A Raytown man pleaded guilty in federal court Tuesday to embezzling more than $86,000 from Nativity of Mary Church and school in Independence and Sacred Heart of Guadalupe Church in Kansas City, where he worked or volunteered.
David Townley, 59, pleaded guilty in Kansas City federal court to one count each of wire fraud, mail fraud and tax evasion. He initially faced a 14-count indictment when charged in June 2016.
By pleading guilty, Townley admitted that he committed wire fraud while serving as business manager at Nativity from December 2006 to June 2013. His job gave him access to collections, donations and tuition payments, and according to court documents he skimmed tuition payments and frequent bank deposits separate from his and his wife's salary payments.
During that same time period, Townley admitted, he stole more than $47,700 from Guadalupe, where he had been volunteering since 2002. He had been in charge of paying bills, making book entries and preparing tax returns. According to court documents is wrote unauthorized checks to himself and third parties.
Monday, February 27, 2017
Friday, February 24, 2017
West Seneca Baseball leader sentenced to weekends in jail in embezzlement case
The president of the West Seneca Youth Baseball Association who stole close to $50,000 from the organization was sentenced Tuesday to spend weekends in jail for the next three months.
Kevin Chodkowski, 46, of West Seneca already has repaid $49,350 to the baseball club, the full amount that investigators could confirm that he stole. He pleaded guilty to attempted grand larceny after the restitution was paid.
Chodkowski took the money when he was head of the league, from 2011-2014, and lost much of it in local casinos, according to prosecutor Christopher Jurusik.
Chodkowski is now in counseling for his gambling addiction.
Thursday, February 23, 2017
Embezzlement charges dropped against former Bruton High School bookkeeper
Six embezzlement charges have been dropped against Bruton High School’s former bookkeeper, who was accused of opening an unauthorized corporate credit account in the school’s name and making purchases with it over a span of four and a half years.
Prosecutors made a motion to drop the charges, including five felonies and a misdemeanor, against Charlene Flood-Liggon in York-Poquoson General District Court Tuesday afternoon.
Assistant Commonwealth’s Attorney Jacob Lambert asked to drop the charges because the “commonwealth had insufficient evidence” in the case. The charges were nolle prossed, meaning the prosecution will not pursue the charges unless more evidence comes to light.
Flood-Liggon, 54, of Newport News, worked as a bookkeeper at Bruton High School, handling cash and checks from “every aspect” of the school, including athletics, arts, field trips and more, according to court documents.
According to the criminal complaint, Bruton High School’s principal, Arletha Dockery, started to become suspicious of Flood-Liggon when she noticed several years’ worth of cash deposits missing from the high school’s bank account.
The police investigation, which started last June, tied Flood-Liggon to $4,731.56 in purchases on an Amazon Corporate Credit account, court documents state. The purchases spanned from Dec. 14, 2011 to April 5, 2016.
The School Board terminated her employment when the York-Poquoson Sheriff’s Office opened the investigation, according to court documents.
When Dockery was cleaning out Flood-Liggon’s desk, she discovered an Amazon statement addressed to the former bookkeeper, documents state.
“While Dockery has only been principal at BHS for one year, she did not recall there being an authorized account for the school,” the criminal complaint states.
The account was created by Flood-Liggon “under the guise of purchasing for BHS,” and the bookkeeper opened a line of credit in the school’s name, the document states.
Dockery worked directly with Amazon to get account statements from as far back as December 2011, which were all addressed to Flood-Liggon using the school’s address at 185 E. Rochambeau Drive, according to the criminal complaint.
Flood-Liggon was charged on Aug. 3 with six counts of embezzlement, at the completion of the investigation.
Wednesday, February 22, 2017
Editorial: Embezzlement charge at Fayetteville private school exposes risks of voucher abuse
In the last three school years, North Carolina taxpayers have spent nearly $859,000 to educate elementary and high school students at Trinity School in Fayetteville. The school is the top recipient of the state’s private school vouchers.
Just last week Heath Vandevender, athletic director at the school and vice president of the Truth Outreach Center Inc., was arrested and accused of embezzling nearly $400,000 in employee tax withholdings at the private school.
Vandevender, who was released on $50,000 bond, continues to coach the boys’ basketball team and is still employed by the school, according to his father, Rev. Dennis Vandevender, the leader of Trinity Christian School.
So, the state’s biggest recipient of taxpayer-funded private school vouchers is accused of failing to pay nearly a half-million dollars in required state taxes.
In the three years since the state-funded vouchers have been offered, schools have quickly caught on to the “opportunity of vouchers. The number of schools participating has grown from 224 when launched to 349 this current school year.
And what kind of oversight does North Carolina have to make sure schools receiving vouchers are spending taxpayer money properly? Next to none.
For politicians who have made a mantra out of “running government like a business,” the opportunity school vouchers is a scheme that might delight Bernie Madoff.
While schools that receive more than $300,000 in vouchers are required by state law to conduct an audit, incredibly they don’t have to reveal or share the contents of that audit. And while the schools are required to administer a “nationally standardized test” to students annually, it is up to the schools to select the test – and there is no requirement they be the same, or similar to those used to measure the progress of students in North Carolina public schools.
This latest accusation of administrative and financial abuse at Trinity School is a stark reminder that our lawmakers should have reasonable rules and regulations in place to assure taxpayers that their money is being spent wisely.
Many of the schools have rules and policies imposing discrimination, excluding some students based on their faith, if their parents are gay, or whether students might be LGBT. These policies shouldn't be supported with state tax dollars.
Further, these schools that are so anxious to accept the state funding should be expected to show how the money was spent and whether the resulting education was worth it.
This school year the state’s paid out more than $12 million to support 5,432 students at 349 private schools. Within 10 years, the legislature has mandated the program grow to $13 .8 million for support of 32,105 students.
North Carolina taxpayers should know how their tax dollars are being spent – and not left to merely take the word of private school administrators or the students’ parents.
If the legislature is determined to continue funding the vouchers, it should impose appropriate accountability measures that assures taxpayers the money is paying for student education and that the schools are being operated in a financially responsible way. Additionally, the schools should demonstrate student progress through the same, or similar standardized tests that public schools are required to meet.
Failing to do this cheats North Carolina taxpayers and just as importantly, fails the students it is intended to help.
Tuesday, February 21, 2017
Ex-Baruch College basketball coach allegedly pocketed $600K from school
A former Baruch College basketball coach and athletic department official was busted Tuesday for pocketing more than half million dollars that should have gone to the college for rentals of its athletic facilities, authorities said.
Machli Joseph, who served as a women’s basketball coach for 10 years and an assistant athletics director from 2002 through 2016, was charged with one count of embezzlement, said Manhattan U. S. Attorney Preet Bharara and state Inspector General Catherine Leahy Scott.
Baruch rented out its gym to outside parties when it was not used by its athletic teams.
Officials said Joseph, 42, had sole control over the rentals and schedules.
On numerous occasions between 2010 and 2016, Joseph rented the gym to individuals and groups, with the money intended to go into Baruch’s coffers.
But Joseph directed the payments be made to bank accounts over which he had personal control, authorities said.
On several occasions, Joseph even directed that payment be made directly to himself or associates of his, according to the charges.
Many of these funds were ultimately spent on personal expenses, including renovations to Joseph’s home in Elizabeth, N.J., officials said.
All told, the scheme improperly diverted approximately $600,000, the criminal complaint said.
“Embezzling money from a public college is no game, and for allegedly taking criminal advantage of his control over Baruch’s basketball courts, Joseph will now face federal charges in a court of law,” Bharara said.
Joseph has been charged with one count of embezzlement and misapplication concerning a program receiving federal funds, which is how Bharara got involved.
The charge carries a maximum term of 10 years in prison.
Baruch College president Mitchell Wallerstein issued a statement saying the college was cooperating with authorities and had changed its practices:
“Today, the U.S. Attorney for the Southern District of New York arrested a former Baruch College employee, Machli Joseph, on charges of embezzlement. While employed at the College, it is alleged that he diverted approximately $600,000 in funds that were intended for the College. I am disturbed by this betrayal of trust, and will take further steps to improve oversight.
“We are disappointed that an employee would allegedly perpetrate a criminal theft of financial resources that are so critical to our students’ success. We support the U.S. Attorney’s intention to prosecute this case to the full extent allowed by law.
“Baruch has cooperated with the New York State Inspector General’s investigation that led to the charges from the U.S. Attorney’s office. We appreciate the diligence that led to the discovery of this malfeasance, and we intend to continue to offer our cooperation.
“Mr. Joseph was employed by the Baruch Athletics department between 2002 and 2016, first as Women’s Basketball Coach and later as Assistant Athletics Director. Beginning in 2015, Baruch started a significant reorganization of the Athletics department to improve its monitoring, control and rules of enforcement. Among the changes that have been made:
Revamped the role of Athletics Director. The revised position has substantially more responsibility to assure compliance by coaches and other staff with external and internal rules and procedures.
As part of these efforts, Mr. Joseph was moved from the Athletics Department in November 2015, and he resigned from the College in October of 2016.
Appointed a new Faculty Athletics Representative who is an authority on sports law.
Established an Athletics Compliance Team with oversight regarding all of Baruch’s athletic programs and compliance under the leadership of the College’s legal counsel.
“Baruch will continue to cooperate with all investigative and law enforcement agencies regarding this matter, which violates all of our standards and values.”
Machli Joseph, who served as a women’s basketball coach for 10 years and an assistant athletics director from 2002 through 2016, was charged with one count of embezzlement, said Manhattan U. S. Attorney Preet Bharara and state Inspector General Catherine Leahy Scott.
Baruch rented out its gym to outside parties when it was not used by its athletic teams.
Officials said Joseph, 42, had sole control over the rentals and schedules.
On numerous occasions between 2010 and 2016, Joseph rented the gym to individuals and groups, with the money intended to go into Baruch’s coffers.
But Joseph directed the payments be made to bank accounts over which he had personal control, authorities said.
On several occasions, Joseph even directed that payment be made directly to himself or associates of his, according to the charges.
Many of these funds were ultimately spent on personal expenses, including renovations to Joseph’s home in Elizabeth, N.J., officials said.
All told, the scheme improperly diverted approximately $600,000, the criminal complaint said.
“Embezzling money from a public college is no game, and for allegedly taking criminal advantage of his control over Baruch’s basketball courts, Joseph will now face federal charges in a court of law,” Bharara said.
Joseph has been charged with one count of embezzlement and misapplication concerning a program receiving federal funds, which is how Bharara got involved.
The charge carries a maximum term of 10 years in prison.
Baruch College president Mitchell Wallerstein issued a statement saying the college was cooperating with authorities and had changed its practices:
“Today, the U.S. Attorney for the Southern District of New York arrested a former Baruch College employee, Machli Joseph, on charges of embezzlement. While employed at the College, it is alleged that he diverted approximately $600,000 in funds that were intended for the College. I am disturbed by this betrayal of trust, and will take further steps to improve oversight.
“We are disappointed that an employee would allegedly perpetrate a criminal theft of financial resources that are so critical to our students’ success. We support the U.S. Attorney’s intention to prosecute this case to the full extent allowed by law.
“Baruch has cooperated with the New York State Inspector General’s investigation that led to the charges from the U.S. Attorney’s office. We appreciate the diligence that led to the discovery of this malfeasance, and we intend to continue to offer our cooperation.
“Mr. Joseph was employed by the Baruch Athletics department between 2002 and 2016, first as Women’s Basketball Coach and later as Assistant Athletics Director. Beginning in 2015, Baruch started a significant reorganization of the Athletics department to improve its monitoring, control and rules of enforcement. Among the changes that have been made:
Revamped the role of Athletics Director. The revised position has substantially more responsibility to assure compliance by coaches and other staff with external and internal rules and procedures.
As part of these efforts, Mr. Joseph was moved from the Athletics Department in November 2015, and he resigned from the College in October of 2016.
Appointed a new Faculty Athletics Representative who is an authority on sports law.
Established an Athletics Compliance Team with oversight regarding all of Baruch’s athletic programs and compliance under the leadership of the College’s legal counsel.
“Baruch will continue to cooperate with all investigative and law enforcement agencies regarding this matter, which violates all of our standards and values.”
Monday, February 20, 2017
Man pleads guilty to church embezzlement
A Raytown man pleaded guilty in federal court Tuesday to embezzling more than $86,000 from Nativity of Mary Church and school in Independence and Sacred Heart of Guadalupe Church in Kansas City, where he worked or volunteered.
David Townley, 59, pleaded guilty in Kansas City federal court to one count each of wire fraud, mail fraud and tax evasion. He initially faced a 14-count indictment when charged in June 2016.
By pleading guilty, Townley admitted that he committed wire fraud while serving as business manager at Nativity from December 2006 to June 2013. His job gave him access to collections, donations and tuition payments, and according to court documents he skimmed tuition payments and frequent bank deposits separate from his and his wife's salary payments.
During that same time period, Townley admitted, he stole more than $47,700 from Guadalupe, where he had been volunteering since 2002. He had been in charge of paying bills, making book entries and preparing tax returns. According to court documents is wrote unauthorized checks to himself and third parties.
Analysis of Townley's bank records showed he used the embezzled money mostly to pay off credit card debt. Townley also admitted that he failed to file federal income tax returns for tax years 2005-13 and tried to conceal his true sources of income at Nativity and Guadalupe.
Townley faces up to 45 years in federal prison without parole, and sentencing hearing will be scheduled for at a later date.
David Townley, 59, pleaded guilty in Kansas City federal court to one count each of wire fraud, mail fraud and tax evasion. He initially faced a 14-count indictment when charged in June 2016.
By pleading guilty, Townley admitted that he committed wire fraud while serving as business manager at Nativity from December 2006 to June 2013. His job gave him access to collections, donations and tuition payments, and according to court documents he skimmed tuition payments and frequent bank deposits separate from his and his wife's salary payments.
During that same time period, Townley admitted, he stole more than $47,700 from Guadalupe, where he had been volunteering since 2002. He had been in charge of paying bills, making book entries and preparing tax returns. According to court documents is wrote unauthorized checks to himself and third parties.
Analysis of Townley's bank records showed he used the embezzled money mostly to pay off credit card debt. Townley also admitted that he failed to file federal income tax returns for tax years 2005-13 and tried to conceal his true sources of income at Nativity and Guadalupe.
Townley faces up to 45 years in federal prison without parole, and sentencing hearing will be scheduled for at a later date.
Sunday, February 19, 2017
WVSP investigate embezzlement involving Boone County Schools
The West Virginia State Police (WVSP) are investigating an embezzlement case involving Boone County Schools.
State police were at the bus garage Wednesday, February 15 serving search warrants for financial records.
According to the WVSP the funds being investigated are within the transportation department of Boone County Schools. However, there is a local business and individuals allegedly involved in this case as well.
Sgt. Sutphin of the WVSP Madison Detachment said they received a tip and that is when they started pulling records through the companies and discovered some fraudulent transactions had taken place.
“When we started piecing it together it just came in a whirlwind,” said Sutphin.
According to Sgt. Sutphin this has probably been going on for about two years. As for the dollar amount the WVSP have not come up with a grand total at this time.
“Every day the totals are going up and down,” said Sutphin.
“It is a pretty complex investigation,” said Sutphin. “This basically involves a pretty large scale of converting transportation monies into a private business and also into personal purchases.”
The Boone County School system has been taking some hard hits financially in the last few years with their budget. There have been layoffs, pay cuts and school closures during this time and there is a possibility of more layoffs for the 2017-18 school year.
“The Boone County administration with the school board through the central office they have been nothing but supportive and nothing but helpful,” said Sutphin. “Mr. Huffman has done an outstanding job in assisting us. This is nothing they were aware of and has taken them by complete shock.”
Sutphin said Boone County School system is the victim of this.
WVSP have not released any names at this time. However, Sutphin said, “There is going to be multiple arrests made.”
At this time there is no timeline as to when these arrests will be made.
State police were at the bus garage Wednesday, February 15 serving search warrants for financial records.
According to the WVSP the funds being investigated are within the transportation department of Boone County Schools. However, there is a local business and individuals allegedly involved in this case as well.
Sgt. Sutphin of the WVSP Madison Detachment said they received a tip and that is when they started pulling records through the companies and discovered some fraudulent transactions had taken place.
“When we started piecing it together it just came in a whirlwind,” said Sutphin.
According to Sgt. Sutphin this has probably been going on for about two years. As for the dollar amount the WVSP have not come up with a grand total at this time.
“Every day the totals are going up and down,” said Sutphin.
“It is a pretty complex investigation,” said Sutphin. “This basically involves a pretty large scale of converting transportation monies into a private business and also into personal purchases.”
The Boone County School system has been taking some hard hits financially in the last few years with their budget. There have been layoffs, pay cuts and school closures during this time and there is a possibility of more layoffs for the 2017-18 school year.
“The Boone County administration with the school board through the central office they have been nothing but supportive and nothing but helpful,” said Sutphin. “Mr. Huffman has done an outstanding job in assisting us. This is nothing they were aware of and has taken them by complete shock.”
Sutphin said Boone County School system is the victim of this.
WVSP have not released any names at this time. However, Sutphin said, “There is going to be multiple arrests made.”
At this time there is no timeline as to when these arrests will be made.
Saturday, February 18, 2017
Trinity Christian coach out on bail, expected on sideline Saturday
The Trinity Christian School coach accused of embezzling nearly $400,000 is out on bail and expected to be on the sideline Saturday night when his team opens play in the state basketball playoffs.
Heath Curtis Vandevender, 48, of the 900 block of Westland Ridge Road in Fayetteville, was arrested Monday and appeared before a Wake County District Court judge Tuesday. He was represented by lawyers Mike Williford of Fayetteville and Trey Fitzhugh of Raleigh.
Later Tuesday, Vandevender was out on $50,000 bail. The bail amount was initially incorrectly reported by the Wake County Clerk of Court as $100,000, but his lawyer confirmed Thursday that the bail was $50,000.
Vandevender is accused of taking $388,422 from employee withholding money that was to go to the N.C. Department of Revenue. Vandevender's next court appearance is March 7.
Vandevender, vice president of Truth Outreach Center Inc., is accused of taking the money between Jan. 1, 2008, and Dec. 31, 2015, a Department of Revenue spokesman said. Trinity Christian School and Trinity Community Services are under the center's umbrella.
The school is an independent, nonprofit, private day school that offers classes in grades K-12.
Vandevender is the school's athletics director and coaches the boys' basketball team. Trinity Christian begins its postseason in the N.C. Independent Schools Athletic Association 1-A playoffs with a home game Saturday.
Vandevender, son of Trinity Christian Church founder Rev. Dennis Vandevender, and all school athletics and administration officials have declined comment on the case. Vandevender did send a text message late Tuesday to the Observer's sports editor that said, "All I can say is I'm teaching and coaching starting tomorrow."
Trinity Christian School, at 3727 Rosehill Road, has turned out several college basketball players, many considered high-profile recruits. The latest in that line was Dennis Smith Jr., a freshman at N.C. State who is among the front-runners for the ACC's top rookie award that will be handed out next month and a possible NBA lottery pick this spring.
Heath Curtis Vandevender, 48, of the 900 block of Westland Ridge Road in Fayetteville, was arrested Monday and appeared before a Wake County District Court judge Tuesday. He was represented by lawyers Mike Williford of Fayetteville and Trey Fitzhugh of Raleigh.
Later Tuesday, Vandevender was out on $50,000 bail. The bail amount was initially incorrectly reported by the Wake County Clerk of Court as $100,000, but his lawyer confirmed Thursday that the bail was $50,000.
Vandevender is accused of taking $388,422 from employee withholding money that was to go to the N.C. Department of Revenue. Vandevender's next court appearance is March 7.
Vandevender, vice president of Truth Outreach Center Inc., is accused of taking the money between Jan. 1, 2008, and Dec. 31, 2015, a Department of Revenue spokesman said. Trinity Christian School and Trinity Community Services are under the center's umbrella.
The school is an independent, nonprofit, private day school that offers classes in grades K-12.
Vandevender is the school's athletics director and coaches the boys' basketball team. Trinity Christian begins its postseason in the N.C. Independent Schools Athletic Association 1-A playoffs with a home game Saturday.
Vandevender, son of Trinity Christian Church founder Rev. Dennis Vandevender, and all school athletics and administration officials have declined comment on the case. Vandevender did send a text message late Tuesday to the Observer's sports editor that said, "All I can say is I'm teaching and coaching starting tomorrow."
Trinity Christian School, at 3727 Rosehill Road, has turned out several college basketball players, many considered high-profile recruits. The latest in that line was Dennis Smith Jr., a freshman at N.C. State who is among the front-runners for the ACC's top rookie award that will be handed out next month and a possible NBA lottery pick this spring.
Friday, February 17, 2017
Director of home for girls, his wife indicted on embezzlement
The former director of Happiness Hill Christian Home for girls on Deemer Road and his wife were arrested last week on an indictment charging them with embezzlement. The indictment charged that Jack Lee High, 70, of 11871 Road 505, and Karen Lynn High, 68, same address, embezzled $25,000 or more from the Christian home, a mission of Lighthouse Baptist Church in Lafayette, Ind. A Neshoba County grand jury handed down the indictment during its December session. The two were booked at the county jail Thursday. They were initially arrested in April 2016 after a state audit showed that $210,313.36 was missing from the home, Sheriff Tommy Waddell said. However, he said a separate in-house audit showed $383,251.05 was missing. High was director of Happiness Hill and his wife was secretary/treasurer, Waddell said. The Highs are no longer employed by the home. Authorities were notified of the missing funds on March 8, 2016, by William Murdock, chairman of the board of Lighthouse Baptist Church. Happiness Hill was founded in 1991 by Raymond and Kaye Palmer. It is a home for young ladies between the ages of 13-17 who want and are willing to receive help. According to their website, many of the young ladies have been abused, neglected and unwanted. Some may be caught up in alcohol, drugs, being with the wrong crowd, rebellion and some may just have no one to care for them, the website said. Among the home’s financial supporting ministries in this area at the time of their arrests were: Arlington, Calvary and Enon Baptist churches and First Baptist Church of Union and Greenland Baptist Church of Union. A home for boys was later opened called the Solid Rock Boy’s Home. The two homes are located within five miles of each other on Road 505, better known as Deemer Road. -
Thursday, February 16, 2017
Former Broken Arrow church employee charged with embezzling nearly $245,000
A woman was charged Tuesday with embezzling nearly $245,000 from a Broken Arrow church to pay her credit card bills and purchase concert and theme park tickets, authorities said.
Candy Jean Tompkins, 47, faces five charges of embezzlement by employee for money taken from Arrow Heights Baptist Church, 3201 S. Elm Place, since 2008 when she was employed as payroll administrator, according to an affidavit.
After hiring a new company to take over payroll duties, the church’s pastor, Roger Taylor, discovered the alleged finance discrepancies, the document states.
Tompkins, who also uses the last name Butler, is accused of not withholding the agreed upon amount of insurance from her paycheck. The total amount is estimated to be $33,414.52 over the course of her employment, according to court documents.
Investigators believe Tompkins also charged approximately $100,282.00 to various employees’ company credit cards to purchase concert and theme park tickets, as well as for travel and purchases from Amazon.com.
Those cards were intended for buying church supplies, prosecutors said.
Tompkins allegedly also used church funds to pay two personal credit card debts, paying $75,548.47 on one card beginning in 2012 and $60,740.74 for another card.
For the first credit card, investigators said they chose to only search records back to 2012 because of the costs of getting that information from the bank.
Tompkins is also accused of taking $35,619.10 from funds she was supposed to deposit into the church’s bank account from tuition payments from parents whose children attend a ministry program, according to the affidavit.
Tompkins refused to speak with investigators when they initially approached her, authorities said.
When they reached out to her new employer, A-Best Roofing, officers discovered she’d been fired because of suspected embezzlement, investigators said.
She was charged with embezzlement in that case on Jan. 26, according to court records. She is accused of taking $6,133.68 from the business.
A district judge ordered a warrant for Tompkins’ arrest in relation to both cases. Online jail records indicate she has not yet been arrested.
Wednesday, February 15, 2017
Berkeley County Schools finance director fired after allegations of misappropriating funds
The chief financial officer of Berkeley County School District has been fired in the wake of allegations of misappropriating funds, and school officials had little to say Wednesday about the amount of money involved or the potential impact on schools there.
Brantley D. Thomas III, who has worked for the district since 1993, oversaw all of the district’s monies, including its nearly $260 million general fund.
Superintendent Brenda Blackburn, Board Chairwoman Sally Wofford, Vice Chairman Mac McQuillin and district lawyers learned of an investigation into the district’s finances during a Monday meeting with investigators from Wells Fargo and the FBI.
“We appreciate Wells Fargo and the FBI for promptly bringing this to our attention,” Wofford said in a statement released Wednesday. "We ask the public’s patience as we thoroughly investigate this matter and promise to take all appropriate actions.”
Blackburn fired Thomas, 60, on Tuesday, according to a district press release. Thomas has not yet been charged because the investigation is ongoing.
Calls to Thomas' home went unanswered Wednesday afternoon, and his lawyer, Matt Hubbell, said he could not comment other than to say that Thomas is fully cooperating with authorities.
The release did not specify how much money was at issue. It said a review of all financial accounts and monetary transactions is underway.
The school board held an emergency meeting Monday to receive advice from district lawyer Josh Whitley on a criminal investigation. It voted immediately to go into closed session, which lasted about an hour, and then adjourned without comment.
Board members reached Wednesday refused to comment, citing the ongoing investigation. They would not say how much money is missing or how it might impact district operations.
The district also declined to comment. An acting CFO has not yet been appointed, officials said.
The district has come under fire in the last couple of years for some financial decisions, including large property tax increases in 2015 and 2016.
In addition, after a State Law Enforcement Division investigation into the district’s $198 million Yes for Schools building campaign, the district spent more than $500,000 on salaries for indicted employees Rodney Thompson and Amy Kovach and lawyer’s fees for the pair and Deputy Superintendent Archie Franchini, who was not indicted. Thompson and Kovach both pleaded guilty to ethics violations in connection with the 2012 referendum campaign.
In November, voters expressed their dissatisfaction with the board by electing four new members associated with the county’s conservative Republicans. Three board members chose not to seek re-election and two incumbents, Chairman Jim Hayes and Julius Barnes, were defeated.
At its Jan. 10 meeting, the board received the results of an audit for its fiscal year ending June 30, during which Larry Finney of Greenville-based accounting firm Greene, Finney & Horton gave the district an “unmodified opinion,” the best result possible.
The audit did not look at every transaction, but instead used a sampling technique, Finney said at the time.
“Those are the kinds of things that let me sleep at night,” Superintendent Brenda Blackburn said upon hearing the favorable report.
Thomas, a Hanahan resident, is a 1975 graduate of Porter-Gaud and earned an accounting degree from Wofford College in 1979.
Until Tuesday, he was listed as chairman of the S.C. Association of Governmental Organizations, a nonprofit program created in 2002 to fund the building of school facilities through municipal bonds, according to its website. On Wednesday, Thomas’ name was removed from the site, and Horry County accounting officer William Saunders was listed as acting chairman.
Thomas' brother-in-law, Mike Gallagher, director of Compass Municipal Advisors in Columbia, serves as the organization's financial adviser and program administrator
Brantley D. Thomas III, who has worked for the district since 1993, oversaw all of the district’s monies, including its nearly $260 million general fund.
Superintendent Brenda Blackburn, Board Chairwoman Sally Wofford, Vice Chairman Mac McQuillin and district lawyers learned of an investigation into the district’s finances during a Monday meeting with investigators from Wells Fargo and the FBI.
“We appreciate Wells Fargo and the FBI for promptly bringing this to our attention,” Wofford said in a statement released Wednesday. "We ask the public’s patience as we thoroughly investigate this matter and promise to take all appropriate actions.”
Blackburn fired Thomas, 60, on Tuesday, according to a district press release. Thomas has not yet been charged because the investigation is ongoing.
Calls to Thomas' home went unanswered Wednesday afternoon, and his lawyer, Matt Hubbell, said he could not comment other than to say that Thomas is fully cooperating with authorities.
The release did not specify how much money was at issue. It said a review of all financial accounts and monetary transactions is underway.
The school board held an emergency meeting Monday to receive advice from district lawyer Josh Whitley on a criminal investigation. It voted immediately to go into closed session, which lasted about an hour, and then adjourned without comment.
Board members reached Wednesday refused to comment, citing the ongoing investigation. They would not say how much money is missing or how it might impact district operations.
The district also declined to comment. An acting CFO has not yet been appointed, officials said.
The district has come under fire in the last couple of years for some financial decisions, including large property tax increases in 2015 and 2016.
In addition, after a State Law Enforcement Division investigation into the district’s $198 million Yes for Schools building campaign, the district spent more than $500,000 on salaries for indicted employees Rodney Thompson and Amy Kovach and lawyer’s fees for the pair and Deputy Superintendent Archie Franchini, who was not indicted. Thompson and Kovach both pleaded guilty to ethics violations in connection with the 2012 referendum campaign.
In November, voters expressed their dissatisfaction with the board by electing four new members associated with the county’s conservative Republicans. Three board members chose not to seek re-election and two incumbents, Chairman Jim Hayes and Julius Barnes, were defeated.
At its Jan. 10 meeting, the board received the results of an audit for its fiscal year ending June 30, during which Larry Finney of Greenville-based accounting firm Greene, Finney & Horton gave the district an “unmodified opinion,” the best result possible.
The audit did not look at every transaction, but instead used a sampling technique, Finney said at the time.
“Those are the kinds of things that let me sleep at night,” Superintendent Brenda Blackburn said upon hearing the favorable report.
Thomas, a Hanahan resident, is a 1975 graduate of Porter-Gaud and earned an accounting degree from Wofford College in 1979.
Until Tuesday, he was listed as chairman of the S.C. Association of Governmental Organizations, a nonprofit program created in 2002 to fund the building of school facilities through municipal bonds, according to its website. On Wednesday, Thomas’ name was removed from the site, and Horry County accounting officer William Saunders was listed as acting chairman.
Thomas' brother-in-law, Mike Gallagher, director of Compass Municipal Advisors in Columbia, serves as the organization's financial adviser and program administrator
Tuesday, February 14, 2017
Investigating Embezzlement
Determining whether or not to trust someone, particularly in the workplace, can be complicated. As Ernest Hemingway once said “The best way to find out if you can trust somebody is to trust them.”
Although this concept sounds genuine in theory, forensic accountants have found that the practice of an employer instilling too much trust in an employee can lead to manipulation. It also can lead to embezzlement.
Embezzlement, a crime rooted in trust, is defined by The Legal Dictionary as “The theft, misappropriation, or conversion of monies placed in one’s trust, or which belong to an employer.” It is also defined by California Penal Code section §503 (which defines embezzlement as the fraudulent appropriation of property by a person to whom it has been entrusted).
If you are faced with an embezzlement investigation, the following may help you work with a forensic accountant in order to understand some of the practical procedures utilized and the appropriate documents to request.
LEARN THE ACCOUNTING PROTOCOL
Understand the accounting of the company. It is important to gain a general understanding of how a company’s accounting is supposed to operate versus how it actually operates. In an embezzlement investigation, detecting the differences between the two operations is critical. In order to identify if differences are present, you must obtain documents highlighting the policies and procedures accepted by the business. This data can be outlined in handbooks, policies and procedures manuals, and through conducting interviews with relevant staff members. Interviews with staff should include discussions about the day to day activities and how they might depart from the governing policies of the company. Awareness of the company’s prescribed financial processes allows the forensic accountant to discover transactions that deviate from the protocol, when performing a detailed analysis. It should be noted, however, that variances from the prescribed processes may not mean that fraud occurred.
GET THE RECORDS
Gain access to the company’s accounting records. In order to conduct a detailed analysis, determine how the accounting records are maintained and request the relevant electronic files. For example, if the business utilizes QuickBooks, requesting the native QuickBooks files is fundamental. QuickBooks allows the forensic accountant to analyze individual transactions, identify various customer vendors and download pertinent financial statement summaries. Exporting large amounts of QuickBooks data into Excel or other analytical platforms, allows the forensic accountant to organize the information in various presentations. Analyzing the data in this manner can highlight fraudulent patterns that may not be obvious when simply viewing in QuickBooks.
BANK INFORMATION
Request company banking records. Specifically, obtain the bank statements, cancelled check copies and deposit slips directly from the banking institution. Having access to these documents allows the forensic accountant to perform a line by line reconciliation between the banking records and the accounting records. This reconciliation process can either verify that the accounting records are being accurately recorded, or can expose fraud if the two records reveal contrasting data.
For example, the date, amount and payee details on cancelled checks should match what has been entered into the accounting records. In many embezzlement cases, a check was actually issued to someone other than who was entered in the accounting records. Analyzing check copies of the business, particularly details on the back of the check, can reveal additional information about where funds were deposited. In some cases, the individual who endorsed the check and the account it was deposited into may be different from the payee identified on the front of the check. If the suspect has signing authority over the business account, these instances are especially likely.
CONNECT THE DOTS
Once the embezzlement scheme is identified, performing a line by line analysis of the general ledger and reconciling the information to the suspect’s bank accounts can reveal disguised transactions. For example, the General Ledger may indicate a wire transfer was paid to a third party vendor, yet a transfer for the same amount on the same date was deposited into the suspect’s bank account. Furthermore, if you have the ability to do so, requesting the banking records of the alleged fraud perpetrator can reveal the final destination of the diverted funds. Tracing the money through these accounts is especially fruitful if the investigation requires quantifying damages.
Unfortunately, there is no universal approach to an embezzlement investigation. Because each case will vary, the documents needed to perform the analyses will vary as well. However, the methods listed here should serve as a helpful guide.
Although this concept sounds genuine in theory, forensic accountants have found that the practice of an employer instilling too much trust in an employee can lead to manipulation. It also can lead to embezzlement.
Embezzlement, a crime rooted in trust, is defined by The Legal Dictionary as “The theft, misappropriation, or conversion of monies placed in one’s trust, or which belong to an employer.” It is also defined by California Penal Code section §503 (which defines embezzlement as the fraudulent appropriation of property by a person to whom it has been entrusted).
If you are faced with an embezzlement investigation, the following may help you work with a forensic accountant in order to understand some of the practical procedures utilized and the appropriate documents to request.
LEARN THE ACCOUNTING PROTOCOL
Understand the accounting of the company. It is important to gain a general understanding of how a company’s accounting is supposed to operate versus how it actually operates. In an embezzlement investigation, detecting the differences between the two operations is critical. In order to identify if differences are present, you must obtain documents highlighting the policies and procedures accepted by the business. This data can be outlined in handbooks, policies and procedures manuals, and through conducting interviews with relevant staff members. Interviews with staff should include discussions about the day to day activities and how they might depart from the governing policies of the company. Awareness of the company’s prescribed financial processes allows the forensic accountant to discover transactions that deviate from the protocol, when performing a detailed analysis. It should be noted, however, that variances from the prescribed processes may not mean that fraud occurred.
GET THE RECORDS
Gain access to the company’s accounting records. In order to conduct a detailed analysis, determine how the accounting records are maintained and request the relevant electronic files. For example, if the business utilizes QuickBooks, requesting the native QuickBooks files is fundamental. QuickBooks allows the forensic accountant to analyze individual transactions, identify various customer vendors and download pertinent financial statement summaries. Exporting large amounts of QuickBooks data into Excel or other analytical platforms, allows the forensic accountant to organize the information in various presentations. Analyzing the data in this manner can highlight fraudulent patterns that may not be obvious when simply viewing in QuickBooks.
BANK INFORMATION
Request company banking records. Specifically, obtain the bank statements, cancelled check copies and deposit slips directly from the banking institution. Having access to these documents allows the forensic accountant to perform a line by line reconciliation between the banking records and the accounting records. This reconciliation process can either verify that the accounting records are being accurately recorded, or can expose fraud if the two records reveal contrasting data.
For example, the date, amount and payee details on cancelled checks should match what has been entered into the accounting records. In many embezzlement cases, a check was actually issued to someone other than who was entered in the accounting records. Analyzing check copies of the business, particularly details on the back of the check, can reveal additional information about where funds were deposited. In some cases, the individual who endorsed the check and the account it was deposited into may be different from the payee identified on the front of the check. If the suspect has signing authority over the business account, these instances are especially likely.
CONNECT THE DOTS
Once the embezzlement scheme is identified, performing a line by line analysis of the general ledger and reconciling the information to the suspect’s bank accounts can reveal disguised transactions. For example, the General Ledger may indicate a wire transfer was paid to a third party vendor, yet a transfer for the same amount on the same date was deposited into the suspect’s bank account. Furthermore, if you have the ability to do so, requesting the banking records of the alleged fraud perpetrator can reveal the final destination of the diverted funds. Tracing the money through these accounts is especially fruitful if the investigation requires quantifying damages.
Unfortunately, there is no universal approach to an embezzlement investigation. Because each case will vary, the documents needed to perform the analyses will vary as well. However, the methods listed here should serve as a helpful guide.
Monday, February 13, 2017
Ex-LLCC Employee Admits To Embezzlement
A former Lincoln Land Community College employee has admitted ripping off the school to the tune of nearly $700,000.
47-year-old John Martinez has agreed to pay back the money he stole as part of a plea deal that could still send him to prison for more than four years.
He worked for the school as a telecommunications administrator, and prosecutors say he forged signatures in order to obtain payments to fictitious vendors… money which he then pocketed and used for personal expenses, including travel and alcohol.
Saturday, February 11, 2017
Dealing with employee theft
FROM http://www.thegazette.com
There recently has been a spate of news articles regarding theft and embezzlement from Iowa cities. Former city clerks in Delhi, Garwin and Vining are all alleged to have embezzled or improperly spent hundreds of thousands of taxpayer dollars.
In another instance, a former city clerk in Casey was even indicted on charges of burning down City Hall to hide her alleged theft.
As the above stories revealed, an employer may not discover the crime until years after it has begun during an official audit or when someone follows a hunch or notices an irregularity. The Iowa State Auditor warned cities to “trust but verify” employees that handle money.
Public employers are not alone. One study by a national supermarket organization found that its employees were responsible for around 56 percent of supermarket thefts.
Such theft included shoplifting, taking cash from registers and/or providing unauthorized customer discounts. Theft should always be a terminable offense.
However, before doing so, employers should have a plan in place that includes proper policies, a thorough investigation, and records retention.
Proper written policies
Employers should consider requiring employees to sign an acknowledgment that they understand they have no privacy rights with items they bring to the work premises, such as purses and other bags; that they may be subject to and consent to video surveillance in certain areas; and that they are aware that participation in investigations is mandatory and that refusal to participate may result in termination.
Investigations
Theft should never be taken lightly. Accordingly, a thorough investigation of the theft allegation is critical.
When an employee gets fired for theft and retains counsel, the employee’s first tactic will ordinarily be to attack the quality of the employer’s investigation. Accordingly, follow all best practices regarding your investigation.
Juries demand this, and failure to conduct a proper investigation can serve as evidence of pretext or some cover up. This means that an employer investigating an employee for theft should allow the accused employee to tell his/her story in full and include it as part of the record.
This will prevent a jury from assuming the employee was railroaded.
Employers should ensure that all employees who witnessed theft-related events write their own statements without help or interference. Such statements should be in the employee’s own words.
Should you call the police? It depends.
For years, many managers and their lawyers believed it was a best practice and a good theft deterrent. However, times have changed.
Before calling the police, it is critical to know how seriously they will respond to allegations of theft of a few hundred dollars in merchandise. Some police departments are simply too overwhelmed to do more than write a report of the complaint.
Of course, thefts involving thousands of dollars may be another issue. Check with your local law enforcement agency and proceed accordingly.
The termination meeting should not be the first time an accused learns that he or she is suspected of theft. Frankly, if you have overwhelming proof, it is far better to suspend the employee pending the outcome.
Many employees will not return for a follow-up meeting and can be terminated as having abandoned their job.
Records retention
Finally, keep all records regarding the alleged theft, investigation and termination. Nothing should be allowed to be destroyed.
Video footage of an employee pocketing a twenty, for example, is outstanding evidence in court.
Conversely, not having the video footage of the employee pocketing the $20 in an employment trial will be outstanding evidence for the plaintiff. No explanation will overcome a jury’s assumption that if the video is missing, the employer did not want them to see the video.
Eliminating theft entirely in the workplace is impossible. However, employers can limit their liability by having policies in place and conducting a proper investigation after a theft allegedly occurs.
Friday, February 10, 2017
University of Kentucky ex-business manager stole equipment, sold it on eBay
A former business manager at the University of Kentucky admitted Friday that he stole equipment, and he agreed to pay nearly $300,000 in restitution.
Steven Ellis pleaded guilty to one count of embezzlement. The top sentence on the charge is 10 years in prison, although Ellis’ sentence will likely be considerably lower under federal guidelines.
Ellis was a business manager in the physics and astronomy department, and his duties included ordering equipment. He took surplus equipment that belonged to UK and sold it on eBay, court records say.
For instance, UK alleged in a report that Ellis used the school’s money to buy hundreds of multimeters, which measure electric currents, and sold more than 300 on his eBay account for $49,856.
Ellis’ plea involved only acts between July 1, 2014, and June 30, 2015, because the federal law covers one-year periods, but Ellis stipulated that he committed offenses in other years as well, according to his plea agreement.
A court document said the loss to UK was $137,662. UK said in a report last year that Ellis also misappropriated $87,000 in royalty revenue.
The royalties were from lab manuals Ellis had written and published through an outside vendor. UK alleged that Ellis had made his students buy his manuals and therefore was required to donate the royalties to the school, but that Ellis kept the money.
Ellis agreed to pay $299,603 in restitution to UK to cover the cost of the stolen equipment, the royalties and an audit, his plea said.
UK said its police and auditors began investigating Ellis after another employee reported suspicions about him. The university fired Ellis in September 2015 and turned over the results of its investigation to federal authorities.
The report from UK said Ellis started working there in July 1995 as an instructional lab specialist and later held a variety of jobs, including academic coordinator and information technology manager.
He also taught undergraduate labs, supervised teaching assistants, and stocked and maintained the equipment inventory for the physics labs, according to the report.
Ellis’ attorney, Fred E. Peters, said Ellis is remorseful for his actions and that he and his family will make full restitution before he is sentenced.
“This is a sad ending for a man who had a very good military and academic career up till now,” Peters said.
U.S. District Judge Danny C Reeves scheduled sentencing for May 19.
Steven Ellis pleaded guilty to one count of embezzlement. The top sentence on the charge is 10 years in prison, although Ellis’ sentence will likely be considerably lower under federal guidelines.
Ellis was a business manager in the physics and astronomy department, and his duties included ordering equipment. He took surplus equipment that belonged to UK and sold it on eBay, court records say.
For instance, UK alleged in a report that Ellis used the school’s money to buy hundreds of multimeters, which measure electric currents, and sold more than 300 on his eBay account for $49,856.
Ellis’ plea involved only acts between July 1, 2014, and June 30, 2015, because the federal law covers one-year periods, but Ellis stipulated that he committed offenses in other years as well, according to his plea agreement.
A court document said the loss to UK was $137,662. UK said in a report last year that Ellis also misappropriated $87,000 in royalty revenue.
The royalties were from lab manuals Ellis had written and published through an outside vendor. UK alleged that Ellis had made his students buy his manuals and therefore was required to donate the royalties to the school, but that Ellis kept the money.
Ellis agreed to pay $299,603 in restitution to UK to cover the cost of the stolen equipment, the royalties and an audit, his plea said.
UK said its police and auditors began investigating Ellis after another employee reported suspicions about him. The university fired Ellis in September 2015 and turned over the results of its investigation to federal authorities.
The report from UK said Ellis started working there in July 1995 as an instructional lab specialist and later held a variety of jobs, including academic coordinator and information technology manager.
He also taught undergraduate labs, supervised teaching assistants, and stocked and maintained the equipment inventory for the physics labs, according to the report.
Ellis’ attorney, Fred E. Peters, said Ellis is remorseful for his actions and that he and his family will make full restitution before he is sentenced.
“This is a sad ending for a man who had a very good military and academic career up till now,” Peters said.
U.S. District Judge Danny C Reeves scheduled sentencing for May 19.
Thursday, February 9, 2017
Woman charged with embezzlement
One woman has been arrested on felony charges following an embezzlement case involving a nonprofit group, according to a news release from Mifflin County Regional Police Department.
On Sunday, Jan. 22, members of Shining Light Through the Darkness, of the East Freedom United Methodist Church, Burnham, contacted police after suspecting funds had been taken without permission.
According to the release, the church was preparing for an audit when they discovered the
inconsistency.
Upon investigation by police, it was discovered that the organization’s treasurer, Sandra Gray, 36, of Lewistown, had electronically transferred approximately $5,690 from the group into her private bank account.
According to the release, Gray began transferring funds Sept. 19, 2016, through Jan. 19.
MCRPD officers obtained and executed a search warrant for the financial records of the group and Gray’s private financial records, according to the release.
Gray was arrested on felony charges of theft and receiving stolen property. She was arraigned before Magisterial District Judge Jonathan Reed.
Wednesday, February 8, 2017
Ex-Flagler Beach pastor guilty in fraud scheme
A former Flagler Beach pastor was convicted Thursday of playing a role in a fraud scheme to dupe several of his friends and fellow church members out of nearly $400,000.
A jury deliberated about 90 minutes before finding Wesley Brown guilty on 19 of the 31 charges he stood accused of to culminate a three-day trial inside the Kim C. Hammond Justice Center.
Circuit Court Judge Dennis Craig, who presided over the trial, ordered a pre-sentencing report before he determines Brown's prison term. Craig revoked his bond and deputies took him into custody immediately after the trial. Attorneys agreed to schedule a sentencing hearing for Brown in about 60 days.
The verdict was the end of a more than three-year journey for the victims, several of whom remained in the courtroom and watched as deputies ushered Brown away in handcuffs. His wife sat in the front row of the courtroom gallery and sobbed as Brown was fingerprinted before being detained.
Assistant State Attorney Tim Pribisco, who characterized Brown's fraud and embezzlement tactics as a Ponzi scheme in his opening statements, said it was part of a nationwide network that included victims from Naples to New York. One of those victims was a Yonkers, New York, woman who testified Wednesday afternoon
Testimony began Tuesday in the trial with Brown, 54, facing a barrage of embezzlement and securities fraud charges. The most severe of those, organized scheme to defraud, is a first-degree felony that holds a 30-year maximum prison sentence. Brown was found guilty on that offense.
The jury also convicted him on three counts of sale of unregistered securities, two counts of securities fraud, four counts of theft, and nine counts of sale of securities by an unregistered dealer.
Brown targeted six people in his scheme, some of them friends from two churches he attended, and other local residents. Brown was a volunteer pastor at Calvary Chapel Flagler Beach, one of the churches that served as his recruiting grounds, and led Bible studies there.
A jury deliberated about 90 minutes before finding Wesley Brown guilty on 19 of the 31 charges he stood accused of to culminate a three-day trial inside the Kim C. Hammond Justice Center.
Circuit Court Judge Dennis Craig, who presided over the trial, ordered a pre-sentencing report before he determines Brown's prison term. Craig revoked his bond and deputies took him into custody immediately after the trial. Attorneys agreed to schedule a sentencing hearing for Brown in about 60 days.
The verdict was the end of a more than three-year journey for the victims, several of whom remained in the courtroom and watched as deputies ushered Brown away in handcuffs. His wife sat in the front row of the courtroom gallery and sobbed as Brown was fingerprinted before being detained.
Assistant State Attorney Tim Pribisco, who characterized Brown's fraud and embezzlement tactics as a Ponzi scheme in his opening statements, said it was part of a nationwide network that included victims from Naples to New York. One of those victims was a Yonkers, New York, woman who testified Wednesday afternoon
Testimony began Tuesday in the trial with Brown, 54, facing a barrage of embezzlement and securities fraud charges. The most severe of those, organized scheme to defraud, is a first-degree felony that holds a 30-year maximum prison sentence. Brown was found guilty on that offense.
The jury also convicted him on three counts of sale of unregistered securities, two counts of securities fraud, four counts of theft, and nine counts of sale of securities by an unregistered dealer.
Brown targeted six people in his scheme, some of them friends from two churches he attended, and other local residents. Brown was a volunteer pastor at Calvary Chapel Flagler Beach, one of the churches that served as his recruiting grounds, and led Bible studies there.
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