Zero Tolerance for Church Embezzlement
Extended sentences put churches on notice.

A sad story emerged last week out of Indiana, where a 37-year-old woman accused of stealing more than $350,000 from a church while working there as an employee received the maximum sentence allowed by the state.

According to an article in the Greencastle Banner-Graphic, the local paper, the woman was convicted on six counts of Class C felony charges and six counts of Class D felony theft, resulting in 10 years in the state jail, followed by 5 years of probation.

The woman began stealing from the church shortly after getting hired in late 2004 as the church's financial and administrative secretary, according to the article. She forged signatures on 192 checks, doctored bank receipts to cover it up, and also made unauthorized charges on church credit cards, the paper said.

This case is similar to one covered by Richard Hammar in November's Church Finance Today in which a woman employed as a church office manager for seven years stole $450,000. She received a 15-year sentence, which included an upward adjustment "for misrepresenting that she was acting on behalf of her church," according to the article.

What's the takeaway for church leaders from these cases? Aside from the need to implement strong financial controls, if such controls aren't already in place, Richard explains three reasons why church leaders should learn from cases like these:

1. It illustrates the seriousness of the crime of embezzlement. The trial court handed down a sentence of 15 years for the embezzlement of $450,000 in church funds.

2. The case illustrates that under federal sentencing guidelines church employees who misappropriate church funds by misrepresenting that they are acting on behalf of the church are subject to an upward adjustment in their sentence.

3. This case demonstrates that in some cases church leaders decide to turn cases of embezzlement over to the civil authorities for investigation and prosecution rather than resolving the matter internally. Such decisions are often difficult, since church leaders often believe that involving the civil authorities is somehow incompatible with the virtues of mercy and grace. These are questions that each church will have to answer for itself, depending on the circumstances.

Before forgiving an embezzler and dropping the matter, though, Richard recommends church leaders consider four key points, including the serious nature of embezzlement, possible IRS forms to file, and fiduciary obligations to the congregation. For subscription information to Church Finance Today, visit http://ChurchLawToday.com/newsletters.php (this article also will soon be available for individual download at http://store.churchlawtodaystore.com/fiad.html).

Other resources:

For a full consideration of the topic of embezzlement, see chapter 7 in Richard Hammar's four-volume series, Pastor, Church & Law (4th ed. 2008) (also available by calling 1-800-222-1840). Chapter 7 addresses the following topics:

• Definition of embezzlement

• Why churches are vulnerable

• How embezzlement occurs

• Reducing the risk of embezzlement

• Responding to allegations of embezzlement

• The consequences of embezzlement

• Confidentiality and privileged communications

• Informing the congregation

• Avoiding false accusations

• The Employee Polygraph Protection Act

For a comprehensive look at internal controls that help protect against embezzlement, also see the book, Essential Guide to Church Finances (Christianity Today International, 2009).

For other financial safety resources, visit http://store.churchlawtodaystore.com/fiad.html or the Money section at ChurchSafety.com.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations

Comments

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Church Fraud Prevention Resources

May 11, 2010  10:22am

I really appreciate the awareness you create about church fraud. Churches can be an easy target because they operate largely on trust in many cases. You list Weeds in the Garden as one of your top 7 resources for fraud prevention and I totally agree that it is an excellent resource in fighting and preventing church fraud.

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