Non-Profits At Risk For Fraud, Embezzlement

An analysis of major embezzlements reveals a host of cases in just the past six months at non-profit organizations.  Clearly a lack of controls is the principal reason for these thefts.  Unfortunately, non-profits generally do not have the resources for a robust financial control environment.  However, as previously outlined, there are a number of practical actions that can be taken to improve/prevent or detect frauds.

June 2011 - Valerie Tebbetts, 54, formerly of Dorchester, Massachusetts, was indicted on charges alleging she embezzled more than $126,000 from The Living Center, a local HIV/AIDS charity group for which she had served as the executive director. According to prosecutors, over a period of more than 2 years, from September 2008 to November 2010, Tebbetts issued numerous checks to pay for personal expenses, including her rent as well as made numerous cash withdrawals from the charity's accounts. Tebbetts was indicted on three counts of larceny by embezzlement over $250 and false entries in corporate books. Her case is pending.

June 2011 - Ralph R. VanAlstyne Sr., 62, of Gloversville, New York was pleaded guilty to charges charges he embezzled more than $200,000 from three non-profit veterans organizations: the American Legion Harold Wilmont Post 137, the Veterans of Foreign Wars Bernard W. Kierney Memorial Post #2077 and the Fulton County Disabled American Veterans Chapter 122, where he held fiduciary positions. According to prosecutors, VanAlstyne's scheme spanned nearly 4 years from January 2005 until December 2008. The scheme involved the siphoning of funds from the organizations' revenues from gaming operations. Prosecutors alleged that VanAlstyne shifted funds between accounts in an effort to hide his thefts.

June 2011 - Connie A. Stills, 56, of Middleton, Idaho, was sentenced to 41 months in prison for embezzling $1.3 million from the Port of Hope Centers Inc., a non-profit drug and alcohol treatment concern where she had been employed as a bookkeeper. According to prosecutors, Stills siphoned the funds over a period of four year, from 2004 until 2008, by writing checks from the non-profit's coffers to pay for her credit card bills and other personal expenses. She pleaded guilty in September 2010 to felony counts of filing a false tax return and mail fraud. Stills was also ordered to pay $1.7 million in restitution. Still's daughter, Bobbie A. George, 31, also of Middleton, plead guilty for her involvement in the theft of some $177,000 from the agency and was sentenced to five years probation and ordered to pay $233,024 in restitution. Stills had been an employee of the agency for nearly 20 years.

June 2011 - Diana Hubbard Carr, 56, of Alexandria, Virginia, pleaded guilty to charges she embezzled as much as $400,000 from the American Conservative Union where she had been employed as an administrative director. According to authorities, Carr's scheme spanned at least 3 years from 2006 through 2009 and involved the diversion of funds from the non-profit's coffers into her own accounts. She was also accused of paying her credit cards and making personal purchases with the organization's funds. The ACU hosts the annual Conservative Political Action Committee (CPAC) meeting. Carr faces up to 20 years in prison upon sentencing, scheduled for September 16, 2011.

May 2011 - John Willis Hurst, 51, of Charlotte, North Carolina, was sentenced to 12 to 16 months in prison for embezzling more than $300,000 from the Matthews Playhouse of the Performing Arts where he had served as treasurer. According to authorities, over a period of 7 years, from 2002 until August 2009, Hurst siphoned funds from the non-profit’s coffers. Hurst was arrested in June 2010 and pleaded guilty earlier in May 2011. However, details are unclear as to how Hurst embezzled the monies. Hurst was also ordered to make restitution to the playhouse and to pay court costs.

May 2011 - Lynette Rojas, 37, of La Habra, California, was sentenced to 3 years in prison for embezzling $134,540 from the La Habra Boys and Girls Club where she had been employed as an executive assistant with bookkeeping responsibilities. According to authorities, Rojas stole more than $109,000 in cash from the club and wrote more than 2 dozen unauthorized checks to herself totaling nearly $25,000. The thefts spanned more than 2 ½ years, beginning in April 2008 and she reportedly used some of the stolen funds to pay for breast implants. Rojas was arrested and charged in December 2010 with grand theft by embezzlement and 24 felony counts of computer access and fraud and subsequently pleaded guilty in April 2011. As a result of Rojas' alleged thefts, several employees had to be laid off and cut off programs for needy children.

May 2011 - Vincent Paul Reed Jr., 58, of Shapleigh, Maine, was charged with embezzling about $1.25 million from the Massachusetts Grand Lodge of Masons where he had served as treasurer. According to authorities, Reed's scheme spanned a period of about 7 years, from 2001 to 2008. He is alleged to have siphoned funds from the non-profit’s investment accounts and transferred the monies to operating accounts he controlled and used a debit card to pay for personal items, expenses and debts. His case is pending.

May 2011 - Gayle J. Tatman, 59, of Grove City, Ohio, was sentenced to 2 years in prison for embezzling nearly $213,000 from the Grove City Food Pantry for which she had served as treasurer. According to authorities, Tatman siphoned the funds, amounting to half of the non-profit pantry's cash, over a period of 7 years, from May 2002 until April 2009. Tatman's scheme involved forgery of checks and at least four of the organization's bank accounts, including one that was supposed to have been closed out years ago. Tatman pleaded guilty in a plea agreement in January 2011 to one count of bank fraud.

May 2011 - James T. Wagner, 69, of South Dartmouth, Massachusetts, was charged with embezzling more than $100,000 from the Andrews-Dahill Post of the Veterans of Foreign Wars where he had served as quartermaster for 21 years. Wagner is believed to have written checks out to himself as well as to fictitious businesses and individuals as well as real people, including the infamous Lorena Bobbitt. Wagner’s case is pending.

May 2011 - Joyce Bidnick, 58, of New City, New York was charged with embezzling more than $100,000 from the New City Little League for which she had served as volunteer treasurer. Bidnick is accused of writing checks to herself for nearly 8 years, since 2003 and then falsifying the non-profit league's books to hide her thefts. Meanwhile a forensic audit is still in process. Bidnick’s case is pending.

April 2011 - Sheila Elliott, 62, of Hendersonville, North Carolina, was charged with embezzling $100,515 from Elks Lodge 1616, where she had been employed as an office manager "entrusted to receive money". According to authorities, Elliott's scheme spanned a two year period, from July 1, 2008 until July 16, 2010. Her case is pending.

April 2011 - Eric Wayne Stroschein, 49, and Judith Ann Stroschein, 46, both of Blythe, California, were arrested and charged with embezzling more than $100,000 from the Blythe Jaycees where Eric had served as treasurer. According to authorities, Eric Stroschein made withdrawals from the non-profit Jaycees account and deposited the monies into his own and his wife's accounts. The two have been charged with felony embezzlement and conspiracy. Their cases are pending.

April 2011 - Kathy Dishman White, 40, of Abingdon, Virginia, was sentenced to 53 months in prison for embezzling $225,079.65 from the Southwest Virginia Emergency Medical Services Council where she had been employed as a bookkeeper. Authorities alleged that over a four year period, beginning in 2006, White misappropriated small, but regular amounts of money by utilizing the non-profit's credit cards for personal use. She then attempted to cover-up the thefts by issuing checks from the organization's checking account to pay the credit card bills. She was accused of using the stolen funds to pay for a house and all kinds of personal luxury items. The non-profit operated on a budget of only $500,000. Dishman-White, who pleaded guilty in November 2010, was also ordered to pay restitution.

April 2011 - An unnamed female former bookkeeper for the Washington State Superior Court Judges' Association is being investigated for embezzling as much as $400,000 from the non-profit group. According to reports, the bookkeeper was fired in April 2010 after an internal investigation revealed the misappropriation. The thefts allegedly spanned "several years." The matter has been turned over to law enforcement officials for investigation and possible prosecution. Specific details about the case have yet to be released.

March 2011 - Patricia M. "Trish" Dano, 43, of Naples, Maine, was accused in a civil lawsuit of embezzling about $117,000 from the Maine Island Trail Association, a non-profit environmental association where she had served as business manager. According to the lawsuit, Dano used the organization's credit card for personal expenses and forged checks for her own benefit and then created “parallel and inaccurate banking records” to hide the misappropriations. She is also alleged to have caused unauthorized electronic funds transfers to pay her personal credit card bills. The thefts allegedly spanned a 4 1/2 year period, from August 2006 until early February 2011, when her position was eliminated and suspicious transactions were discovered. Dano has reached a civil restitution agreement with the association to pay back the funds. It is not known whether law enforcement authorities are investigating.

March 2011 - Thomas Ray Martin, 47, of Concord, California, was charged with embezzling about $162,000 from the Discovery Counseling Center of the San Ramon Valley, a Bay Area non-profit mental health organization where he had served as director. According to authorities, Martin used a debit card linked to the checking account of the organization to pay for personal expenses and luxury items. His misappropriations allegedly spanned more than three years, from July 2007 until September 2010. The thefts were quantified after an audit was conducted following allegations of Martin's misconduct and he was terminated last October. Martin has been charged with 4 felony counts of grand theft by embezzlement and has pleaded not guilty. His case is pending.

March 2011 - Carolyn Mitchell, 47, of Washington, DC, pleaded guilty to charges she embezzled $210,800.42 from the National Consumers League where she had been employed as an accountant and an administrative assistant. According to authorities, over a period of more than 5 years, from March 2005 to May 2010, Mitchell misappropriated funds from the private non-profit by depositing checks meant for vendors into her own accounts. She also deposited donor checks into her own accounts. Mitchell, who pleaded guilty to forging securities, was sentenced to 27 months in prison on June 24, 2011 and ordered to pay restitution.

March 2011 - Kirk McDaniel Jr., 74, of Prairie Village, Kansas, was indicted on charges he embezzled nearly $285,000 from the York Rite Masonic Bodies in Kansas City, Missouri, where he had served as Secretary and Treasurer. According to prosecutors, McDaniel made electronic funds transfers from the non-profit Masonic accounts to several accounts he controlled over a period of as long as five years from June 2000 and September 2005. McDaniel was indicted on 18 felony counts, including 16 counts of bank fraud and 2 counts of money laundering. McDaniel has reportedly paid back $105,012 of the $284,675 he allegedly stole, according to authorities. His case is pending.

March 2011 - Cheri A. Logue, 42, of Claysville, Pennsylvania, was sentenced to 22 months in prison for embezzling about $195,000 from the Southwestern Pennsylvania Legal Services Corporation where she had served as legal aid. According to authorities, Logue misappropriated the funds from the non-profit agency that provides legal services to low-income people, over a period of at least 7 years, from 2001 until June 2008. According to prosecutors, Logue misappropriated the funds by writing at least 86 checks to herself or for her own benefit; made at least 56 unauthorized cash withdrawals using an agency ATM card; made at least 25 unauthorized electronic transfers to herself or to pay for personal expenses; and made more than 300 unauthorized and improper charges to an agency credit card for her own benefit. Logue, who was fired in June 2008 after suspicions were raised about missing funds, pleaded guilty to the charge of theft from a program receiving federal funds on April 27, 2010.

February 2011 - Deborah A. Leggio, 47, currently of Tracy, California and formerly of Long Island, New York, was arrested and charged with grand larceny in connection with her alleged embezzlement of $274,301 from the Suffolk County chapter of the American Red Cross in Long Island, New York where she had served as finance director. According to prosecutors, Leggio used a Red Cross debit card, issued in her name, to make numerous unauthorized cash withdrawals over a period of more than four years between August 2005 and November 2009. Her case is pending.

February 2011 - Bettysue Higgins, 53, of Gardiner, Maine, was arrested and charged with embezzling about $166,000 from the Maine Trial Lawyers Association where she had served as an administrative assistant. According to authorities, Higgins issued at least 220 forged checks from the non-profit to herself over a period of about 4 years, from 2006 until October 2010. She has been charged with one count of theft by unauthorized taking or transfer and one count of forgery. Higgins is also a defendant in a civil lawsuit filed by the association seeking recovery of the misappropriated funds. Her case is pending.

January 2011 - Hugh Michael Robey, 48, of Bowie, Maryland, was sentenced to one year in prison for his role in an embezzlement scheme that bilked some $1.7 million out of the American Board of Opticianry and the National Contact Lens Examiners, where he had served as Executive Director. According to prosecutors, Robey used the non-profits funds to take trips and buy expensive items for his family and friends. He reportedly conspired with Carletta Carter Stewart, 45, of Fredericksburg, Maryland, the group's Chief Financial Officer and Legal Officer. Stewart is believed to have written about $1.1 million worth of checks and other association credits to herself. The schemes spanned a six year period from January 2004 to July 2010, in which they allegedly covered for each other. Robey pleaded guilty to four counts of embezzlement. He was actually sentenced to four 10 year sentences with 9 years suspended on each count, to be served concurrently.

January 2011 - Christina Madej, 58, of Chicago, Illinois, was charged with embezzling nearly $290,000 from the Chicago Engineers’ Foundation, a non-profit that provides scholarships to area students, for which she had served as its director. According to authorities, Madej wrote checks to herself from foundation accounts. The foundation is affiliated with the Union League Club of Chicago. Her case is pending.

January 2011 - Diana Lynn Lewis, 44, of Boulder, Colorado was arrested on charges she embezzled $178,000 from the non-profit Impact on Education, where she had been employed as a bookkeeper. According to authorities, Lewis forged numerous checks from the charity that supports the Boulder Valley School District over a period of six years, between 2004 and 2010. According to reports, Lewis has a prior conviction for fraud, although details are not available. In June 2011, Lewis was sentenced to 6 years in jail.

January 2011 - Ronald E. Partee, 45, of St. Louis, Missouri, pleaded guilty to charges he embezzled more than $1 million from MERS/Goodwill Industries, where he had served as an assistant vice president in the human resources department and had specific fiduciary duties. According to authorities, Partee wrote checks to several bogus businesses and accounts to which he was the sole beneficiary. The scheme reportedly began in January 2007 and spanned 3 1/2 years until July 2010 when it was uncovered and he was fired. Partee purchased a Porsche automobile and other luxury items with the stolen money. He also accepted tuition reimbursements for law school which he never attended. Partee pleaded guilty to one felony count of embezzlement and one felony count of money laundering. In May 2011, Partee was sentenced to 70 months in prison.

January 2011 - Marcia Jackson, 51, of Florissant, Missouri, was sentenced to 7 years in prison for embezzling more than $650,000 from the Show-Me Institute, a local non-profit think-tank, where she had been employed as an office manager. Jackson, who was originally charged in July 2010, pleaded guilty in November 2010 to one count of theft greater than $25,000 and 24 counts of fraudulently using a credit device. Authorities alleged that over a period of three years, from November 2006 to December 2009, Jackson misappropriated the funds from the institute and used the monies to pay for home repairs, spa treatments, hair replacement treatments, jewelry and numerous vacations. According to reports, Jackson was fired for unprofessional conduct and insubordination and an audit ensued, which revealed the thefts.