Monday, April 22, 2013

Embezzlement: Has it become part of our culture?


The following was noted in the Spring 2012 issue of the Vermont Bar Journal:
"Vermont is the number one state in the nation for embezzlement thefts from corporations and nonprofits. In fact we may well be on our way to another dubious number one ranking: for thefts by fiduciaries from estates of all types -- guardianships, decedents’ estates -- and by agents acting under powers of attorney. It appears that living well on other people’s money has become a way of life for some Vermonters."
And how prophetic a statement: the Bennington Banner reported on April 13, that Robert Baker, reached a plea deal with the U.S. Attorney’s office. He was accused of diverting for his personal use $171,000 from the estate of Nada Lodinko.
To the listing of corporations and nonprofits, I would to add, unfortunately, municipalities.
No matter the institution, the embezzlers’ pedigree or the motivation, embezzlement has become an epidemic. Even long established collegiate institutions have not avoided the hurt to their finances and reputation from the evil deeds of former trusted employees.
Westchester County’s Iona College, saw Sister Marie Thornton (yes a nun) plead guilty to having embezzled $850,000 from Iona where she had been the college’s V.P. of Finance. All of the money was used to satisfy a gambling addiction. For her ill-gotten gains she was sentenced, in late 2011, to 2,000 hours of community service.
Dartmouth College’s former auditor, 79-year-old Vermonter, Bruce McAllister, allegedly betrayed his fellow employees at the New Hampshire college by stealing over $800 thousand. If it is any consolation, the Dartmouth alum will pay back the money once his 18-month sentence is complete.
Closer to home, in Bennington, and much more tragic was the recent announcement that James Beckwith, with a tenure of seven years as Southern Vermont College’s CFO/COO, allegedly embezzled over $500,000 from the college. Much about this embezzlement will never be known. The 58-year-old alleged embezzler took his life with a self -inflicted gunshot wound in February 2013.
On March 25, the Rutland Herald reported that Karen Brisson, the long serving Weybridge Town Clerk and Treasurer, admitted, that over a six-year period, she stole $400,000 from her town.
Soon, she might very well be joining, Sherry Roebuck of Guildford, who on Feb. 17, was given an 18-month prison sentence for embezzling $80,000 from the Algiers Fire District. The Herald also reported on April 14, that in Fairhaven, Denis Ballard was charged for allegedly taking $150,000 from her employer, a local store.
Nor are Vermont’s neighboring towns immune to the wrongful deeds of employees. On March 12, Virginia DiCapria, the former Treasurer of Charlton, N.Y. (near Saratoga) admitted embezzling nearly $500,000 from the Charlton volunteer fire department. And in nearby Troy, N.Y., in December 2012, Dennis Bassal, the former executive director of a nonprofit agency, was charged with allegedly stealing $200,000 from his employer, Father Young’s Rehabilitation Center.
Unfortunately, there are many more that could be detailed here -- to what end? Can embezzlement be stopped? Not really, but it can be curtailed and to do so we need to make real changes to the culture in how we approach this epidemic.
Heading the list is what forensic auditors refer to as "setting the tone" by those who have the responsibility of overseeing an organization’s funds -- and they need formal training. For example, New York State’s school board trustees are required to obtain six hours of continuing education in financial matters. Furthermore, those at the "top" must get involved. But too many fail to do so, just ask any convicted embezzler.
Second, is to recognize that "I have trust in our financial person" as is so often heard. Trust is a feeling and is absolutely not a financial control.
Third, if a town or nonprofit organization does not have the money to invest in overseeing its finances seek outside help from the Vermont State Auditors office, the Vermont CPA Society, the League of Cities and Towns, or from volunteers.
And fourth, the judicial system must see to it that convicted embezzlers served time in prison, made to pay back what was stolen and yes, pay the federal and state income taxes due on their ill-gotten gains. Every organization that is embezzled should issue a Form 1099 (similar to a W-2) to the convicted embezzler.
Vermont has gained the reputation of being first in America in so many worthwhile areas -- its time we shed our reputation of being first in embezzlements. It should not be part of our culture.

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