Key point 7-21. Embezzlement refers to the wrongful conversion of funds that are lawfully in one’s possession. Embezzlement is a common occurrence in churches because of weak internal controls.

A New York court affirmed a trial court’s order directing a pastor who embezzled a substantial amount of church funds to make restitution over the pastor’s objection that the amount was excessive and not supported by the evidence. A pastor (the “defendant”) pled guilty to embezzlement and was sentenced to six months in jail and five years of probation. He also was ordered to pay restitution in the amount of $256,488.The defendant appealed, claiming that the restitution award was not supported by the evidence. An appeals court rejected the appeal. The court noted:

[The woman] who became the financial secretary of the church upon defendant’s resignation, testified that defendant eliminated any financial oversight by church trustees during his 18-year tenure as pastor. Following defendant’s resignation as pastor [the financial secretary] attempted to reconcile the church’s finances and noticed numerous discrepancies. Because there were no receipts or other records with regard to the church finances during defendant’s tenure, an audit was undertaken with the assistance of an accounting firm, and a voluminous compilation of church checks and bank statements was compiled and analyzed for the period of 2010 through 2014.

In addition to a $40,000 commercial loan, the audit also disclosed cash withdrawals and checks payable to either defendant, his wife or cash with no notation or receipts to validate a legitimate church purpose. Further, numerous payments were made to various credit card and retail establishments which, according to testimony at the hearing, were for personal expenses that would not otherwise be authorized by the church.

The records reflect that other expenses paid through the church account included payments for various personal expenses, such as collection accounts and a vehicle for defendant’s wife, which were for the benefit of defendant and his wife and not for church purposes. . . . A state police investigator who assisted with the investigation of the church finances testified that defendant and defendant’s wife admitted to misappropriating approximately $70,000 for personal expenses.