Posted on Wednesday, December 03, 2014
Think fraud cannot happen in your organization? Here’s a look at some local frauds that have occurred over the past few years.
The organization’s Treasurer allegedly used more than $20,000 of the organization’s funds for personal use. Most was taken through unauthorized ATM withdrawals. The individual was charged in court.
The organization’s Finance Manager took more than $130,000 by creating false invoices from an unnamed company and recording payments in its ledgers for equipment the nonprofit had not actually purchased. Money was then routed to the Finance Manager’s bank account in amounts ranging from $100 to $17,890. The individual was arrested by the FBI after a federal grand jury handed down a 20-count criminal indictment.
The Executive Director was accused of stealing approximately $30,000 by paying herself in addition to her normal pay. She was charged in court with a felony count of corrupt business influence.
The Executive Director pled guilty to four counts of theft, each as a class D felony for using the organization’s debit card for personal items and to pay personal bills totaling almost $1,500.
The Bookkeeper allegedly took more than $364,000 from the church’s checking account. The checks were then deposited into the Bookkeeper’s business account and subsequently transferred into her personal account. The checks were listed in the church’s records as payment to another local nonprofit. When the checks were returned from the bank to the church, the bookkeeper altered the payee from her business name to a vendor used by the church. The individual was indicted on 10 counts, ranging from wire fraud to tax evasion.
The Director of Finances was charged with eight counts of theft and one count of fraud for taking more than $276,000 of the organization’s funds by using electronic transfers to pay his personal credit cards and medical bills, as well as buying cars and motorcycles.
The Administrative Assistant took $95,000 of funds by using the organization’s credit cards, transferring money and writing checks to herself. More than 140 checks had forged signatures. The individual was sentenced to five months in prison, five months home detention and ordered to repay the $95,000 she had stolen.
The organization’s Treasurer was accused for opening an unauthorized charge account at Sam’s Club and using the organization’s money for personal use totaling $8,570. The individual faces theft and fraud charges.
A few controls that may help deter frauds such as these are segregation of duties, board oversight, and prohibiting the use of Organizational debit cards and ATM cards.
See our blog on Segregation of Duties for additional recommendations for organizations with small staff.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
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