Coleman v. State, 2006 WL 3513407 (Miss. 2006)
Background. Two deacons were responsible for collecting offerings from church members, depositing the funds into the church's bank account, and paying for authorized maintenance and repairs to the church building and facilities. Both deacons were authorized to sign checks individually, without the safeguard of requiring two signatories. They were not, however, authorized to make expenditures without the approval of the members, which was determined at meetings held after church services.
Over the course of six months, one of the deacons (the "defendant") wrote checks totaling $1,600 to himself, with no documentation showing that he used the funds to pay for expenditures authorized by the congregation. When the other deacon became aware of the defendant's behavior, he notified law enforcement officials. An investigation was initiated that resulted in the indictment of the defendant for embezzlement. The indictment stated:
[The defendant] between the 22nd day of January and 8th day of July … being a deacon and in a position of trust at [the church] and by virtue of his position as deacon, had under his care money an amount being two hundred and fifty dollars or more, and did fraudulently and feloniously embezzle and convert said money to his own use, without the consent of [the other deacon or the church] against the peace and dignity of the state.
The case proceeded to trial. The defendant's defense was that he had written the checks to compensate himself for payments he made from his own funds for repair of church property, including plumbing and electrical work, as well as maintenance of the church's lawn mower. The church's pastor, however, testified that before any authorized work could be done for the church, the deacons were required to obtain approval from the congregation. The pastor also testified that the plumbing work which had been done was minor, there had been no electrical work done at the church, and the repairs performed were not worth $1,600.
The defendant did not testify, but called various witnesses concerning his alleged work and repairs. The jury found him guilty, and he was sentenced to a ten-year term of imprisonment and ordered to pay restitution in the amount of $2,255. The verdict was reversed on appeal due to a technicality.
What this means for churches
Consider the following points:
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. How was the defendant able to embezzle church funds? By issuing unauthorized checks over his sole signature to pay for personal expenses. Had the church implemented the most basic internal controls he could not have engaged in his acts of embezzlement. Here are two internal controls that would have worked:
- Require at least two signatures for all checks above a nominal amount.
- Have monthly bank statements reviewed by a church official or employee having no responsibility for handling cash or writing checks.
3. 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.
4. The legal consequences of embezzlement can be severe. In this case, the defendant was sentenced to ten years in a state penitentiary. Although his sentence was reversed on appeal, this was due to a technicality that in no way justified or diminished the gravity of his crime.