Wednesday, November 19, 2014

Former Financial Controller For New York Non-Profit Charged With Embezzling $1.8 Million

From the New York Times on 11/18/2014:

A former official of the Hereditary Disease Foundation, a New York-based nonprofit group that supports research into genetic illness, has been charged with embezzling more than $1.8 million of the organization’s funds and using the money for personal expenses.
The former official, Karen Alameddine, 57, served as the organization’s controller until she resigned this year. She had almost exclusive responsibility for overseeing various aspects of the foundation’s financial affairs, the government said, including delivering grant money to researchers and paying the organization’s bills.
Federal prosecutors in Manhattan said in a criminal complaint unsealed on Tuesday that Ms. Alameddine began diverting money by disguising entries in the foundation’s accounting software “to make what in reality were transfers to her personal bank account appear as if they were wire or bank transfers” to grant recipients.
The government said Ms. Alameddine, who also went by Karen Dean, worked for the organization in recent years from her residence in Perris, Calif. The funds she diverted went into accounts she controlled with names like Abacus Accounting, Chez Cheval Ranch, Dean & Co. and Karen Dean Exports, the complaint said.
Ms. Alameddine was arrested Monday night in Boston, and appeared in federal court there on Tuesday, where she was held pending her transfer to Manhattan, according to the United States attorney’s office for the Southern District of New York. Her federal public defender in Boston, Stellio Sinnis, declined to comment on Tuesday.
The scheme began to unwind this year, the complaint said, after Ms. Alameddine left her job, and the foundation received a call from a grant recipient who said that he had not received his check from the foundation.
The foundation discovered that its bank statements showed an online wire transfer, “purportedly representing the grant amount, which had been fraudulently diverted to Alameddine’s personal bank account,” the complaint said.
The foundation said in a statement that Ms. Alameddine had served as controller from September 2005 through January 2014, and that its current controller uncovered several months ago what appeared to be fraudulent transactions. “This loss was confirmed by a thorough internal investigation and a forensic audit conducted by outside legal counsel retained immediately by the foundation,” the statement said.
It also said that the internal investigation had determined that “although the theft was substantial, only a small amount of grant monies committed before 2014 was compromised.” The complaint says Ms. Alameddine further concealed her fraud “by creating, apparently out of whole cloth, a fictitious accounting firm named Davis & Greene, based in Washington, D.C.,” to prepare some of the foundation’s tax returns.
Read the whole story here.

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