Case #3: “Tipster’s” Alertness Led To Demise of Church Fraudster

The Conviction:
In October 2009, a former church secretary and treasurer was sentenced to a minimum of five years in federal prison and five years probation for the theft of more than $13,000 from a church account.

The Alleged Scheme:
Between December 2006 and January 2009, the defendant wrote 14 fraudulent church checks to individuals and entities to which the church owed money. The checks, each endorsed by the “payee”—whose names were forged—were either cashed by the defendant or deposited into her personal checking account.

The Scheme’s Downfall:
A “tipster’s” alertness and concern led to the demise of this fraudster. Further investigation into the background of the defendant revealed that this was not the defendant’s first encounter with the criminal justice system. She was previously imprisoned for another embezzlement scheme.

Lessons Learned:

• Past behavior is an excellent predictor of future behavior. A thorough background can provide extremely valuable information, especially when a candidate is applying for a position of trust. A check of this individual’s criminal history would have revealed that previous conviction for embezzlement.
• This perpetrator had the authority to prepare and act as authorized signature on church checks. Failure to require a second-person intervention in such matters creates substantial risk within any operation. No individual should have authority to both initiate and process a financial transaction.
• Lack of adequate supervisory oversight and monitoring was another weakness factor. It took a “tipster’s” report to identify this two-year scheme. Letting your staff know that “surprise” audits are part of your responsibilities to prevent internal fraud and embezzlement is known to be an effective strategy—that is, providing those surprise audits are regularly performed.
• Knowing which job tasks create the greatest internal fraud risks should be an important component of any manager’s preventative strategies. Business Fraud: From Trust To Betrayal is filled with things that every manager should know.

Be informed – learn from the experiences of others. Get involved – and YOU will be prepared.

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