Report: Lawsuit claims ex-worker stole $2 million from PBS

From the Boston Globe 9/25/14:
 

Lawsuit claims ex-worker stole $2 million from PBS

By Deirdre Fernandes

Boston Globe
September 25, 2014

The former finance director of PBS’s video distribution arm in Boston is alleged to have stolen more than $2 million from the public broadcasting network over the course of about four years, according to court records.

The alleged embezzlement came to light in a lawsuit filed Monday by PBS’s insurance company against Citizens Bank in US District Court in Boston. The suit alleges that Christopher C. Morris, who worked for a PBS subsidiary that sells DVDs and video-on-demand of popular shows, deposited more than 200 checks meant for PBS in his own private account, and it contends that Citizens should have been aware of the fraud.

Federal law enforcement officials are investigating, according to the PBS subsidiary, Public Media Distribution. No charges have been brought in the case, according to court records.

The office of US Attorney Carmen M. Ortiz declined to comment, as did Citizens Bank. Morris, whose last known address was in Chelsea, could not be reached.

In a statement, Public Media Distribution, said, “There is current law enforcement activity regarding this issue and we cannot comment at this time.”

 PBS, which stands for Public Broadcasting Service, and its state affiliates are nonprofits that rely on taxpayer funding and the goodwill and trust of individual and corporate donors. But the network also has some money-making entities, such as Public Media Distribution, a joint venture between PBS and Boston public television’s WGBH Educational Foundation.

Public Media Distribution generated $48.7 million in profits in 2012, according to the latest federal tax filings.

Morris worked for the distribution company until 2012. Company officials declined to provide more specific information about when Morris was hired and the circumstances of his departure. Morris sold his Chelsea condominium in early 2013 for $312,000, according to real estate records.

Morris deposited 202 checks made out to PBS totaling $2.1 million into his own account starting in 2008 continuing until at least 2012, according to the lawsuit filed by Federal Insurance Company, a New Jersey firm that covers PBS and its subsidiaries. The checks were not from the network’s fund drives but from consumers and companies buying PBS and WGBH programming such as “Downton Abbey,” the Civil War series by documentary filmmaker Ken Burns, and the children’s program, “Arthur.”

The checks should have been deposited into PBS’s Bank of America account. But the lawsuit alleges Morris forged a PBS endorsement on the checks and presented the checks to Citizens for deposit into his own account

“Citizens Bank did not conduct any reasonable inquiry or question the appropriateness of the deposits when the checks were presented to Citizens Bank and accepted,” Federal Insurance said in the lawsuit.

Federal Insurance, which covered PBS for employee theft, paid the nonprofit $2 million, the limit of the policy’s liability. The insurer is seeking to recover that money from Citizens, plus legal and other costs.

Federal Insurance on Wednesday filed a motion asking the court to seal the original complaint and allow Federal Insurance to submit a redacted version concealing the name of the former employee and PBS, according to court records.

WGBH was the victim of employee theft a few years ago. In 2010, a former accounting manager at WGBH-TV pleaded guilty to stealing nearly $500,000 from the station over nine years.

Such thefts deliver a blow to the reputations of charities, because they are built on trust and the expectation that the money they receive is used appropriately, said Chris Marquet, the owner of Marquet International, a Boston investigative firm that publishes an annual report on white-collarfraud.

“It’s never a good thing,” Marquet said. “They are probably no doubt going to have show the world that they have safeguards in place.”

Thefts from charitable organizations are fairly common, usually because they do not have the resources and structure for strict oversight, Marquet said. One in six major embezzlement cases in 2012 involved charities or religious organizations, according to Marquet’s study.

Public Media Distribution is set up as separate company from PBS and WGBH, with its own leadership and employees. But executives from WGBH, which owns a 40 percent stake in the distribution company, sit on its board of directors.