Bensmom Posted July 14, 2015 Share Posted July 14, 2015 If you had significant evidence proving someone embezzled, what would you do? Would the dollar amount matter in your decision? If you have been a part of an organization where money was stolen, did the perpetrator continue active membership? When our church treasurer stole tens of thousands from the church, she was quietly let go, but no charges were pressed. No one wanted bad publicity. The treasurer stopped attending church for several months, but is now back and singing in the choir. My mom has a friend who embezzled from her employer. She was confronted and quit her job. No charges were pressed. This was a school cafeteria manager. She visits the school several times a year to "visit her friends." I am part of a small organization that is conducting an audit. It appears that there is about $6,000 unaccounted for. The treasurer resigned when we said we would be conducting an audit, but is still a part of the organization. We are supposed to share the results of the audit next week. I am very stressed about how to handle our audit report. (This is an "in house" audit. We are not professionals, just committee members). We are thinking we may present the numbers and carefully avoid words like "embezzled" or "stolen", but simply state that it appears that a deposit was missed and we would appreciate her making a deposit for $xxxx immediately. What do you think? If you have been in this type of situation how did you handle it? Quote Link to comment Share on other sites More sharing options...
IfIOnly Posted July 14, 2015 Share Posted July 14, 2015 $20 dollars and I probably wouldn't press charges. 6,000? Yep. It's not about revenge, but it's about protecting others. What if she goes and does this again? 17 Quote Link to comment Share on other sites More sharing options...
NorthwestMom Posted July 14, 2015 Share Posted July 14, 2015 I would consult a lawyer, honestly. If you do not follow the correct procedures, could you be complicit in covering it up? That would be my concern. 20 Quote Link to comment Share on other sites More sharing options...
Lang Syne Boardie Posted July 14, 2015 Share Posted July 14, 2015 Does your organization have a lawyer? I've been a board member and secretary of various not-for-profit orgs. I wouldn't move a muscle without a board meeting in which we decide whom (not whether) we'll retain for advice. 8 Quote Link to comment Share on other sites More sharing options...
Jean in Newcastle Posted July 14, 2015 Share Posted July 14, 2015 I would call the police. It is a crime. I don't understand why anyone would not report it. (I understand that they are doing a CYA move but I think that is morally wrong.) 14 Quote Link to comment Share on other sites More sharing options...
Bensmom Posted July 14, 2015 Author Share Posted July 14, 2015 She is a board member. Do we ask her to leave the room to share our report? Maybe she won't show for the meeting, but she may. We do not have a lawyer. We are a small non-profit. Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 $6000? She needs to cough it up or be reported. I once managed a small non-profit where the gal who had my job before me was skimming donations. I discovered it but the board didn't want to pursue it. About 6 months later a small business owner showed up at my workplace and asked me what I knew about her. She'd gotten a job with him on some board member's reccomendation and he caught her stealing upwards of $10,000. It also turned out that before she worked at my organization, she was stealing from a church who just let her go quietly rather than make a deal of it. Thankfully the business owner did report it and she was charged and pled out so that she can't get those sorts of jobs anymore. 12 Quote Link to comment Share on other sites More sharing options...
Lang Syne Boardie Posted July 14, 2015 Share Posted July 14, 2015 "$6000 unaccounted for" isn't a crime. It's a question. That's why I'd start with a lawyer before calling the police. I say this as a person who joined a board the year after the stupidest person in the world had been doing the job of treasurer for several years. She turned out not to be a thief; just incompetent. The money was all found, in the wrong pockets (accounts), and all turned out OK. 13 Quote Link to comment Share on other sites More sharing options...
Lang Syne Boardie Posted July 14, 2015 Share Posted July 14, 2015 Has anyone just frankly asked her, in a board meeting, "Where is this money?" If not, why not? If so, what did she say? 5 Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 "$6000 unaccounted for" isn't a crime. It's a question. That's why I'd start with a lawyer before calling the police. I say this as a person who joined a board the year after the stupidest person in the world had been doing the job of treasurer for several years. She turned out not to be a thief; just incompetent. The money was all found, in the wrong pockets (accounts), and all turned out OK. I agree they need to ask her. Most small nonprofits have exactly one bank account. Often calling the authorities is what convinces the person to make it right, and fast. Also, most small non-profits lack the resources to hire a lawyer. I have found that the larger the amounts, the less interested the authorities. Which is weird but I won't bore you with shop talk. Donors are owed good financial stewardship of their resources. If someone can't quickly explain this and didn't report it themselves when it happened (say, someone made off with the cash bag at the auction, it happens) it's usually, IME, malfeasance rather than accident. 3 Quote Link to comment Share on other sites More sharing options...
J-rap Posted July 14, 2015 Share Posted July 14, 2015 I would definitely do something about it. It's a crime. A good friend of ours was caught embezzling years ago from a non-profit group, before we knew him. He had taken thousands of dollars when his family was going through a rough time financially. Charges were pressed, and he was convicted. I know he had to do hundreds of hours of community service. We are a small town, so everyone found out about it and it was terribly embarrassing and really horrible for their family. But he became a changed man after that. He is an upstanding member of our church and community now and he speaks very openly about it. He is really grateful that it was not just quietly swept under the rug. 7 Quote Link to comment Share on other sites More sharing options...
Orthodox6 Posted July 14, 2015 Share Posted July 14, 2015 Seems excellent advice already posted! Surely the woman knows how wholly peculiar is her resignation upon announcement of an audit. Fosters suspicions even if none turn out to apply. Unless she has been accused formally, excluding her from a board meeting serves as an informal accusation. Having her present could help,mor could harm. It could help if she were guilty of theft, and felt remorseful enough to come clean. It could cause harm if she were guilty of theft and at a meeting was privy to any plans for identifying the thief, and plans for repercussions. Any board member married to a lawyer? If your organization is small, it may not be able to afford legal fees to investigate. Is the "subject matter" of the organization such that there are "same kind" organizations to call and ask for advice? 2 Quote Link to comment Share on other sites More sharing options...
Bensmom Posted July 14, 2015 Author Share Posted July 14, 2015 No. We have not asked her where the money is. She handled all the finances and no one else had access to them. No monthly reports or statements were ever given. Yes, I realize this was a huge mistake. We only decided to conduct an audit because we wanted to apply for grant which required, among other things, an audit. Our first clue that something was not right was that she resigned (we didn't ask her to). She then had many excuses not to give us her records. She then refused to cooperate to get a new treasurer added to the checking account, and called the bank requesting that not give past statements to the new treasurer. I would like to think, like someone here mentioned, that is is just incompetence, but I don't think so. 3 Quote Link to comment Share on other sites More sharing options...
Starr Posted July 14, 2015 Share Posted July 14, 2015 You could have a professional outside audit done. It doesn't cost that much. 2 Quote Link to comment Share on other sites More sharing options...
Ethel Mertz Posted July 14, 2015 Share Posted July 14, 2015 If you discover that indeed the money has been taken, I would contact police. BTDT and it turns out that the embezzler had defrauded not only our organization, but the Volunteer Fire Department, the Red Cross, and another organization I can't recall at the moment. Our person ended up spending several years in prison. Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 No. We have not asked her where the money is. She handled all the finances and no one else had access to them. No monthly reports or statements were ever given. Yes, I realize this was a huge mistake. We only decided to conduct an audit because we wanted to apply for grant which required, among other things, an audit. Our first clue that something was not right was that she resigned (we didn't ask her to). She then had many excuses not to give us her records. She then refused to cooperate to get a new treasurer added to the checking account, and called the bank requesting that not give past statements to the new treasurer. I would like to think, like someone here mentioned, that is is just incompetence, but I don't think so. Your instincts are right. 4 Quote Link to comment Share on other sites More sharing options...
Orthodox6 Posted July 14, 2015 Share Posted July 14, 2015 Enormous red flags now! I have not known an organization to have only one signing authority for a financial account. In fact, often checks require two signatures (as protection against theft). 4 Quote Link to comment Share on other sites More sharing options...
Jean in Newcastle Posted July 14, 2015 Share Posted July 14, 2015 "Liking" Ethel's post. 5 Quote Link to comment Share on other sites More sharing options...
Lang Syne Boardie Posted July 14, 2015 Share Posted July 14, 2015 I agree they need to ask her. Most small nonprofits have exactly one bank account. Often calling the authorities is what convinces the person to make it right, and fast. Also, most small non-profits lack the resources to hire a lawyer. I have found that the larger the amounts, the less interested the authorities. Which is weird but I won't bore you with shop talk. Donors are owed good financial stewardship of their resources. If someone can't quickly explain this and didn't report it themselves when it happened (say, someone made off with the cash bag at the auction, it happens) it's usually, IME, malfeasance rather than accident. This doesn't describe the large, historical, and well-established not-for-profit org which I was referring to -- the small differences that exist, legally, between not-for-profit and nonprofit are 100% in play in this case. We don't have donors and we do have more than one account, and we do have legal counsel. But this is off-topic b/c the OP has specified that it's a small nonprofit with no money for a lawyer. ETA: No bylaws, no accountability, no monthly reconciling and reporting. :( This is not the type of org I have experience with, at all. I'm so sorry this is happening. Talking about one person who held all the swag and was unsupervised and didn't come to meetings and the money is gone -- I agree 100% with those who are saying to call the police. 2 Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 You could have a professional outside audit done. It doesn't cost that much. On the contrary, many small non-profit audits are running $4500-9000, budgets of just $100-300k. I am willing to bet that this organization is likely smaller than that based the casual accounting procedures they have had thus far and that this is the first funder that wanted an internal audit. The price of nonprofit audits went up when new rules took effect in 2005 and 2006. I am sure there are cheaper areas, but I hear similar cost concerns from people in other states. Some foundations have started to allow small organizations to do internal audits following guidelines or have an outside auditor do a stripped down financial review or financial procedures review. Even those reviews though are bidding at $3000-6000 though. It's not affordable for very small organizations. 1 Quote Link to comment Share on other sites More sharing options...
Jean in Newcastle Posted July 14, 2015 Share Posted July 14, 2015 The title said "if you caught someone embezzling" . The first thing to do is to call the bank, remove that person from any list allowing them access and go through with the audit. If there is proof of embezzlement, then you call the police. Somewhere in there, sooner rather than later, you set up a better financial accountability system so this can never happen again. If the board (in general) is shown to be negligent then they can be held financially liable for the funds. Following through with an audit, reporting it and showing that you've fixed the flaws in your system will go a long way towards keeping you from being held liable. 10 Quote Link to comment Share on other sites More sharing options...
Ethel Mertz Posted July 14, 2015 Share Posted July 14, 2015 If the board (in general) is shown to be negligent then they can be held financially liable for the funds. Following through with an audit, reporting it and showing that you've fixed the flaws in your system will go a long way towards keeping you from being held liable. This is really, really important. Share this with your board - especially if they are inclined to sweep things under the rug. Quote Link to comment Share on other sites More sharing options...
Tenaj Posted July 14, 2015 Share Posted July 14, 2015 Enormous red flags now! I have not known an organization to have only one signing authority for a financial account. In fact, often checks require two signatures (as protection against theft). Just as an aside . . . I'm the treasurer of a small church and this was always the way our bank account was set up. A few years ago, I received notification from the bank that even though our signature card shows that the account requires two signatures, the bank would no longer be able to have that requirement and our checking account could only be a one-signature account. I don't know if that's just our bank or not but that's what we were told. We still have two signatures required in our constitution but it's only on our side, the bank won't stop a check that has only one signature from going through. Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 Just as an aside . . . I'm the treasurer of a small church and this was always the way our bank account was set up. A few years ago, I received notification from the bank that even though our signature card shows that the account requires two signatures, the bank would no longer be able to have that requirement and our checking account could only be a one-signature account. I don't know if that's just our bank or not but that's what we were told. We still have two signatures required in our constitution but it's only on our side, the bank won't stop a check that has only one signature from going through. Even if the bank doesn't require two signatures, the procedures of the organization can require two signatures, either on the check request form or on the check itself (that you keep an image or copy of). Then, a one signature check raises a red flag and can be looked at more closely. 4 Quote Link to comment Share on other sites More sharing options...
Bensmom Posted July 14, 2015 Author Share Posted July 14, 2015 The title said "if you caught someone embezzling" . The first thing to do is to call the bank, remove that person from any list allowing them access and go through with the audit. If there is proof of embezzlement, then you call the police. Somewhere in there, sooner rather than later, you set up a better financial accountability system so this can never happen again. If the board (in general) is shown to be negligent then they can be held financially liable for the funds. Following through with an audit, reporting it and showing that you've fixed the flaws in your system will go a long way towards keeping you from being held liable. When she resigned as treasurer, she spent many weeks with excuses why she couldn't get the books to us etc. She actually refused to have her name taken off the account and the account currently has her name and the new treasurer on it. Yes, this raised red flags, but remember that up to this point we had no evidence that anything was amiss. So my question is, do we have to have her signature to remove her from the account? I was under the impression that we did. Quote Link to comment Share on other sites More sharing options...
MomatHWTK Posted July 14, 2015 Share Posted July 14, 2015 If your organization is a 503© nonprofit, then there may be legal requirements that need to be met. It is probably time to contact a lawyer, not only for the finance issue but also to make sure your organziational documents are all in order. 2 Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 When she resigned as treasurer, she spent many weeks with excuses why she couldn't get the books to us etc. She actually refused to have her name taken off the account and the account currently has her name and the new treasurer on it. Yes, this raised red flags, but remember that up to this point we had no evidence that anything was amiss. So my question is, do we have to have her signature to remove her from the account? I was under the impression that we did. No you do not, provided you have an EIN/TIN that the bank is using and it's not really a personal account. 4 Quote Link to comment Share on other sites More sharing options...
Jean in Newcastle Posted July 14, 2015 Share Posted July 14, 2015 When she resigned as treasurer, she spent many weeks with excuses why she couldn't get the books to us etc. She actually refused to have her name taken off the account and the account currently has her name and the new treasurer on it. Yes, this raised red flags, but remember that up to this point we had no evidence that anything was amiss. So my question is, do we have to have her signature to remove her from the account? I was under the impression that we did. Call the bank. Tell them that the person has resigned as treasurer. (Do you have any paperwork to that effect?) They should be able to tell you how to remove her name. You might need to ask them what to do while the account is being audited. If absolutely necessary I would even go as far as freezing the account so that she cannot drain it, though I realize that could be a financial hardship. 6 Quote Link to comment Share on other sites More sharing options...
zoobie Posted July 14, 2015 Share Posted July 14, 2015 Y'all need to use organizational funds to hire a lawyer knowledgable about 501c3 orgs and embezzlement if you can't find one to volunteer her time. You need layers of accountability and bylaws. You as board members could be liable if you know something and cover it up. I resigned from a private school PTO board whose accounting was wonky. 1 Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 Bensmom, it appears you are in Oklahoma. You may want to contact a few places: http://www.oklahomacenterfornonprofits.org http://afpoklahoma.afpnet.org http://www.unitedwayokc.org They may be able to help you with governance and compliance checklists, non-profit best practices, board development (finding good board members), pro bono legal and nonprofit managment services, free or low cost board training and more. There are, in most populated areas, a myriad of resources for small nonprofits to find the information they need to operate professionally with minimal or no staff and too small of a budget for full price legal and technical advice. Finding a board member who is a lawyer is a good idea. Finding a board member who is an accountant but who does not serve as treasurer (to ask the treasurer the right questions moving forwards) is also a good idea. A good national resource for information is Board Source. 5 Quote Link to comment Share on other sites More sharing options...
sbgrace Posted July 14, 2015 Share Posted July 14, 2015 ETA: I didn't read further in the thread for more story. Yikes. That sounds like it's going to be hard to get the money back. There may be more. Do you guys know a CPA that would volunteer help? I'm sorry. On the bank situation, you can probably close the account and open a new one with the money transferred. The bank could help. I'd get it out of her reach as soon as possible. This sounds messier than I initially thought. Crime wise, around here, she would likely get a slap on the wrist for that amount-plead down to d felony or misdemeanor. It would be stressful and emotional for everyone. I probably wouldn't go that route honestly. I would prioritize getting the money back. I'd ask the person first, and hope she can come up with it. Consider small claims if there is money to get back from the person and she is unwilling assuming you can prove it (consult CPA if needed/especially if you have a friend/spouse/etc. to help for free--my husband has done that for small organizations in these situations). Alternatively, is there an insurance policy? Does it cover theft? If not, next time you guys do an insurance policy, have a crime insurance/employee dishonesty (called different things in different companies) rider added. Or bond the next person, if that's cheaper than going through or getting insurance. It's relatively cheap here. Finally, make sure the accounting system in place for the money makes theft difficult in the future. A CPA could help with that too if needed. I'm really sorry, and hope you get the money back. Quote Link to comment Share on other sites More sharing options...
Catwoman Posted July 14, 2015 Share Posted July 14, 2015 I don't understand why the organization doesn't send the woman a certified letter telling her that the money is missing and that she needs to return it within a certain number of days, or else the crime will be reported to the police. Her actions have made it abundantly clear that she was trying to cover her tracks, so I don't believe for a second that this was an innocent mistake, although I'm sure she will claim there was a clerical error. It is also hard for me to imagine that the woman is still being permitted to have any role in the organization. 4 Quote Link to comment Share on other sites More sharing options...
Catherine Posted July 14, 2015 Share Posted July 14, 2015 Without reading the other responses, I would do what you are planning first-ask that the full amount be deposited immediately. If that does not happen, you should pursue legal action. I know of a situation where a township was bankrupted, to the tune of > $100,000, by a savvy woman whose dh was on the town board but was not computer literate, so she did the reports for him and sent out notices, etc. Without his knowledge, so I understand, she took this money over period of a few years until the town's assets were completely gone. No one figured it out-and I think when it did come to light, it was learned that she had embezzled before. Quote Link to comment Share on other sites More sharing options...
Artichoke Posted July 14, 2015 Share Posted July 14, 2015 Enormous red flags now! I have not known an organization to have only one signing authority for a financial account. In fact, often checks require two signatures (as protection against theft). Our tutorial only requires one signature, but the treasurer can not spend any of the money. We have two board members with spending privileges while the treasurer reconciles the accounts and keeps our budget on track. Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted July 14, 2015 Share Posted July 14, 2015 dh's background is audit. report it to the police. they should be able to determine where the money went. I am very stressed about how to handle our audit report. (This is an "in house" audit. We are not professionals, just committee members). We are thinking we may present the numbers and carefully avoid words like "embezzled" or "stolen", but simply state that it appears that a deposit was missed and we would appreciate her making a deposit for $xxxx immediately. What do you think? If you have been in this type of situation how did you handle it? and THIS is why people get away with embezzling and aren't held liable until they embezzle larger amounts. . . . . 7 Quote Link to comment Share on other sites More sharing options...
Seasider Posted July 14, 2015 Share Posted July 14, 2015 No. We have not asked her where the money is. She handled all the finances and no one else had access to them. No monthly reports or statements were ever given. Yes, I realize this was a huge mistake. We only decided to conduct an audit because we wanted to apply for grant which required, among other things, an audit. Our first clue that something was not right was that she resigned (we didn't ask her to). She then had many excuses not to give us her records. She then refused to cooperate to get a new treasurer added to the checking account, and called the bank requesting that not give past statements to the new treasurer. I would like to think, like someone here mentioned, that is is just incompetence, but I don't think so. Um, yeah. That is beyond incompetence. Her behavior incriminates her. Bet she won't show at any board meeting you call. 1 Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted July 14, 2015 Share Posted July 14, 2015 Um, yeah. That is beyond incompetence. Her behavior incriminates her. Bet she won't show at any board meeting you call.Yeah, I bet she dodges the meeting. You never want a treasurer who will take on the job without oversight to protect themselves. If she doesn't insist on transparency, you have a problem. I have resigned from boards and once fired a client (triggering his entire staff and nearly all of the board to resign at the same time) because I felt insufficent financial controls were putting not just the organization, but myself (either liability wise as a board member or my reputation as a professional) at serious risk. I can't afford such nonsense. I also have, ironically enough, a rule against being the treasurer myself in general. I've made two exceptions and I regretted them both. 3 Quote Link to comment Share on other sites More sharing options...
Seasider Posted July 14, 2015 Share Posted July 14, 2015 Yeah, I bet she dodges the meeting. You never want a treasurer who will take on the job without oversight to protect themselves. If she doesn't insist on transparency, you have a problem. I have resigned from boards and once fired a client (triggering his entire staff and nearly all of the board to resign at the same time) because I felt insufficent financial controls were putting not just the organization, but myself (either liability wise as a board member or my reputation as a professional) at serious risk. I can't afford such nonsense. I also have, ironically enough, a rule against being the treasurer myself in general. I've made two exceptions and I regretted them both. I also will never agree to be treasurer in a club setting. When running a student organization, two signatures were required - a time consuming necessity for a club that met infrequently and whose members' homes were spread across a wide area. A second organization, of which I was a former member, discovered that the long-time treasurer had made off with tens of thousands, shocking everyone. Yet another ran through a string of poorly qualified treasurers who left the records a grand mess. As troublesome as the two-signature account was, those books were always open, accurate, checked-and-balanced. I will never again serve in an organization that lacks transparent, accurate and secure handling of member funds. Too much risk for headaches and worse. Quote Link to comment Share on other sites More sharing options...
Seasider Posted July 14, 2015 Share Posted July 14, 2015 http://www.blueavocado.org/content/nonprofit-embezzlement-more-common-and-more-preventable-you-think Quote Link to comment Share on other sites More sharing options...
SKL Posted July 14, 2015 Share Posted July 14, 2015 Tough question. Accountability is needed. If they can't come up with an answer, it must be something fishy unless they are getting senile. If this is a nonprofit, you may have a fiduciary duty to do more than just ask the question. Consult the law regarding your fiduciary duties in this matter. If you let it go, would that make you (or your committee) an accessory after the fact? The buck has to stop somewhere. My sister was an accountant working under a controller during an IRS audit. The IRS uncovered theft and the controller was prosecuted like any other thief. If the individual is embezzling and is not prosecuted, what's to stop him/her from doing it again in the next job? 1 Quote Link to comment Share on other sites More sharing options...
SKL Posted July 14, 2015 Share Posted July 14, 2015 I have been a treasurer of several organizations. You'd better believe those books balanced to the penny every day of the year. :P Quote Link to comment Share on other sites More sharing options...
annandatje Posted July 14, 2015 Share Posted July 14, 2015 If you had significant evidence proving someone embezzled, what would you do? Would the dollar amount matter in your decision? If you have been a part of an organization where money was stolen, did the perpetrator continue active membership? When our church treasurer stole tens of thousands from the church, she was quietly let go, but no charges were pressed. No one wanted bad publicity. The treasurer stopped attending church for several months, but is now back and singing in the choir. My mom has a friend who embezzled from her employer. She was confronted and quit her job. No charges were pressed. This was a school cafeteria manager. She visits the school several times a year to "visit her friends." I am part of a small organization that is conducting an audit. It appears that there is about $6,000 unaccounted for. The treasurer resigned when we said we would be conducting an audit, but is still a part of the organization. We are supposed to share the results of the audit next week. I am very stressed about how to handle our audit report. (This is an "in house" audit. We are not professionals, just committee members). We are thinking we may present the numbers and carefully avoid words like "embezzled" or "stolen", but simply state that it appears that a deposit was missed and we would appreciate her making a deposit for $xxxx immediately. What do you think? If you have been in this type of situation how did you handle it? Transparency. Transparency. Transparency. Do NOT fall for sob stories. One of the most ridiculous excuses I have ever heard for theft was high blood pressure. Good advice re attorney. Smart to not make accusations but as you suggested, ask for clarifications. Generally speaking, what you initially uncover will be tip of iceberg. Further, if there was collusion with another party, you just might never know the full amount embezzled. Not sure what has happened thus far, but church should have contacted banks, brokerage houses, credit card companies, etc. to have her name removed immediately as authorized party. Block access to all financial records and any other church records. Look for checks written to vendors you do not recognize. A favorite trick is to set up shell company with name similar to a real vendor, and then funnel funds to shell company. If she stole, prosecute her. If this is a first offense, she'll probably get slap on wrist, maybe even if is second offense. It is likely she has stolen before and will again. Tighten up internal controls over cash even though this is often difficult for smaller organizations. Maybe have one person make deposits and write checks while another person does monthly bank reconciliations. 3 Quote Link to comment Share on other sites More sharing options...
Cammie Posted July 14, 2015 Share Posted July 14, 2015 There are two issues, IMHO. First, you need to get your accounts in order. Someone needs to go speak to this person, let her know there is money missing, ask her what her plan is. If she is willing to pay it back immediately - take the money and move on. If she cannot, you will have to consider some type of a lawsuit - however that may end up costing more than you lost. Second, as mentioned above, you need to get some policies/procedures in place so that there are layers of accountability. No one person should ever have full control over the finances. Ever. Quote Link to comment Share on other sites More sharing options...
Bensmom Posted July 14, 2015 Author Share Posted July 14, 2015 ETA: I didn't read further in the thread for more story. Yikes. That sounds like it's going to be hard to get the money back. There may be more. Do you guys know a CPA that would volunteer help? I'm sorry. On the bank situation, you can probably close the account and open a new one with the money transferred. The bank could help. I'd get it out of her reach as soon as possible. This sounds messier than I initially thought. Crime wise, around here, she would likely get a slap on the wrist for that amount-plead down to d felony or misdemeanor. It would be stressful and emotional for everyone. I probably wouldn't go that route honestly. I would prioritize getting the money back. I'd ask the person first, and hope she can come up with it. Consider small claims if there is money to get back from the person and she is unwilling assuming you can prove it (consult CPA if needed/especially if you have a friend/spouse/etc. to help for free--my husband has done that for small organizations in these situations). Alternatively, is there an insurance policy? Does it cover theft? If not, next time you guys do an insurance policy, have a crime insurance/employee dishonesty (called different things in different companies) rider added. Or bond the next person, if that's cheaper than going through or getting insurance. It's relatively cheap here. Finally, make sure the accounting system in place for the money makes theft difficult in the future. A CPA could help with that too if needed. I'm really sorry, and hope you get the money back. Interestingly enough, yes, we had an insurance policy that covered theft. She didn't pay the premium when it came due last October. That was one of the first things we noticed when we started looking through things. The policy was reinstated last month. We were uninsured for 9 months. Quote Link to comment Share on other sites More sharing options...
Bensmom Posted July 14, 2015 Author Share Posted July 14, 2015 I don't understand why the organization doesn't send the woman a certified letter telling her that the money is missing and that she needs to return it within a certain number of days, or else the crime will be reported to the police. Her actions have made it abundantly clear that she was trying to cover her tracks, so I don't believe for a second that this was an innocent mistake, although I'm sure she will claim there was a clerical error. It is also hard for me to imagine that the woman is still being permitted to have any role in the organization. Yes, I think that she will claim that there is a clerical error and claim innocence. Knowing her, I do not see her becoming overwhelmed with a sense of remorse and admit to theft. I think she will say, "Oh well, I am just as confused as you guys where the money went. Since nobody knows lets just move on..." I think that it is much more likely that this person will become loud and angry than sorrowful and remorseful. I can see why other organizations have quietly dismissed the person and essentially swept things under the rug. It is messy, ugly stuff to deal with. I appreciate everyone's responses. I will share them with the other auditor tomorrow. I don't think anyone on our small board has lawyer connections, but I have a CPA friend. I will ask if she is willing to review things for us for free. (There is really very little left in the organization's account to pay for services). That will at least give us a professional confirmation of the dollar amount that is missing. I will also try contacting the resources provided in WTM posts. Thank-you for your recommendations. Quote Link to comment Share on other sites More sharing options...
G5052 Posted July 14, 2015 Share Posted July 14, 2015 I was part of a group that went through a financial mess. In the end, it probably was just negligence, but we never really knew. It really divided the board, and I resigned part-way through the investigation because I felt very uncomfortable about how it was being handled. There were IRS and potential legal issues, and most of the board just wanted to sweep it all under the rug and start over. Thankfully after two of us resigned, the church that provided the facility got involved and took over completely. They ran the finances and handled the tax and legal issues. Sadly, that also was pretty much the end of the group. They instituted a more restrictive statement of faith, a lot of people left, and it is just an email group now. Later I was in another group where the leader was paying her bills from the group funds instead of paying who she was supposed to. No board there, but nothing happened until some of us really began complaining to the person over her. She was removed and replaced. In some cases she owed folks over $1,000, which is she paid in cash months late. No apologies at all. Some time later, the person that had been over her took me aside and told me to stay far, far away from the former leader. Apparently she showed no remorse when confronted and gave no explanation, which disturbed those who were charge. She would have gone on and eventually destroyed the group. And yes, she's still very active in certain circles, but I keep my distance. If you want your organization to survive and thrive, you have to get control of this. Quote Link to comment Share on other sites More sharing options...
cera2 Posted July 14, 2015 Share Posted July 14, 2015 I would probably present the informal audit and ask her for an explanation. If she can't give one and show that the money is not in fact missing I would request a formal audit (not terribly expensive) and then based on the results of that contact the police to file charges if there is evidence that there was embezzlement. It is a crime and it sounds like she may have done it intentionally. Also, I believe in most places $6000 would be considered a felony...other people deserve to be protected from what she might do in the future. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted July 14, 2015 Share Posted July 14, 2015 Do you know for a fact that a particular person stole that money? Or do you just think it's very likely? I think what I'd do is just report the findings. People are going to raise eyebrows over this. If this were $60 I doubt anyone would freak. But $6000...yeah. Quote Link to comment Share on other sites More sharing options...
goldberry Posted July 14, 2015 Share Posted July 14, 2015 Yeah, I bet she dodges the meeting. You never want a treasurer who will take on the job without oversight to protect themselves. If she doesn't insist on transparency, you have a problem. This is absolutely true. I have been a bookkeeper for years and work for a volunteer fire department right now. I am the one who insisted that someone else review the bank statements, bills, etc. I made sure two board members receive online notifications and access, etc. I also handle the very small amount of money for another group I belong to (less than $1000 per year activity). I make another team member sign off on *those* bank statements and reports also. They never did that because it was "too small to bother", but I wasn't going to handle the money unless that took place. 3 Quote Link to comment Share on other sites More sharing options...
MyThreeSons Posted July 14, 2015 Share Posted July 14, 2015 Years ago, my dh was asked to be treasurer of our church. At the same time, a gal who was the accountant for her husband's business took on the task of being bookkeeper for the church. They both wanted to see the present records, and discovered that no one had balanced the church checking account in years. (!!) The accountant tackled the pile of unopened bank statements and did her best to get things figured out. There was a huge discrepancy from one month the next, where the starting balance in the account for one month was something like $18,000 greater than the ending balance on the previous month's statement. Since this had happened years before, the bank essentially said it was our gain. I think the church board voted to put the money in a separate account because they didn't feel like it really belonged to us. We moved away shortly after that, so I never found out what happened with that money. Quote Link to comment Share on other sites More sharing options...
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