Fast growth and few controls invite employee embezzlement

Pastor shocked by people who said they would not prosecute wrongdoers for theft of monies from their congregations.

By Ronald E. Keener

The headline shrieked across the second section of The Arizona Republic last September 1: “Accountant Held in Church Theft.”

“Police have arrested a church accountant they say stole more than $400,000 while working at Cornerstone Christian Fellowship in Chandler,” ran the lead paragraph. Actually it was closer to $521,000 as far as the megachurch of 5,200 in attendance can tell today, says senior pastor Linn Winters, of the incident which is still pending a court date.

Unfortunately, Winters and his church are in good company. Many churches have experienced theft and embezzlement; it’s just that only a few prosecute or report the events. (See sidebar.) Worse still, the church’s insurance coverage last fall maxed at $50,000. As the church and its budget grew over its 12 years, the coverage had not been changed.

“We were shocked at how many letters we got from churches in the immediate area who said, ‘We are praying for you. This happened to us.’ The reality is that church theft is much more prevalent than people know,” says Winters, “it’s just that we are larger and the amount that was stolen was larger.”

In fact, some people in Winters’ congregation approached him and said, we’re not going to prosecute, are we? “They said we don’t know that’s what Jesus would do,” he shared.

“We had to explain that there’s a difference between forgiving and with asking someone to respond to what they’ve done criminally,” he says. “Scripture is pretty clear about those who have stolen and repaying.”

Then there was the issue about trust. “What’s to keep her from going to a church down the street? Since we didn’t prosecute, what she did is not known and what’s to prevent her from getting hired and doing the same thing to some Christian brothers?,” he says.

At each of the four services Sept. 2, Winters set aside the planned message and spent the sermon time speaking to what he, the elders and the police uncovered. The individual, a woman, was a member of the church’s executive management team.

Winters agreed to an interview about the embezzlement six months later in hopes that other churches might recognize the dangers of employee theft and know what to look for in identifying the potential for it happening to them.

In what ways was the church vulnerable to this incident?

We started not getting the types of reports we felt we ought to get and we weren’t getting them in a timely manner. We’d ask questions and the answers were a little fuzzy. The mistake we made in the process was we assessed that we had outgrown her abilities when the reality was that it was something more devious. But she’d been here since the beginning. I think her family attended the second Sunday of our church opening and had worked tirelessly on behalf of the church in the past. It came out as this spirit of trust and camaraderie and hard work but at some moment her heart turned and she began to abuse that trust.

You said that Sunday that you had been looking at this for 3 1/2 years.

There was a period of about 3 1/2 years when a couple of the elders had asked, because they felt that one of the reports that they had gotten was a little fuzzy. And when they had asked about it they felt there was some hesitation in the answer.

We gave the elders permission to go through and look over all of our charge receipts, all of our balance sheets, and at the end of that they came back and said we haven’t found anything.

The part that I intentionally owned is that after a year they said we want to continue to look even more. And I at that point said, “We have inflicted this scrutiny on this department now for a year, and at the end of a year we don’t have anything. All you’re seeing is that we want to continue to fish.” At that point I had to say I think we’ve done enough. We’ve done due diligence in the question.

When she gave her confession to the police, the date at which she said she began to take money was well after that initial question was asked.

I don’t know if she got angry at the inquiry, I don’t know if it was that sense of “Hey, I’m not trusted anyway, and if I wanted to do this to you, let me prove to you I can.” I’ll never know.

There was an issue about a $50,000 check that opened further scrutiny.

The thing that we should have caught, and looking back now, it is incredibly simple to see, was that the memo line was to our mortgage company. But the payee at the top was our bank. What we had been led to believe was that she was taking it to the bank and then doing wire transfers. So we were going, well, okay, we get that. But instead of doing that she was actually taking it to the bank and getting cashier’s checks and the cashier’s checks were made out to her bank.

They weren’t made to an individual and she would get there and transfer it.

It allowed the flexibility for her to divert it and not for it to have to go to that specific payee.

How did this happen?

Part of it was that we had gone through such rapid growth, and I think one of the things that happens with rapid growth is you’ve got an awful lot of places where you can spend money and staff. You tend to assess departments that look like they’re struggling, and for the first 10 years of the church it [finance department] didn’t appear to be struggling. We felt we were fine. [In truth, the finance department] was too “ma and pa,” it was too far behind who we were as a church.

We had for us pretty much a perfect storm. The majority of the money taken was from our building fund. That was the place that was most able for money to leave and for us not to notice. Even when this first happened, I felt this couldn’t be happening. I’ve got a pretty good handle on what it costs to run this place, of what payroll is, of what building payments are. I know there’s not enough room for us to pay our bills and for someone to take a whole lot of money out of it.

But the reality was that’s not where she was dipping in. She was dipping into our building fund. A building fund is incredibly susceptible because you had people walking up to her and handing her a check. They’d say here’s my $40,000 contribution to the building fund. Well it would never get there. And the rest of us didn’t know someone had walked up and handed her a check in the lobby for the building fund.

That money that came to her became very susceptible if it wasn’t put in the offering plate, if it wasn’t counted by our counters and documented.

How have things changed in handling money now?

Basically we tripled our accounting department in size. We may have over staffed it but we are at a point now where literally no one has enough access to any portion of the accounting to be able to manipulate monies. You would have to have collusion of at least three people to be able to move money now, because no one has that much access to it.

There should have been what I call separate hands — the hands that were taking the money in should have never touched the books because when those two things are separated then the bookkeeper is going to catch the person taking the money in or the person taking the money in is going to be able to say, hey, wait a minute, we shouldn’t be that short.

But when those two hands belong to the same person — that was our mistake. We lost our accountant and in the meantime, those two hands came back together and she never rehired. That was the vulnerability.

She took over the books during that year and a half. I said, you’ve got to get that accountant back in here, that’s too much work for you to be doing. No, I’m fine, we can do this for awhile, she said. We allowed the hands to come back together.

You went to the police station “looking for innocence.”

I just felt biblically that I didn’t want to level any sort of false accusation against a sister and I knew that the moment I said to the police go ahead and turn this into a criminal investigation, that for all intents and purposes, I had leveled an accusation. And so I went looking and saying, I want to see how it’s possible that this money has not been taken.

I felt the money’s got to be somewhere; it’s probably just not accounted well. So let me look for that, let me see if I can find that. I poured over everything the police had. I see this check, show me if there is any place where this comes back to the church. Is there any place where it possibly shows up to our benefit? And the problem was that it didn’t.

There was still that 2 percent of my heart that said what if there’s some explanation, what if I have sent the police to my sister’s house? The police called me after they had interviewed her for about two hours, and they said, Linn, she’s admitting that she’s moved this money but she says she did it for the benefit of the church.

In that moment I knew she was lying because I had never been apprised of the movement of the money, that the money had been moved without my knowledge of it. At the very least it was horrible, horrible accounting; it was not good management of her division.

How does a friendship of a trusted employee play into the aftermath? Trust but verify, goes the saying. Does that apply here?

She was self-verifying, she’d walk in and she’d hand us the books and they’d all look okay at the end of the day, but she was verifying herself. When you’re sitting in  seminary they don’t say to you, hey, when you get to 1,000 [attendance] your business department better look like this. No one even has that discussion with you. We were saying hey, as far as we know that department is running really smoothly. You don’t all of a sudden say let’s hire a couple staff people and put a  couple salaries into a department that looks like it doesn’t need help.

I would say to most churches that by the time you reach 750 people you better be sure you have real solid checks and balances going in, because the volume of money that you’re doing is beyond volunteers by then, it’s beyond one gal sitting in an office keeping your books.

What’s been the hardest part of this incident for you?

What drove me crazy for probably the first 60 days was the realization not that just the money had been taken but that we had probably had 1,000 conversations that were lies.

That was almost more painful for me. I had to eventually stop and say I can’t go back and pray through all 1,000 conversations and figure out which part was a lie and which part wasn’t. I just have to resign myself to the fact that many of them, maybe even most of them, were lies and be done.

You said that Sunday the enemy wins when we fail to trust others.

Jesus said the thing that matters with people is the care and wonder of how we interact and how we treat one another. When I begin to withdraw trust and when I begin to stop taking chances on people around me I will not be able to demonstrate that love. Part of the Christian walk is always going to leave me with some exposure; there will always be the chance that someone will hurt or betray me. Jesus also said to be as harmless as doves but as wise as serpents; you have to bring a little of that element in. But you will always err on the side that if this person betrays me, I’m exposed.

In a different church embezzlement case the church treasurer said that she had been underpaid and that the church owed the stolen funds to her.

[Laughter.] That would be my whole staff.

Fraud and embezzlement are all too common in churches

The former treasurer of the Lower Susquehanna Synod, Evangelical Lutheran Church in America, Harrisburg, PA, was arraigned March 13 on 36 counts of criminal use of a communication facility (electronic transfer of funds) and one count of theft by deception in the amount of more than $1 million.

Each charge is a felony of the third degree. Irregularities were discovered in July 2007 and the investigation has been underway since then, with the treasurer, Barry Herr, dismissed from his job on July 31.

The irregularities are believed to be solely in the areas of long-term investments of synod funds, not funds received through regular giving, synod officials said. The synod across nine counties in south-central Pennsylvania has 122,000 members in 261 congregations.

There are virtually weekly reports of theft of monies by fraud or embezzlement — not to mention burglaries and other theft — from churches by employees or members. Here are a few examples during February:

  • Church treasurer charged with stealing $18,700 in checks and offerings from Trinity Christian Church, St. Paul, MN.
  • Former Memphis, TN, police officer indicted for stealing more than $10,000 from Barron Heights Missionary Baptist Church.
  • Ex-bank manager from Llanrwst, Conwy, Wales, admitted stealing £160,000 from local churches while treasurer of church organizations.
  • Ex-principal of Holy Cross High School, Freehold, NJ, given five years for theft of $415,848 from the school.

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