More Church Embezzlement in the News

Sep 22, 14 • BlogNo Comments

Recently the Detroit Free Press reported on another church embezzlement case.  In the article it is reported that “after 19 months, members of [the Church] are getting a full-time pastor to formally replace [their former pastor] charged with embezzling $700,000 from the [Church].”

The article details that this church “struggled with attendance and donations in the wake of the allegations against its [former pastor and business administrator].”  Deeper into the report we learn some specifics about the church’s post-embezzlement struggles.  During a recent fund-raising appeal the church fell $100,000 short of its goal of close to $300,000.

One big lesson can be learned from this story.  In the business world, when employee fraud occurs, the problems usually stop with the loss of money.  The perpetrators are charged, restitution is made (hopefully) and in some cases insurance policies cover the loss.  In most cases, everyone dusts themselves off moves on.  Not true in the church world…

In the church environment, the loss of money is often only the beginning of the victim church’s woes.  And in the end, the lost money is the least of the church’s problems.  My main point when attempting to convince a church that a fraud risk assessment is needed is to point out that the pain of lost money pales in comparison with the tsunami of ill will, accusations and loss of trust that can infect a congregation.  As evidenced by this news account, when churches descend into this situation, a much more destructive form of money loss takes place – church members simply quit giving.  Unfortunately, many churches do not even survive…

*Note – When brackets appear [  ] I have changed the names and replaced them with generic descriptions.

Church Embezzlement

Sep 15, 14 • BlogNo Comments

Lexington woman pleads guilty to embezzling $100,000 from church

This headline, which echoes an all too familiar refrain in the church world, recently appeared in the Roanoke Times of Roanoke Virginia. The story reports that,

“A Lexington woman admitted Tuesday that she embezzled from [her church] for more than 11 years. The total is expected to be about $150,000.  The scheme began to unravel when [the woman] became ill at the beginning of February and other church members took over the accounts.

“A debit card was issued to one account. Purchases were made at a jewelry store, online shopping and clothing stores,” [a Sheriff’s Office representative] said. “The church looked deeper and started to find checks made out just to cash. … They thought it looked suspicious.”

“She very readily admitted to taking some funds from the church. She said her financial life took a downturn. She made a mistake of borrowing from the church,” he said. “It basically got away from her.”

A few lessons to be learned about church fraud can be gleaned from the statements highlighted in bold type.

Lesson One –The guilty party was not found out until, unfortunately for her, she became ill and had to miss work.  In her absence, other church members took over her duties and discovered the theft.  One of the questions we ask our clients is “Does your church require anyone handling money to take required vacations and are their job responsibilities rotated to other individuals?”  If the church had implemented such a policy this event might never have happened.

Lesson Two– The woman blamed her behavior on the fact that she had encountered serious financial difficulties.  Most of the perpetrators of church embezzlement aren’t bad people. Rather, they are good people who find themselves in difficult circumstances.  The PRESSURE these difficult circumstances cause often result in good people contemplating doing something they would never have considered in better times. Embezzlement inducing pressure comes in a variety of forms such as gambling debts, family illness, and addictions to name just a few.

Lesson Three– Fraud experts often talk of the fraud triangle.  What they mean by this is that three elements are usually present when occupational fraud takes place; opportunity, pressure and rationalization.  Rationalization is the process potential fraudsters go through in which they “talk themselves into” proceeding with their scam.  Of all of the excuses given, I have the opinion that the most common is the one this lady used. “I was only borrowing.”  She also followed the typical pattern of those who use this reasoning.  Once free to take what is not theirs, embezzlers tend to get carried away to a point where it is impossible to ever pay the money back to their church.

 

 

 

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