s biggest problem will not be with the church, or even with the local prosecutor. It will be with the IRS for failure to report taxable income. There are only two ways to avoid trouble with the IRS: 1) the embezzler pays back the embezzled funds, or 2) the church reports the embezzled funds as taxable income on a 1099 or corrected W-2.

3. Church leaders must remember that they are stewards of the church’s resources. Viewing the offender with mercy does not necessarily mean that the debt must be forgiven and a criminal act ignored. Churches are public charities that exist to serve a religious purpose, which means they are funded entirely out of charitable contributions from persons who rightfully assume their contributions will be used to further the church’s mission. These purposes are not served when a church forgives and ignores cases of embezzlement.

Wednesday, August 24, 2011

Rabbi who claimed to rescue Holocaust Torahs arrested on fraud charges


A rabbi who claimed that he rescued Torah scrolls lost during the Holocaust was arrested on fraud charges.

Rabbi Menachem Youlus, founder of Save a Torah, was arrested on Wednesday, charged with one count of mail fraud and one count of wire fraud. Federal prosecutors accused Youlus of embezzling money from his charity for personal use and fabricating stories of rescuing lost Torahs.
"Menachem Youlus called himself the 'Jewish Indiana Jones,' but his alleged exploits were no more real than those of the movie character he claimed to resemble," said Preet Bharara, the U.S. attorney for the Southern District of New York, in a statement.
The U.S. Attorney's office stated that Torah scrolls that Younus claimed to have rescued had simply been purchased from local dealers and lacked any connection to the Holocaust. The office further stated that during many of the years Youlus claimed to be personally rescuing Torahs overseas, he had not even traveled internationally.
The statement said that Save a Torah had raised $1.2 million in contributions from 2004 to 2010.
Youlus gained public notoriety after a January 2010 Washington Post article raised doubts about the veracity of his claims.
"Menachem Youlus' indictment is welcome news to all who are concerned with the integrity of Holocaust memory," said Menachem Rosensaft, vice president of the American Gathering of Jewish Holocaust Survivors and Their Descendants, in a statement.

SW Ind. church's ex-secretary faces theft charges


A southwestern Indiana church's former secretary faces theft charges for allegedly embezzling more than $51,000 in church funds.

State Police say 45-year-old Denise Purcell of Vincennes was arrested Wednesday on four counts of theft. She remained jailed Wednesday afternoon at the Knox County Jail on a $6,500 bond.
Purcell had been the administrative assistant and financial secretary at Community United Methodist Church in Vincennes.
Police say an investigation that began in January found that Purcell allegedly used two church credit cards to purchase numerous items for her personal use between February 2007 and August 2010. That amount totaled more than $51,000.
Purcell had worked at the church for about nine years before she resigned in September 2010

EL Paso Independent School District investigation: Simple posters in costly contract.


Taxpayers footed the bill for an expensive but sparse set of posters and handouts in the El Paso Independent School District that are now the focus of an FBI investigation.

The district used state grant funds to pay Infinity Resources ... & Associates $360,000 for staff development and math-related posters and handouts under a 5-year-old contract that has left Superintendent Lorenzo García facing federal charges of fraud and embezzlement.

The cost of the materials, which totaled $319,500, in the El Paso district, is a stark contrast to the $11,191 the Houston Independent School District paid the company for several similar items.

García allegedly steered a $450,000 no-bid contract to Tracy Rose, a woman with whom he had a personal relationship, according to the FBI. The FBI also said the superintendent had a personal financial interest in the company. He has pleaded not guilty and is out on bond while he awaits trial.

The indictment has left EPISD officials inundated with questions about what students eventually received for the money, the kinds of safeguards that were factored into the agreement and to what degree companies are examined before they are chosen for their services.

No specific demands appeared to be required of Rose, who was awarded the district contract after signing an affidavit stating that she was the sole vendor for specialized data-driven materials that would help boost student math scores on the state's

standardized test, known as the Texas Assessment of Knowledge and Skills.

School district officials said no written contract was ever drawn up for Infinity Resources ... & Associates. Evaluations of the services and materials provided by the Houston company were not conducted.

School districts generally do not have to sign contracts with companies providing materials. Instead, administrators contend that the purchase orders for the materials serve as a contract.

But the purchase order for the materials Rose provided the district simply directs the company to supply: "specialized TAKS driven materials for curriculum implementation. Items are to be specifically designed to meet EPISD's current data needs."

The El Paso Times has learned through a request for public information that board trustees and district administrators never required Rose to submit a detailed proposal with examples of the materials she planned to provide or with itemized costs.

The copyright posters Infinity Resources...& Associates provided the district include basic examples of math equations as well as conversions for measurement and time.

One poster listed the numbers 1-20, spelled them out and included pictures. For example, it had the number 8, spelled out eight and then showed eight strawberries.

A multiplication and division handout, titled Fact Families, showed that 6 multiplied by 4 equals 24 and 24 divided by 4 equals 6. The chart had several blank spaces intended for students to repeat the exercise.

Another chart for which the company claimed a copyright simply had words such as "Work Station #1" and "Work Station #2." A description provided by the district about the charts said they served as a tool that "allows teachers to place students into workstations quickly by placing their names in the correct work station quadrant."

The district paid the company for the rights to the instructional materials but was separately responsible for all printing and distribution costs. The tally of those costs remains unclear.

EPISD Chief Business Officer Ken Parker said that normally materials are sent to the district warehouse, which checks the items against the approved purchase order before the vendor gets paid. Parker said the situation was different with Rose, who received payment for the items ahead of time.

"My understanding is these items were hand-carried into the district by the vendor," Parker said. "They never really went through receiving like what most purchases go through."

EPISD was not the only school district to buy such items from the company.

Houston Independent School District bought similar materials from the company at a cost of $11,191 between September 2005 and March 2006.

Because EPISD did not itemize its costs, it is difficult to provide a direct comparison. Still, documents provided by the Houston ISD in response to a public information request by the Times show the price the district paid for several comparable items.

The Fact Families multiplication and division charts cost the Houston ISD $9.95 apiece, the work station posters and labels were $14.95 and the number word chart with pictures was $41.95, according to invoices from the company.

Parker said the EPISD has since worked to improve procedures and create a system with tighter restrictions that makes vendors more accountable. Such measures were not in place when school board trustees approved the purchase agreement with little oversight and nearly no direct requirements of the company.

A video of the meeting shows Trustee Carlos Cordova, who has pleaded guilty to public corruption charges, making the motion to award the $450,000 no-bid contract to Rose's company at a meeting on July 11, 2006.

The contract was approved without discussion on a unanimous voice vote.

Rose then received two checks each of $180,000 -- the first on Aug. 4 and the other payment on Aug. 18.

García's signature is on both checks but district officials said the signature is a stamp that is used for all payments. The remaining $90,000 approved by the school board was never paid to the company, which did not provide the additional materials that it had promised, according to district documents.

The school district used state Accelerated Reading Instruction and Accelerated Math Instruction grant funds to pay the company. The grant program, which spread $144 million among districts statewide during 2005-06, was aimed at helping students who did not pass the state's standardized test.

Debbie Ratcliffe, a spokeswoman for the Texas Education Agency, said a statewide evaluation of the grant program shows that districts spent most of their funding on teacher pay, supplemental curriculum, tutoring and supplies and materials.

"What a lot of districts tended to do with it was set up very small classes before or after school or during the school day that were focused on whatever the students were struggling with," Ratcliffe said.

While contracts are not generally written for the purchase of materials, school districts use them when they are paying a person or company for services.

The school board agreed to give Rose $40,500 for staff development. District officials acknowledged that a contract should have been crafted for the services.

The price for the services included projected costs of travel, hotels and meals for 18 visits to the district. No receipts were required of Rose for the travel expenses since the school board had agreed to the costs ahead of time, district officials said.

"This whole transaction basically occurred in one department," Parker said.

He said the district's Department of Curriculum and Instruction, without the participation of any other department, found the company, processed the paperwork, took it to the school board and crafted the purchase order.

"Basically, the only time it went through purchasing is when the purchase order was released and, looking at the face of the purchase order, it didn't look like anything out of the ordinary," Parker said.

The school district is seeking to withhold some public records that the El Paso Times requested about the company by claiming an exemption in the state's Public Information Act that pertains to pending litigation. It has asked the attorney general for an opinion on the matter.

"EPISD believes that some of the responsive materials relate to underlying issues in the Criminal Proceeding," Clyde Pine, a lawyer for the district, wrote in his letter to the attorney general.

He added, "As such, EPISD intends to withhold certain responsive materials."

The Times is unable to see which documents or information the school district is attempting to withhold from release.

Former Clawson youth sports official charged with embezzling $10,000 in Michigan


 A former top official with the Clawson Mavericks youth football league is charged with embezzling about $10,000 from the non-profit organization.

Stephen Manthei, 42, of Madison Heights was arraigned Monday before troy 52-4 District Magistrate Clement Waldmann and jailed on $10,000 cash bond.
The felony embezzlement charge against Manthei, past president of the Clawson Mavericks league for elementary and middle-school age children, comes more than three months after suspicions first surfaced, police said.
Members of the Mavericks organization first contacted Clawson Police back in May about Manthei.
Police said they then investigated the case and determined that between April 29, 2010 and Dec. 31, 2010, Manthei withdrew money from the youth football group for his own personal gain.
The money was not authorized to be withdrawn or used by Manthei, police said. During the 2010 season, Manthei refused to turn over financial records at meetings as requested, which led to the criminal investigation, according to police.
Police said Manthei was removed from his position with the organization earlier this year and the new treasurer found discrepancies in the group’s financial records.
Manthei, who is employed as a maintenance worker at the Clawson Manor senior housing high-rise on 14 Mile Road, was arrested there by police on Monday, police said.
He stood mute to a charge of embezzling more than $1,000 but less than $20,000 at his arraignment and requested a court-appointed attorney.
The suspect faces up to five years in prison if convicted of the charge.
Though the Maverick sports teams are not a city organization, the city does maintain fields for the group at City Park where they play their games and helps advertise games, said Mickey Alderman, Clawson Recreation Director.
Manthei is scheduled for a pre-exam conference before Troy District Judge William E. Bolle at 8:30 a.m. Monday.

Tuesday, August 23, 2011

Ex-Detroit Public School bookkeeper gets prison in embezzlement


A former bookkeeper for the Detroit Public Schools is going to prison for 14 months for stealing money from the cash-strapped district.

Allen Swayze, 34, was sentenced today before U.S. District Court Judge Lawrence Zatkoff on charges that he fraudulently obtained money from the DPS by writing more than $148,000 in unauthorized checks to himself. In addition to prison time, he also was ordered to pay DPS restitution in the amount of $148,772.86 – the exact amount of the money he swindled.
According to court records, Swayze worked as a bookkeeper at the Breithaupt Career and Technical Center. He admitted that between August 2006 and May 2009, he wrote unauthorized checks to himself – drawn on the technical center’s bank accounts – and then deposited them into his own bank account.
“We hope that this case will deter others from stealing money intended to benefit our school children,” U.S. Attorney Barbara McQuade said. “ Officials who steal school funds will be caught and brought to justice."
Added Roy Roberts, Emergency Manager of Detroit Public Schools: "We will continue to work closely with the U.S. Attorney's Office and law enforcement authorities to ensure that funds and resources intended for students and the classroom are not misdirected for anyone's personal benefit."

Monday, August 22, 2011

Oklahoma's gambling addicts put life on line for big win


Everyone thought for years that he was just a lucky gambler.

“It was really tearing me up,” Melson said, sobbing into a prison phone.
“I kept telling myself I would finally hit the big one — whatever that is — and it would take care of everything.”
Then he decided something really could take care of his lies and the hurt he caused others. He met a man in the parking lot at his workplace at the Commissioners of the Land Office to buy a gun.
“I was going to kill myself ... when I was caught,” he said.
Months before a grand jury in June 2009 handed down a 174-count indictment for embezzlement, to which he later pleaded guilty, the former state-employed auditor chose not to join the 13 percent of Gamblers Anonymous members who try suicide.
He confessed to one of his sons that he'd embezzled and gambled for years. He mentioned the gun and handed it over to his son.
Melson, 57, is one of the estimated 35,000 to 105,000 pathological gamblers living in Oklahoma. In 2004, voters authorized gaming at racetracks and expanded gambling at tribal casinos, as well as the state lottery, to help fund education. The number of people accessing state-sponsored gambling treatment services has grown about 150 percent from 2007 (139 clients) to 2011 (347 clients).
“It's a brain disorder. What happens is people really do get hooked on gambling. People who don't understand it underestimate the strength of it,” said David Swope, Nationally Certified Gambling Counselor and Licensed Professional Counselor.
“I've heard stories of people so engrossed in gambling they wore diapers. They didn't want to leave the machine.”
People sometimes get into serious gambling by innocently joining friends at a casino, said Jo Ann Pearce, A Chance to Change Foundation executive director.
The innocent roots of Michelle's gambling addiction began at age 16 in a sweaty gym in El Reno, where she first joined her mother to play bingo.
Her addiction was sealed with a kiss at age 26. She married her second husband, a heavy gambler, and after the ceremony, they went straight to a casino. “We didn't leave for our honeymoon until two days later,” she said.
She picked up almost $1,000 for their honeymoon — and an addiction she's still fighting at age 38.
She once found a MegaMania machine with a glitch that kept giving money back. At one point, she put her children in day care and treated her machine playing as a job, devoting eight to 10 hours a day to it until the casino fixed the gusher.
“It's like giving a cocaine addict an endless supply of cocaine,” said Michelle, who asked that her last name not be used.
Swope said a big win can be like crack cocaine to a problem gambler.
“One of the worst things that can happen to a gambler is they win. Once that happens, it's an exciting event. It's thrilling. It gives them such a sense of euphoria they want to repeat that again,” Swope said.
Though most are upstanding citizens, they'll often begin lying and deceiving as the habit grows.
At the worst of times, Melson would say he was going to a meeting but sneak off to gamble three or four days of the week.
He said he's miserable about deceiving family, co-workers and the state over the more than five years he covered for his gambling. It went hand in hand with his creation of bank accounts where he deposited checks intended for the Land Commission and then helped himself to the money.
Michelle ditched hairstyling classes to gamble. After becoming a stylist, she had cash and excuses handy. She'd claim a client canceled, and she'd go play the machines.
Once she was 15 minutes late from gambling and found her daughter, who was in second grade, sitting on the porch.
“What does that do to a 6- or 7-year-old? You can't go back and fix it. All I can do is do better in the future,” Michelle said.
She used to leave the porch light on when she left with the children in the morning so she'd know that evening whether the utilities had been turned off without upsetting the children. “I didn't have to explain why we were going to their grandmother's house to spend some time,” she said.
They got evicted from homes and had cars repossessed for lack of payment, Michelle said.
The Melson family had to move to a smaller home and sell many possessions. His wife continues to work at their church's child care facility and takes on baby-sitting and other jobs to supplement their income.
“A person out of control with gambling can, and many do, use all the funds they can get their hands on, usually in the belief that they're going to win it all back,” said Pearce, with A Chance to Change, which has a gambling treatment program under contract with the state.
Gambling clients often are broke, have mortgaged their homes several times or lost them to foreclosure and don't have insurance. So, the program there costs just a $3 co-pay per treatment.
Michelle credits the program, along with divorcing her gambling husband and establishing a relationship with a man who never gambles, with her road toward good health.
Melson is getting addiction treatment as he serves his 10-year-sentence in minimum security at the Jim E. Hamilton Correctional Center in Hodgen in southeast Oklahoma. He said inmates and prison personnel are nice, but he thinks constantly about what he's done to others.
“I will be making (restitution) payments again, when I can, until I die,” he said. “I regret the harm I've caused ... every day,” he added tearfully.
Michelle said excessive gambling can be devastating, but addicts shouldn't give up.
“There's hope. No matter how desperate anybody is feeling and thinks there's no way out, there is help,” she said.

Sunday, August 21, 2011

Louisville PTA Mom indicted on fraud charges


A Liberty Elementary PTA Mom was indicted by an Oldham County grand jury for theft of more than $11,000 by forging checks from the school’s PTA.

Melanie Winkle, 39, of LaGrange, is charged with theft by unlawful taking and nine counts of forgery. It began in June 2010 with a $3,000 check Winkle allegedly forged, followed by eight additional checks over the next nine months.

The checks totaled $11,527.14. The police launched an investigation after PTA board members found discrepancies earlier this summer.

Winkle’s pretrial conference is scheduled for September 1

Friday, August 19, 2011

Woman repays First United Methodist Church $44,000, charges dropped


After she repaid the money, charges were dropped Thursday against a woman accused of embezzling from a Battle Creek church.

Kathleen Vanorsdol, 36, of Kalamazoo and her attorney Jeffrey Getting presented a certified check for $44,000 to Calhoun County prosecutors and church officials in Calhoun County Circuit Court just before Vanorsdol could have been sentenced after earlier entering a plea.

Vanorsdol would have faced up to 10 years in prison but as part of a plea agreement, the charge was dropped in exchange for restitution.

Battle Creek police and the church alleged she stole at least $47,737 between Sept. 1 2009 and April 1, 2011, when an audit revealed the theft. But assistant prosecutor Sarah Lincoln said officials could only corroborate $44,000.

Several members of the congregation and Pastor Billie Dalton attended the hearing and accepted the check.

Lincoln said while repayment was positive and fulfilled the agreement, the theft by the former financial manager "has significantly hurt this congregation" by shaking their trust in other people.

Circuit Judge Allen Garbrecht told her, "what you have done is stolen the money and without this agreement you would be sentenced. What you did impacted other people and it was a pretty low blow to steal from these people. I hope you will learn."

Vanorsdol told the judge, "I am truly sorry for betraying the trust of the people of First United Methodist Church."

But Garbrecht said she should say it directly to the people in the audience.

Vanorsdol turned and said, "I am very sorry for what I did. I am working to get better. It will never happen again."

Former Poolville ISD worker charged with embezzlement in Texas

A former Poolville ISD employee was arrested Aug. 3 on accusations of embezzlement from the district.

A former secretary at the elementary school, Deborah Talley Jones, 49, has been charged with theft, more than $1,500, less than $20,000, a state jail felony.

According to an arrest warrant affidavit, Jones is accused of taking more than $16,400 from the school’s activity fund without the consent of the school between July 2007 and May 2011.

Poolville superintendent Jimmie Dobbs reported the alleged theft to the Parker County Sheriff’s Office July 26, according to court records.

During an interview at Jones’ home Aug. 1, Jones reportedly admitted to taking 12 to 13 questionable disbursements from the account totaling more than $9,100, according to the affidavit.

Jones reportedly admitted to taking checks paid to cash, Toney Jones, Debbie Jones or Weatherford National Bank four times during the 2008, totaling $5,275, once for $250 in 2009, four times in 2010, totaling $1,567.55 and five or six times in 2011, totaling around $2,000.

Checks for thousands of dollars listed bookshelves as the items purchased, according to the probable cause affidavit.

Others listed staff Christmas cards, snacks, teacher gifts, break room and office supplies, staff lunch and summer pay as the reason for the check.

Jones worked for the district from August 1998 to June 8, when she resigned, Dobbs said.

Dobbs declined to talk about why the alleged thefts went on for years and how they were discovered.

“I would consider this a personnel issue,” Dobbs said. “Our practice is not to comment publicly on personnel [matters].”

Dobbs also said he does not want to hinder the criminal investigation.

Each campus has a checking account for the activity fund, according to Dobbs.

Monies in the account come from various fundraisers and funds are supposed to be used for a variety of things such as field trips or school supplies for classes, Dobbs said.

The checking accounts are audited annually, Dobbs said.

However, the school district is now moving some of the account oversight to the district’s central office, according to Dobbs.

The policy changes are being put in place because they need to be in place, not because something happened, Dobbs said.

The Democrat was unable to reach Jones for comment Thursday

Thursday, August 18, 2011

Wirt teacher headed to trial


A Wirt County teacher and coach decided to forgo a plea agreement from the state Wednesday and her case has been set to go to trial in December.
Christine Wilson of Washington, who is charged with embezzlement of funds from the Wirt County Band Boosters, had been scheduled for a change of plea hearing before Judge Robert Waters in Wirt County Circuit Court Wednesday.
However, as she sat in the courtroom, her attorney William Summers told the court of her decision not to accept a plea agreement.
''She does not want to take the plea agreement offered by the state,'' Summers said, adding she might still be willing to enter a plea at a later date.
Wilson, who served as treasurer of a band boosters club, is alleged to have taken almost $9,000 from the club's account. According to the criminal complaint, Wilson took over duties as treasurer for the Wirt County Band Boosters in July 2010 and held the post until February 2011.
Investigators had said they received information from the Wirt County Board of Education regarding discrepancies in the boosters' account.
In the complaint, West Virginia State Police Sgt. C.E. Boring stated he met with Wilson, who admitted to taking $3,600 from the money collected by the club.
Wilson, a teacher at the Wirt County Primary Center who had served as the high school softball coach, was suspended without pay pending the outcome of the case.
Summers moved to have the case continued to the next term of court and have trial set for early December as Wilson will be having surgery in Parkersburg soon and will be recovering when the September term of court is under way.
Waters said the case was not tried earlier this week because the court was under the impression Wilson was going to be entering into a plea agreement Wednesday.
Summers said it was a misunderstanding between him and Wilson on what the proposed plea agreement entailed.
Wirt County Prosecutor Leslie Maze said she was "very upset" with this development as there would have been time and opportunity to try the case earlier this week.
Waters said the case had been scheduled for a while and asked when this surgery became known and why it was scheduled for the week of trial.
After conferring with his client, Summers said the case had been scheduled since July, but scheduling, caseload and other factors prevented Summers from being made immediately aware of it. He said the doctor had two openings for the surgery, the one it is now scheduled for or another date toward the end of the year.
Waters scheduled trial for Dec. 5.
Wilson will remain on bond and will inform the court immediately if any further medical concerns come up.

Lake Oswego groups attempt to recover from stolen funds, loss of community trust


Local non-profit group leaders say the jailing of a woman who stole an estimated $100,000 from their organizations won’t compensate for the lost money, opportunities and trust from the community.

“It’s not going to be easy,” said Chris Casebeer, President of Lake Oswego Youth Football. “Besides the money gone, which is going to take us years to recover from, it’s hard to know that this took place because of a mother in our neighborhood.”

The loss has forced the football league to cut back on financial assistance to kids who otherwise couldn’t afford the $300-$350 registration fee. The organization typically offers up to 20 scholarships a year, Casebeer said, but they now have to offer payment plans instead. The loss could also have future impacts on how the league pays for updating equipment for kids, using city fields and other effects.

“The effect has been immediate and it will be ongoing,” said Casebeer.

renae-mason.jpgView full sizeRenae Mason
Renae Marlee Mason, 45, was sentenced to five years in prison last week in Clackamas County Circuit Court after pleading guilty in June to six counts of theft charges. She admitted taking money from Lake Oswego Junior Baseball, Lake Oswego Youth Football and the Lake Oswego Junior High School Parent Club while serving as a volunteer treasurer for all three organizations until January.

She spent the money mostly on herself, according to court documents, including an almost $1,800 stay at the Marriott Marquis hotel in Times Square and shopping sprees at Tommy Bahamas, Victoria’s Secret, Sephora and others. Kevin Davenport, Mason’s attorney, attributed Mason’s behavior as a result of side-effects from abusing pain medication.

Chuck McLaughlin, president of Lake Oswego Junior Baseball, said his group discovered some unusual account transfers soon after Mason became their treasurer last October.

“It definitely raised red flags with us when we noticed some heavy activity on our account when there was no baseball being played,” McLaughlin said.

He said Mason took $5,000 from their reserve fund, leaving about $1,000. McLaughlin said once members of his group noticed money missing, they alerted the other groups where Mason acted as treasurer. Once the other groups noticed missing funds as well, Lake Oswego police were notified. McLaughlin said the money taken from the group, which acts as a baseball league for 7th- and 8th-graders, did not have much of an effect on their season.

“We weren’t hit as hard as some of the other groups,” he said. “But the whole thing is really just a sad and disappointing situation.”

The group that was impacted the most was Lake Oswego Youth Football, which starts this season $15,000 in the hole, according to Casebeer.

He said Mason took $85,000 from the group and said that she had been stealing from the group since she became treasurer in late 2007.

New safeguards have been put into place to make sure a similar incident does not occur, he added. He believes all three groups have had to deal with disappointment from the community.

“People trusted us to take care of the money given to us,” he said. “When you have someone in your system that is not being trustworthy, it ruins the trust of not only your organization, but the community as a whole.”

Denise Smith, former president of the Lake Oswego Junior High School Parent Club, said the group has had to deal with similar community concerns since Mason stole a little more than $30,000 from the club after becoming treasurer last July.

“It certainly caused people to second guess where their money is going, and we initially had a hard time finding people to fill key roles in our group,” said Smith. “But we have found people capable of taking over, and I think in time we will all be able to recover from this

Southington Church Treasurer Embezzled Nearly $300,000, Police Say


A local woman who was the treasurer at the Plantsville Congregational United Church of Christ was charged Monday with embezzling almost $300,000 from the church over a five-year period, police said Wednesday.

Kelly Saucier, 45, of 48 Blossom Way, turned herself in at police headquarters around 5:30 p.m. Monday after learning of a warrant for her arrest. She was booked on one charge of first-degree larceny through embezzlement and released after posting $100,000 bail.

Police said the arrest stems from a nearly eight-month investigation into transactions Saucier made while treasurer of the church from August 2005 to December 2010. Saucier, who had access to all the church's accounts, pilfered $293,385.15, police said.

"We were contacted by church officials that said that they had discovered a theft had occurred at the church," Sgt. Lowell DePalma told Fox CT. "There were multiple thefts that occurred, actually over 100 during this time period."

DePalma said the investigation into the alleged thefts started in January after church officials reported the alleged thefts following a discussion with Saucier.

Saucier was still listed as treasurer on the church's website Tuesday under the Board and Committee Members section for 2010 to 2011. Church officials could not be reached for comment.

Saucier is expected to appear for arraignment at Bristol Superior Court on Aug. 29.

Wednesday, August 17, 2011

Maryland Man Convicted of Embezzling More Than $500,000 From District of Columbia Church

Jason Todd Reynolds, 40, has been convicted by a jury of federal charge stemming from his embezzling more than $500,000 from a church in the District ofColumbia where he worked as the chief financial officer.
The verdict was returned late August 15, 2011 and announced by U.S. Attorney Ronald C.Machen Jr., David Beach, Special Agent in Charge of the Washington Field Office of the U.S.Secret Service, and Jeannine A. Hammett, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation. Reynolds, of Bowie, Maryland, was convicted of a total of 12 counts following a trial in the U.S. District Court for the District of Columbia. The charges included one count each of wire fraud, bank fraud, making a false statement on a loan application, and fraud in the first degree, as well as four counts each of aggravated identity theft and tax evasion. The Honorable Gladys
Kessler scheduled sentencing for November 4, 2011. Under federal sentencing guidelines,
Reynolds could face a likely range of 70 to 87 months of incarceration.Following the verdict, Judge Kessler ordered that Reynolds be detained pending sentencing.According to evidence introduced at trial, Reynolds was hired by the National City Christian Church in 2001 and later became its Chief Financial Officer. Reynolds had control over the church’s bank accounts, credit cards, and checks. He also was responsible for conducting “reconciliation” of the church’s accounts. Using his position of trust, between 2003 and 2008,
Reynolds used various means to defraud the church.For example, Reynolds handwrote himself numerous unauthorized checks in addition to his biweekly salary. He paid his home mortgage and personal credit card from church bank accounts. Reynolds also misused his church credit card to make numerous luxury purchases, including the purchase of three cars (a Lexus SUV, a Range Rover, and a Nissan Maxima), a
$12,000 diamond ring, a deck/porch addition to his home, high-end furniture including a projection-screen home theater and leather seating, numerous vacations at four-star accommodations, and sports tickets, including courtside season tickets to the Washington Wizards basketball games.A conservative assessment put the defendant’s embezzlement from the National City Christian Church at more than $500,000. In 2007 alone, Reynolds took more than $145,000 in unauthorized payments and benefits. In certain instances, Reynolds took donations to the church,as well as rent payments from charities leasing space at the church, and directly converted those payments to his own use.In addition to the theft, the evidence showed that Reynolds evaded taxes, not reporting any of the income he embezzled from the Church and failing to pay any taxes on it. In addition, to hide his embezzlement and re-fill the church’s accounts, Reynolds forged a false corporate resolution using the names of various church officers purporting to authorize him to obtain a
$450,000 line of credit. He immediately withdrew the full amount of that loan, leaving the
National City Christian Church with an enormous debt of which it was unaware – until the loan
came due after the defendant’s termination.“The hard-working men and women of the National City Christian Church trusted that their offerings would be used to further the work of the church. Mr. Reynolds abused that trust,” said U.S. Attorney Machen. “While serving as the church's financial officer, he devised a scheme to rob the collection plate to pay for his luxury vehicles and four-star vacations. In a little less than
three hours, a jury of his peers found him guilty for his fraudulent conduct and now he will be
held accountable.”“The role of IRS-Criminal Investigation becomes even more important in embezzlement and fraud cases like this one due to the complex financial transactions that can take time to unravel,”
said Acting Special Agent in Charge Hammett. “Federal tax laws are normally violated in these
cases and as we often see, the victims are not only the taxpayers, but also the individuals and
entities who suffer the financial harm.”In announcing the verdicts, U.S. Attorney Machen, Special Agent in Charge Beach and Acting Special Agent in Charge Hammett commended the work of Special Agent Melissa Blake of the U.S. Secret Service and Special Agent Michael Helgesen of the IRS, who investigated the
case. They also acknowledged the work of Revenue Agent Tammy Barker of the IRS, who
analyzed the tax loss from the defendant’s unreported income, and Detective Martin Hoffmaster
of the Alexandria, Virginia Police Department, who conducted a forensic analysis of Reynolds’s
computer. In addition, they commended the work of Paralegal Specialists Tasha Harris and
Sarah Reis and Assistant U.S. Attorneys Jonathan Hooks and Jonathan Haray, who investigated
and tried the case.

Church members sue for financial records in Milwaukee, Wisconsin


Members of a Milwaukee church have sued it and its pastor to obtain financial records the lawsuit claims have been withheld from an audit committee.

The suit, filed Monday in circuit court, names Jeremiah Missionary Baptist Church Inc., 4519 W. Villard Ave., and pastor Eugene Cowan II as defendants. The named plaintiffs include David L. Mays, a deacon, and unnamed "concerned members" of the church.
Cowan said he did have an audit and internal control review done when he first came to the church from Michigan in 2010 and found no missing money or improprieties. He said a disgruntled faction in the congregation numbers fewer than 10 of the church's 350 members.
"They've caused a ruckus or split, but the church has healed since that point," Cowan said Tuesday.
According to the complaint:
Church members concerned about the church's finances decided in May 2009, three months after the sudden death of their pastor, the Rev. Reginal T. Moore, to conduct an audit of the church's finances and formed a committee led by Mays that also was tasked with considering new bylaws for the church.
Cowan became pastor in February 2010 and initially refused to cooperate with an audit, the suit contends. He later turned over some paperwork but not the detailed bank account information, canceled checks and credit card records requested.

Members are concerned that funds have gone missing without explanation and that Cowan has threatened to excommunicate members who continue to challenge his use of church money.
Some church members also voted to adopt new bylaws, but in January, Cowan moved to disband the audit committee and revert to the previous bylaws, all without proper notice, the suit says.
"Pastor Cowan has in every way opposed, frustrated, and refused to cooperate with Jeremiah's Audit & By-Laws Committee," the suit says.
The suit asks that a court order Cowan and the church to allow inspection of all the requested financial records and also claims Cowan has breached his fiduciary duty to the church and threatened its status as a tax-exempt organization. It seeks unspecified damages, costs and any unjust enrichments Cowan might have received as a result of any breach of duty.

Priest sentenced in church embezzlement case in Wheaton, Illinois


A Catholic priest has been sentenced to 60 days probation after embezzling nearly $300,000 from his northwest suburban church.

Father John Regan pleaded guilty in June.
He apparently stole money from the St. Walter Catholic Parish in Roselle, where he was pastor for two years.
Court documents show he would funnel cash into a secret bank account.
Investigators say Regan stole the money to fuel a gambling addiction.
The Joliet diocese says it has reimbursed the parish for the full loss.

The Rev. John Regan, 47, from St. Walter Church in Roselle, was also ordered to pay $295,000 in restitution and will serve 150 days on work release as well as perform 500 hours of community service work.

Some parishioners cried when Regan was led away in handcuffs.
The sentence, handed down by Judge John Kinsella, was a just punishment, according to several parishioners who forgave their former leader.
That includes some who even testified for the state
"I think it was fair. I think our parish needs to move on and I think it was difficult for the judge because the other extreme was a minimum of four years in the penitentiary," said parishioner Bryan Mraz.

Mraz had previously testified that the ordeal had "shaken my faith in priests" and said that a gambling addiction is "is a lame excuse to try to get a lighter sentence."

Mraz testified that Regan used to say in his sermons that he gave half of his $25,000 salary to charity and encouraged parishioners to do the same.

Regan pleaded guilty to the financial crimes in June. He faced up to 15 years in prison.

Tuesday, August 16, 2011

Former Grove cheerleader adviser sentenced for embezzling in Oklahoma


A former Grove schoolteacher was sentenced Monday after pleading guilty to stealing money from the cheerleading fund

Michell Diane Martin, 53, of Grove, was given a two-year deferred sentence and a $1,000 fine and ordered to pay back $8,270 in restitution.

Nick Lelecas, assistant district attorney, said Martin paid the restitution before Monday's hearing.

Martin taught in the school district in 2001 and again from 2005 to October 2010 and was the cheerleading adviser.

Martin confessed to funneling money from advertisements in the football program for her personal use, according to the plea agreement. She was charged in November with embezzlement.

Martin's attorney, Winston Connor II, said Martin has received professional help and is looking forward to being a productive member of society.

In an unrelated case, Martin was given a one-year suspended sentence for driving a motor vehicle while under the influence of alcohol.

She was arrested by Grove police Oct. 29 after she registered 0.23 on a blood-alcohol test, nearly three times over the legal limit to drive.

Martin also was ordered to complete 80 hours of community service and was fined $500 on the DUI charge

Monday, August 15, 2011

CNM Bookstore tied to stolen credit card scheme


People, who have made a purchase at the CNM bookstore recently, might want to check bank statements for anything suspicious.

Police said one of two women involved in a stolen credit card scheme is an employee at the college bookstore.

According to the criminal complaint, the store worker, Febe Estrada, 45, was caught on surveillance cameras over riding the credit card system and manually entering the stolen card numbers.

Also in the complaint, it states that Estrada was brought into the scheme by a distant relative, Donna Marie Lucero, 47.

A director at the bookstore told investigators that on at least 13 occasions, Estrada had helped embezzle more than $6,000 worth of merchandise by putting in the fraudulent numbers given to her Lucero and another man.

Estrada told police the cards she would get from Lucero did not appear to be valid because the numbers were not raised and the only way the purchase would go through would be to override the system.

Lucero made her appearance in court Sunday to answer to the charges.

Febe Estrada bonded out of jail and is charged with embezzlement and conspiracy.

Police have been able to identify most of the victims, but are still trying to track down more.

The CNM bookstore is operated by a separate corporation that manages hundreds of school bookstores nationwide.

Friday, August 12, 2011

Financial audits did not show irregularities at charter school


Kid Street Learning Center Charter School, just before Wednesday’s school board meeting.Santa Rosa school officials expressed dismay Thursday over the embezzlement at a charter school created to serve children in crisis, but said financial audits in recent years showed no indication of a large-scale theft.

Doug Bower, associate superintendent of Santa Rosa City Schools, said he learned of the arrest of Sheila Accornero, finance manager of the

“Disbelief,” he said. “I hate to hear this is happening. Particularly to Kid Street, which we’ve long regarded as a very valuable and very viable organization and one of our best charter school operations. At the same time, we know this stuff happens.”

The small school is an independent charter in the Santa Rosa district. It has its own board, does its own hiring and operates at arm’s length from the school district, which oversees its charter.

Some board members have expressed concern in the past that the school receives a significant amount of private grant money independent of state funding, amounting to as much as one-third of its yearly $600,000 budget.

Accornero, who started with the school in 2005, is suspected of taking nearly $400,000 through hundreds of checks, many involving forged signatures, written over at least three years.

“The numbers are pretty astounding,” said Kim Agrella, executive director of fiscal services for Santa Rosa City Schools.

She said there was nothing that gave an indication “something like this is going on.”

Bower said that while he didn’t think anything was done wrong at the district level, he hoped lessons will come out of it for the future.

“It’s a learning experience. It’s a wake-up call,” he said.

He defended the district’s oversight efforts, saying, “We go above and beyond in what’s required by law.”

City school officials and the school board will determine if any district policies and procedures need to be altered in light of the investigation, he said.

All five charter schools in the district are audited annually by an independent, state-approved company.

Asked how the allegations of embezzling involving so many checks could be missed, Bower said an audit doesn’t go over every financial transaction of a school. Samplings are done with the audit company requesting a variety of checks and financial information, he said.

The district business office then reviews each audit as well as other money-related information from the school, relying on the independent effort to tell officials if the school’s finances appear to be on the up and up.

Bower said it was unclear to him if allegations involving Accornero included if she was designated to write checks, as well as balance the district’s checkbook.

“It’s a dangerous scenario,” he said. “That’s not good internal control,” while acknowledging that small companies and schools often don’t have the staff to create the separation required.

Internal control issues have come up in prior audits.

In the 2006-07 audit of Kid Street, “there was an internal control finding that addressed some issues they thought should be cleaned up, but nothing like this,” Agrella said.

That finding showed the same person was approving purchases and signing the checks. The independent auditor said to protect cash assets a second person needed to be involved in the process.

District finance officials met with school officials to make sure that was fixed.

“It was fully implemented according to the next audit,” Agrella said.

“It was a problem with the process and that problem was corrected,” she said. “They were working on it, taking it seriously.”

Other Kid Street audit findings were considered fairly minor and weren’t financial, Agrella said. One involved payroll checks not being reported in a timely manner because they were being done by hand instead of online.

That also subsequently was fixed.

“There were no red flags in these really,” she said. “These findings aren’t necessarily uncommon especially for a small organization like that.”

The school’s finances for the last school year are due in September and an audit is expected to be available in December.

Bower expressed confidence in Principal Linda Conklin’s ability to put the school back on a solid financial footing. “Linda is very resourceful and dedicated. She’ll find a way to make it work, even if there’s financial pain for awhile,” he said.

The kids that attend the school sometimes are victims of family problems and to become victims of a school employee even was more unfair, he said.

“It’s a sad story.”

Thursday, August 11, 2011

$400,000 embezzlement suspected at Kid Street Charter School in California


The finance and business manager of a nonprofit Santa Rosa charter school has been arrested for allegedly embezzling nearly $400,000 to support a prescription drug habit, Santa Rosa police said Wednesday.

Sheila Accornero, 42, of Cloverdale, is being held in the Sonoma County jail without bail.

She is scheduled to be arraigned Thursday afternoon in Sonoma County Court on felony embezzlement, forgery, burglary, narcotic possession charges and probation violations.

Accornero worked as a bookkeeper for the past five years at the K-6 Kids Street Learning Center charter school at 709 Davis St., police Sgt. Mike Lazzarini said.

Police received a tip about the alleged embezzlement during the past several weeks and believe Accornero misappropriated almost $400,000 over the past three years, Lazzarini said.

The total amount of missing money has not been determined and none of the money has been recovered, Lazzarini said.

The school’s administrators were unaware of the missing money until detectives contacted them Tuesday, Lazzarini said.

The school’s executive director and principal Linda Conklin did not return a phone call Wednesday afternoon. The school is funded through grants and donations, police said.

Accornero had a large amount of prescription pain pills when she was arrested, Lazzarini said.

Accornero is believed to have acted alone, Lazzarini said.

“She wrote checks to herself, cashed them and spent them all on prescription drugs,” Lazzarini said.

“Some of the checks totaled $20,000 to $30,000 a month. There were a lot of transactions,” Lazzarini said.

The Sonoma County District Attorney’s Office also investigated the alleged embezzlement.

On its website, the Kids Street Learning Center lists its mission as providing children and families living in extreme crisis a caring, supportive educational community to call home.

The school fosters a “hands-on, real world self initiated education,” according to the website, and also offers an after-school program.

Wednesday, August 10, 2011

On to felony court for former Red Arrows Boosters treasurer charged with embezzling funds in Michigan


The Lowell schools booster accused of embezzling nearly $100,000 from the athletic support club will see her case move to Kent County Circuit Court where she faces up to 20 years in prison.

Carrie Fisher, the former treasurer of the Lowell Area Schools Athletic Boosters, forged signatures on checks and created fake tax statements to commit and then cover up embezzling $98,588 from the club, according to police.

Fisher, 39, waived a probable cause hearing last week on felony accusations of embezzlement over $50,000, forgery and using a computer to commit a crime.

The case began when school officials uncovered financial irregularities in a March audit.

Court records indicate that Fisher began bilking the club three months after she was appointed treasurer of the group, which helps fund sports teams with revenue from concessions sales at events, in July 2008.

In an affidavit, Michigan State Police Sgt. Tom DeClercq said Fisher wrote checks to either herself or her tax preparation company, Curtis Accounting, and forged the name of booster President Doris Drain.

She recorded on the checks that the payments were for sales tax from booster operations, court documents show.

DeClercq claims Fisher, who sometimes uses the name “Curtis-Fisher,” confessed to both the forgery and the embezzlement.

As of July, the booster club, a registered tax-exempt non-profit, has not filed annual tax documents required by the Internal Revenue Service since the 2007 tax year. In that report of the group's finances, the club had reported a $76,490 fund balance at the end of 2007.

Fisher was listed as tax preparer for the club.

Fisher remains free on a personal recognizance bond.

Former Elementary PTA President Pleads Guilty to Embezzlement in California


A former president of Nicolas Valley Elementary School's PTA pleaded guilty to scamming the organization.

Dusti Lee Brock, 35, admitted to misdemeanor embezzlement on Tuesday as part of a plea deal. A felony charge of grand theft in excess of $400 was dropped, according to court records.

She will serve 36 months of probation and 150 days in a work release program, the record shows.

Brock stole the money from the PTA's coffers between June and December 2010, according to a complaint filed by the District Attorney's Office

Tuesday, August 9, 2011

Father Ciullo Arrested for Embezzlement in Virginia


Fairfax County Police have charged Father Salvator L. Ciullo with embezzling $130,000 from Church of the Nativity in Burke.

Police seized documents at Father Ciullo’s Alexandria residence during an Aug. 1 search. Father Ciullo met with detectives at police headquarters that afternoon, where he was charged with embezzlement of funds from Nativity Parish, where Father Ciullo served as pastor from 1984-96.

The two-day police investigation revealed that Father Ciullo had opened a bank account without the knowledge of Nativity Church or the diocese, deposited funds in that account, then diverted approximately $130,000 to his personal account.

Father Ciullo was released on $10,000 personal recognizance bond.

The Arlington Diocese earlier had turned over to police copies of its extensive seven-month investigation into the financial accounts at St. Raymond of Penafort Parish in Fairfax Station, where Father Ciullo was founding pastor in 1996.

The diocese announced in December 2000 that financial irregularities were discovered at the parish during the course of a routine audit. In accordance with diocesan policy, Father Ciullo, who was then serving as pastor of Queen of Apostles Parish, was placed on administrative leave pending further review of the matter by the Chancery and an independent auditor.

"It is always difficult when situations like this arise," said Bishop Loverde. "While I am grateful to him (Father Ciullo), as many others are, for the good he accomplished during his 40 years of priestly ministry, I do not condone what appears to be the misuse of his position for personal gain.

"I am deeply saddened that Father Ciullo seems to have acted irresponsibly," the bishop said. "As the chief pastor of the diocese, I consider the financial giving and sacrifices of this community to be a sacred trust. I will do everything in my power to recover diverted monies and restore the broken confidence of those of Father Ciullo’s parishioners who gave so unselfishly to the Church."

Father Ciullo was ordained in April 1960. He was named pastor of Queen of Apostles Parish in June 2000.

Former Arlington Bishop John R. Keating instituted financial policies for the diocese in 1992, which include, among other things: all cash and checks are to be immediately counted and tabulated; access to the funds is limited to a small select group of trustworthy individuals whose positions are periodically rotated; all parish funds are to be placed in diocesan-approved accounts; the funds, if not immediately deposited in a bank, are to be placed in the rectory’s locked safe until deposited in the bank the next day; access to a parish safe is restricted to the absolute minimum number of persons; and reconciliation of bank statements is to be performed by individuals other than those persons who regularly maintain or use the account.

Bishop Loverde added to that policy following his 1999 installation to include an independent financial audit of a parish whenever the pastor retired, was transferred or died.

"I consider it a sacred trust that money contributed to the Church is used to support the mission of the Church," Bishop Loverde said. "I want to assure the members of this diocese that a thorough investigation is taking place and appropriate actions will be taken based upon the findings of the investigation."

Church works to heal after crimes in North Carolina


An assistant pastor who confessed to stealing computer equipment and embezzling from his church twice tried to commit suicide after he was found out, according to authorities and church officials.

William Edward “Eddie” Lloyd, 47, of 272 Olive Branch Blvd. in Grifton was arrested Saturday and charged with larceny by an employee in connection with the Aug. 1 theft of $20,000 in computer equipment from Open Door Ministries and Church on Reedy Branch Road. Additional charges are pending, according to the Pitt County Sheriff's Office.

Lloyd, employed eight years in several capacities at the church, allegedly stole the computers to hide records of a more lengthy embezzlement scheme, according to documents filed along with an arrest warrant by sheriff's Detective J.W. Stancil.

The church stands ready to forgive Lloyd and wants to “reclaim and restore” him, senior pastor Paul G. “Greg” Kennedy said Monday.

“We are called to love, and our heart is to be forgivers,” Kennedy said. “We preach that to be done in every situation. It is a difficult thing, but this is what it's about, showing the love of Jesus. Now, we either will or we won't.”

Lloyd was an assistant pastor serving as finance director at the church. When his plans unraveled, he attempted suicide Wednesday by opening a gas connection on the top floor of the church, according to Stancil's report and accounts related by Kennedy.

He was interrupted by employees arriving for work that morning. Unable to reconnect the gas valve, he left the church, headed to Durham and checked into a motel. The church and adjacent day care had to be evacuated.

Lloyd sent a text message to parishioners and the church, revealing his acts, motives and intention to end his life. He cut his wrist and ingested medications, but his effort was interrupted by local police Wednesday afternoon, Stancil reported.

Lloyd was arrested after his release from the hospital Saturday. He posted a $1,500 secured bond and left the jail.

Kennedy visited Lloyd at the hospital.

“Eddie told me he didn't want to die,” Kennedy said, characterizing his actions as a cry for help.

“This is a tragedy and a painful time for all of us. We've seen Eddie and his wife through many times, including the birth of a son who is deeply affected by autism. He's been a very capable employee who gave no indication that he was upset about anything,” Kennedy said.

Lloyd had indicated in his text message that he committed the crimes because he had felt betrayed, according to Stancil's report.

Kennedy said Lloyd recanted that. “He told us he was just looking for an excuse for his behavior while feeling sorry for himself,” Kennedy said.

Established in 1986, The Church of the Open Door has more than 1,200 members. Kevin Wallace, administrative director of the sheriff's office, and Christy Wallace, the sheriff's public information director, belong to the church.

The pastor said church administrators never saw anything identifiably wrong in Lloyd's work or had any indication of illegal behaviors.

“We found some mistakes in our finances last month, nothing serious and we were able to get through it. We were talking about taking the problems out of house to a CPA, but we never put the two together and tied it to Eddie,” Kennedy said. “We talked to him about it, and I think that led to the circumstances that made him do what he did. I think it was the pressure that pushed him over the edge.”

Kennedy said that Lloyd was trusted implicitly, to the point where he was given private passwords for the pastor and his wife.

The ministers, staff and parishioners of Open Door are trying not to feel betrayed, Kennedy said. They are struggling just to believe it happened, he said

“We're choosing not to feel betrayed. We expect, as ministers, to deal with lots of ups and downs and times of difficulty. We expect that, but not with Eddie. He was almost like a son, very easy to like and great with people.”

Kennedy said Lloyd was very contrite and apologetic when they spoke.

“He was ashamed and apologetic for what he had done; he was just a broken man,” Kennedy said.

Sunday, August 7, 2011

IRS Warns Churches about Tax Scams


In July, the IRS urged its Twitter followers to be leery of tax scams convincing taxpayers to apply for rebates or credits. And Forbes reported that there’s been a recent “flurry of schemes in the South and Midwest” targeting local churches. Scammers convince churches that free money is available from the IRS through large tax credits or rebates, requiring minimal paperwork—a substantial reward for little effort and an offer truly too good to be true.

Unfortunately, churches are falling for it.

In 2008, Richard Hammar cautioned churches about several scams included in the IRS’s annual “Dirty Dozen,” a list of common tax scams all taxpayers should be aware of. Out of the twelve, Hammar focused on five that were relevant to churches. These five are still relevant, according to the IRS’s 2011 Dirty Dozen. Read about the five below, and view the complete list at

Five To Watch

Phishing. Identity thieves use this technique to acquire personal information in order to gain access to the financial accounts of unsuspecting consumers, run up charges on their credit cards, or apply for loans in their names.

These Internet-based criminals pose as representatives of a financial institution—or sometimes the IRS itself—and send out fictitious e-mail correspondence in an attempt to trick consumers into disclosing private information. A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking website. The website then solicits a Social Security and credit card number. Scam artists are also using social media and spyware (usually loaded on to a computer by opening an e-mail attachment or clicking on a link) to gain access to personal financial information. Use caution when opening e-mail from unknown senders and giving out too much information through your social media accounts.

The IRS encourages anyone who believes personal information has been stolen to contact the IRS Identity Protection Specialized Unit at 1-800-908-4490. A suspicious e-mail or an “IRS” web address that does not begin with should be forwarded to the IRS at

Zero wages. In this scam, which first appeared in the Dirty Dozen in 2006, “a Form 4852 (Substitute Form W-2) or a ‘corrected’ Form 1099 is used as a way to improperly reduce taxable income to zero.” The taxpayer may include a statement rebutting wages and taxes reported by the payer to the IRS. An explanation on the Form 4852 may cite statutory language behind Internal Revenue Code sections 3401 and 3121 or may include some reference to the paying company refusing to issue a corrected Form W-2 for fear of IRS retaliation. According to the IRS, filing this kind of return can cost you up to $5,000.

Return preparer fraud. Dishonest return preparers can cause problems for taxpayers who fall victim to their schemes. Such preparers make their money by skimming a portion of their clients' refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote filing fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. The IRS urges taxpayers to choose carefully when hiring a tax preparer: "As the old saying goes, if it sounds too good to be true, it probably is. Remember that no matter who prepares the return, the taxpayer is ultimately responsible for its accuracy."

To crack down on this kind of dishonest business work, and increase confidence in the tax system and improve compliance with the tax law, the IRS is implementing a number of requirements for paid tax preparers, including new regulations that “require paid tax preparers (including attorneys, CPAs, and enrolled agents) to apply for a Preparer Tax Identification Number (PTIN) before preparing any federal tax returns in 2011.”

Abuse of charitable deductions. The IRS notes that contributions of noncash assets continue to be an area of abuse, especially with regard to overvaluation of contributed property. In some schemes, organizations are claiming the full value for a receipt and distribution of the same non-cash contribution.

Frivolous arguments. The IRS considers several arguments to be frivolous, including the following: (1) the Sixteenth Amendment, which authorizes Congress to collect income taxes, was never properly ratified; (2) wages are not income; (3) filing a return and paying taxes are voluntary; and (4) being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. The IRS urges taxpayers "not to believe these or similar claims. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or else they may subject themselves to increased penalties." The IRS also noted that Congress amended the tax code in 2006 to increase the amount of the penalty for frivolous tax returns from $500 to $5,000.