Nun embezzles because of gambling addiction

Diverted $128,000.

How do these churches not easily notice 128K missing? Doesn't anybody do their books? Don't most people donate by check, leaving a paper trail? It isn't just this incident, there was a similar on here in Vegas a few years ago. Even Judas had the decency to just skim a little.

Lax procedures, lack of constraints such as two signatures, etc.

Some new events can take place but the same old checking account is used even though the deposits are now substantial.

One cpa firm was auditing a non-profit and missed all the tractor trailers carrying merchandise in and out but focused instead on the cash register receipts in the thrift shop.

I wonder if she would have hit a huge jackpot if she would pay the money back? I'm guessing like most people she would just blow that money too.

Instead of "Nun embezzles because of gambling addiction" how about "Religious fanatic fleeces flock, blames Casino"

one crook robbing another crook....

Quote: jmurillo74

one crook robbing another crook....

You sure nailed that one.

Just the other day I heard about casino employees diverting traffic off the highway, then forcing the drivers into the casino to gamble. It was shocking. I know the story was true because it was told to me by one of the players at my table after he got back from the ATM so he could play some more.

Quote: Wizard

How do these churches not easily notice 128K missing? Doesn't anybody do their books? Don't most people donate by check, leaving a paper trail? It isn't just this incident, there was a similar on here in Vegas a few years ago. Even Judas had the decency to just skim a little.

While I've never audited a church, I have audited a non-profit, and been audited as an accountant for a non-profit. What I know is that there is a tendency, in the non-profits, to assume that people who are working for the non-profit are doing so because of their kindness/devotion to the cause, and that because of this, they wouldn't possibly do anything underhanded. I would gladly make the leap to say that someone working for a church, especially a nun, would even more be assumed to not want to damage their workplace.

In addition, there's a psychological aspect of gambling which convinces people that they are able to win. Or that they will win. (I wouldn't necessarily make the assumption that a person of faith might believe their god would allow them to win more often, but I also wouldn't be surprised if that mentality was there.) A key element in the news article, for me, is that the money was taken between 2006 and 2010. While it doesn't specify, I could almost guarantee that one lump sum wasn't taken, but rather that multiple "thefts" occurred during the time frame. All of these factors combined suggest to me that the person probably thought they would beat the system and win some money, thus able to pay back what they owed, and then having the excess winnings for either themselves, or if they are really altruistic, for the church.

Further, she may have been doing something called "rolling over" which is a fraudulent accounting process by which you use more recent deposits to cover up missing previous deposits. In my experience, persons who do this continue to take money, even while rolling over to hide up their past transgressions, however eventually, the money missing gets to be so large in comparison with incoming money that rolling over no longer works. Then the person gets even more desperate to beat the system and win at the casino, thus causing them to gamble even larger sums.

Quote: konceptum

While I've never audited a church...

Good post. Have you seen the movie Owning Mahoney?

I have not. But, I've missed out on a lot of movies, so it's none too surprising.

I assume she will get probation. It's obvious, the DEVIL made her do it .

$128K over five years from two parishes is about $12.8K / parish / year. Given the size of these parishes (600 families between the two parishes), the amount of money still was probably below the radar at about (128,000 / 600 / 5) = $42/year/family, which would probably represent about 4-5% of the total collections for the diocese.

She probably flew under the radar, and probably gambled at Niagara or Fallsview on our side of the border to avoid meeting others in their parish.

As for non-profits, it's true that the folks who are responsible for the money are usually just assumed to be trusted individuals, and without the audit going on, it's fairly easy to pilfer small amounts of money, particularly if it's cash in an envelope. The reconciliation process however is easy: church donations are charitable so you have to reconcile the cash into the diocese's account with the donation slip going out: you could attempt to avoid the reconciliation by shorting the donation slip or "forgetting" to send a few out, but in the end, it's likely that you get caught.

Sad story.

Quote: boymimbo

The reconciliation process however is easy: church donations are charitable so you have to reconcile the cash into the diocese's account with the donation slip going out:

While partially true, the realities of this are far from perfect. The Salvation Army, for example, will gladly give you blank donation slips. You can then fill out the donation slip indicating what you donated and how much the value of the item was. You can also keep the slips, use them later, or give them to other people. There's no true reconciliation of the donation slips.

Donations to a non-profit/church are indeed charitable and thus open to being a tax donation. However, it's not the NP/C's responsibility to report the donation, and they don't unless the donation is over a certain threshold. Thus, a person can always claim to have made donations to a NP/C and receive a tax deduction, even if they didn't do so. Receiving a receipt of the donation from the NP/C will help indemnify the person in the event of an audit, but small donation amounts do not trigger audit conditions. Checks, and more recently, credit card donations are much safer. Not only is their obtainable proof that the donation was made, but also obtainable proof that the donation was received by the NP/C.

However, cash is the instrument of choice for many people, and those that utilize it are rarely asking of receipts of donation. The next step is that a person working for a NP/C may quickly see how lax the cash control processes are, and thus realize they are easily able to embezzle funds. Especially when there are no independent audits taking place. Even with receipts for cash donations, utilizing a rolling over strategy can allow someone to get away with things for quite some time, even with (poorly executed) audits.

I almost got dragged into a problem of this nature a few years ago when I acted as treasurer for a certain sports related group. I was handed the checking accounts and was told to keep the bills paid up. End of training. First thing I did was take the $20,000 sitting in piddling interest account and put the funds we did not need into laddered CDs.
Part of the income stream was concession sales, and the concession chair would bring me a moneybag every couple of weeks. I would count the money, make the deposit, and report on the funds at the monthly meeting. All volunteers, all for a common cause. Well, we get to the end of the year, and someone mentions that the concession amounts seem low compared to previous years. I hadn't been involved prior to this year, so I had no benchmark to compare to, but some of the members did and they thought the amounts looked low. Of course, there is no way to be sure what the amounts should be, primarily because the concession chair was using concession money to buy supplies, so we really had no true visibility to what supply cost looked like either.
At this point I realized I had no audit trail. I knew I hadn't taken any money, but I had no way of proving it. At that moment, I started a 'new' process. When the moneybag came in, it was counted and a receipt was signed stating the amount I had received. Still not a robust process, but it covered my butt.

And, as it turned out, the member was right. Almost 3 months after the concession season had ended, the chair shows up at my house one day with a money bag 'found' in the back of a drawer at his house, with about 2 months worth of deposits. I have my own ideas about what happened, but ultimately I feel that all of the funds made it to the group, but it scared the crap out of me, as I could have been accused and would not have had any way to vindicate myself.
Lesson learned. When volunteering, when it comes to money, have a way to prove a money trail!

Nice example. If you don't mind, I'd like to add it (no names necessary) to my training classes as an example.

Ideally, a separation of duties should always exist. In this example, whoever is in charge of selling items at the concession stand should not be the one to count the money, and also a third person should be involved in purchasing the concession. When money is counted and deposited, two people should always be involved. However, when it comes to non profit, church, or even volunteer type organizations, there is usually a lack of personnel to carry out a sufficient separation of duties, and thus, again, it opens up the possibility for one person to be doing something they shouldn't.

Good on your for realizing you needed to CYA. One of the toughest things is knowing you're not doing anything wrong, but you're in the prime position to be accused of the wrong doing.

Quote: RaleighCraps

I almost got dragged into a problem of this nature a few years ago....

Wow. Good story. Scared the heck out of me, reading that.

Quote: konceptum

Nice example. If you don't mind, I'd like to add it (no names necessary) to my training classes as an example.

You are most certainly welcome to use my story as an example of what can happen when you volunteer.

And you are also correct. Due to the extreme lack of personnel, it is often impossible to avoid SOD conflicts, or to have two people present for many issues involving money.