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INLAND: Embezzlement on rise in hard economic times

10 Apr

Inland nonprofit organizations and small businesses have been hit hard by embezzlement in the past few years, and a detective who investigates such thefts says they are increasing because of the bad economy.

No group or business appears immune. Churches, a library, a school district, a water company, a hospital, a club for children and even a nonprofit group that supports grieving families have reported thefts.

 


Inland embezzlement arrests
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Two common threads emerged in most cases: The organization trusted a single person with the financial books, and the organization believed it lacked the resources to provide proper oversight.

“If you entrust one person and you never check that one person, then it’s possible for a theft to happen because that person has complete control over everything,” said Riverside police Detective Jerilynn Czobakowski.

She said embezzlements and other money crimes such as check fraud and lottery scams are increasing. The three investigators in her unit each are working from 40 to 50 cases.

“Some people are desperate right now,” Czobakowski said.

Among recent Inland cases:

Gigi Wellott, a longtime bookkeeper and congregant at Corona United Methodist Church, was arrested in December on suspicion of stealing $220,000 since 2003. She has not been charged and the case is still being reviewed, Riverside County district attorney’s office spokesman John Hall said Monday.

Fundraising assistant Crystal Marie Hoyes pleaded guilty in December to stealing a laptop computer and a trip to New York that were to be included in an auction benefiting the Boys & Girls Club of Southwest County.

Dusti L. Brock, a former president of the Nicolas Valley Elementary School PTA in Temecula, pleaded guilty in August to embezzling $14,000.

Debra Sutton, former general manager of the Box Springs Mutual Water Co. in Moreno Valley, pleaded not guilty in March to embezzling $780,000 and spending it on cruises and gambling.

Misti C. Moore, a former employee at A.K. Smiley Public Library in Redlands, pleaded not guilty in July to stealing more than $30,000 from donations and gift shop sales.

CHANGES AT CHURCH

Corona United Methodist Church made changes to its oversight practices after an audit found discrepancies in the books that a spot check had failed to reveal, the Rev. Doug Dickson said.

The church hired a company to review its procedures and policies and created more checks and balances. Several people now oversee the money and an outside accountant handles the books.

“If some people look at it, they might think we went a little overboard,” Dickson said. But he has a duty to safeguard the church’s money, he said.

“The first thing in nonprofits and especially churches, people have a tendency to think checks and balances are showing mistrust in people, when in reality they protect the people who are there,” he said.

At the Boys & Girls Club in Temecula, CEO Maryann Edwards said the fact that Hoyes was caught after about two months indicated the organization’s financial oversight worked, not that it failed. Edwards said she doesn’t expect to make policy changes.

There are regular audits, background checks on all employees and oversight by committees.

“I am constantly re-evaluating our internal controls,” said Edwards, a Temecula city councilwoman.

In Redlands, Don McCue, curator of the library’s Lincoln Memorial Shrine Association, said authorities suspect financial controls were circumvented. Checks written on the accounts require two signatures, but a computer was used to place a second signature on checks. Auditors did not catch the forgery because they saw only online check images.

Now, McCue said, three people will handle transactions: one to receive the paperwork, another to write the checks and a third to reconcile the books.

STARTING SMALL

Czobakowski, the police detective, said embezzlers often follow familiar patterns, starting out with small amounts of money and, if no one notices, graduating to larger thefts.

“Right now, with the economic situation for a lot of people, they’re just in need of money to pay their bills, Czobakowski said. “Most of the time they don’t realize the amount of money they have stolen.”

There are other common tactics that should arouse suspicion, Czobakowski said. Sometimes, other employees aren’t allowed access to the financial tracking systems; books are so confusing that thefts are difficult to detect; suspects constantly check the mail, looking for bank statements; and financial documents are kept at home instead of the office.

Ronald Marks was Box Springs’ treasurer before furious shareholders ousted the water company board of directors. He said Sutton consistently prevented him from reviewing the finances.

Czobakowski said some leaders of organizations believe they don’t have the time or resources to watch the books closely. But the threat of financial ruin should be enough to persuade them to review financial data weekly and have an outside party review it monthly, she said.

Venable LLP, which practices corporate law at seven offices nationwide including Los Angeles, makes several recommendations on its website on how businesses and other organizations can protect themselves. Checks should never be presigned. Blank checks and signature stamps should be locked up.

DISBELIEF

When the trust placed in someone turns out to be misplaced, the psychological toll on an organization can compound the financial woes, especially when it is a longtime employee or volunteer, Czobakowski said.

Dickson said his congregants went through behavior usually reserved for grief: disbelief followed by acceptance.

The fact that her Boys & Girls Club suffered a theft was shocking, Edwards said.

“What made the whole thing heinous to us, people who work for nonprofits … they’re doing it because they have a love of the cause. They know they are making differences in the lives of children. You do feel like you’ve been betrayed.”

Follow Brian Rokos on Twitter: @Brian_Rokos

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