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September 16, 2019
Managing Your Church Blog, April, 2019
A Ruling with Three Lessons on Embezzlement
A Ruling with Three Lessons on Embezzlement

A New York appeals court recently affirmed a trial court ruling that “a pastor who embezzled a substantial amount of church funds” had to make restitution for those funds, said attorney and CPA Richard R. Hammar in “Pastor Who Embezzled Must Make Restitution.”

Hammar said this case is relevant to churches for three reasons:

  1. Many church leaders consider embezzlement to be a problem that “couldn’t happen here.” Yet, it is this very attitude that contributes to poor or nonexistent internal controls over cash handling and payment of expenses that makes embezzlement a real threat.
  2. Church leaders may not be discharging their fiduciary duties when they fail to implement basic internal controls over cash handling and the payment of expenses. Such a failure can result in a host of negative consequences, including criminal liability to the embezzler.
  3. The legal consequences of embezzlement can be severe. In this case, the pastor was convicted of a felony.

Read more details of this case.

For more information on embezzlement and internal controls, see the articles “How Fraud Happens in Churches” and “How to Recognize and Confront Fraud,” interviews by Bobby Ross Jr. with Nathan Salsbery, a partner and executive vice president with the accounting firm CapinCrouse, and “Fraud and Your Church,” a compilation of five infographics on the topic.