A Louisiana court sentenced a treasurer to ten years at hard labor for embezzling corporate funds. While the case involved a for-profit company, there are 3 lessons that will be instructive to churches.
First, it is worth noting how the treasurer embezzled company funds. He issued checks to an account he set up with a false name, forged the signature, and cashed the checks. The proceeds were spent on cars, jewelry, and gambling.
Second, the court could not determine how much the treasurer embezzled. He claimed it was $600,000. The company said it was $1 million. An independent audit could confirm only $312,000. Such discrepancies often occur in such cases, and this can cause problems.
Example. A church board determines that an employee has embezzled funds, but it has no way of knowing how much. The board agrees that if the employee resigns and reimburses the church for all of the funds he embezzled, no criminal charges will be brought and the IRS will not be informed. The employee estimates that he took $10,000. The board is frustrated because it has to "take the word of an embezzler." It has few other options. One would be to a CPA firm to come up with an estimate. But, as this case demonstrates, such estimates may be highly inaccurate and differ sharply from what the embezzler claims to have taken.