Embezzlement, or Error?

The Case:

With a confession and a signed promissory note,  it is likely that this was a case of embezzlement, but we’ll never really know. The suspect died before providing police with documents he said showed that the problem was a bookkeeping error.

The church filed a fraud report with police claiming that the suspect, the chief financial officer for the church, had made cash payments to various individuals using cash app, made withdrawals, used debit cards to make transactions and move money into personal accounts. This occurred between November 2015 and April, 2018, and the ‘hit’ came to nearly $104,000. When confronted by the pastor, the suspect allegedly confessed and said he would pay back the money.

Worse was to come: the suspect also has been accused of killing his gay lover. When officers arrived to arrest him, he fled and during the ensuing chase he died when he struck a dump truck head-on. Link

His attorney says that he was in the process of preparing documents which would show where the money went. The claim was made that he was forced into the confession, the church “was a family affair”, that the church had a history of accusing the CFO of embezzlement, and that multiple people had access to the debit card which was used. Link

Analysis:  

Several financial procedures problems jump off the page. Assuming the reports are correct,

• The size and time frame of the embezzlement was significant: the church lost over $100,000 over a two-and-a-half year period. How did odd withdrawals and debit card irregularities go on for so long? Very likely, nobody was looking at the statements.
• Multiple people had access to the debit card. It is indeed impossible to determine which individual was behind a questionable transaction if more than one person has a debit card on the same account.
• The church was a one-family-driven church with a history of accusing their CFO of embezzlement. If they were concerned, they should have built stronger controls and had an audit committee watching his work. One is supposed to learn one’s lessons! And a church heavily influenced by one family is especially in need of proper controls to prevent misconduct and to protect reputations – of everyone.

How To Prevent This At Your Church:

• Bank statements and credit card bills should be mailed to the home of the pastor. He should look them over for oddities before sending them on to the financial people for  processing. Had this been done, this church’s woes would have been stopped the first month.
• Debit and credit cards should be reserved for a very limited number of people, and each should have their own unique account or other identifier. A very good way to do this is to purchase fill-as-you-go cards and only add to them a slight amount over what you expect to be spent. Pex Visa is one such card.
• If your church is heavily weighted to one family, be especially sure to build in strong controls. It is easy to imagine one family member in a leadership position covering for another family member who was stealing from the church. Better to have strong enough controls to eliminate the possibility of either the theft or a coverup.
• If you are part of a church with weak controls, consider how you might falsely come under suspicion. Should money come up short, if you were accused, how would you demonstrate your innocence? With strong controls, you can point to the rules and show how you had no way to take the dough. It’s pretty hard to accuse the pastor of stealing from the collection, for instance, if he never gets within thirty feet of it!