How to Steal From the Office

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The news routinely brings stories that show how easy it for employees to steal from nonprofits, and how simple some of the safeguards are. Like this:

Casa Youth Shelter, a California nonprofit that serves runaway youth, says a staffer took more than $200,000 by setting up an account for the organization in her own name and having the statements sent to her home.

The credit card company readily gave the card to the worker because the organization had been reliable with payments on its other accounts with the company, according to Luciann Maulhardt, executive director of the shelter. In addition, she said, the worker had access to the organization’s financial data and even Maulhardt’s Social Security number, giving her ample information with which to open the account.

Such schemes are not so rare: In recent weeks the former president of the Pop Warner football league in Rialto, Calif., was sentenced to 180 days in jail for embezzling $3,000 from the league.

In the Casa case, the agency became aware of the theft when Maulhardt received a call from the bank telling her that two of the shelter’s checks had bounced. Those checks had been forged, according to Maulhardt.

The worker – who Maulhardt said confessed to stealing money from the organization but has not been arrested – could not be reached for comment.

Maulhardt said Casa took several steps in response to the theft.

Within days of the discovery, Maulhardt sent a letter to Casa’s 5,500 donors explaining the incident and the agency’s corrective measures.

Among those measures: The agency’s bank now sends statements to Casa’s accountants for review, and they then forward the statements to the organization. Previously, Casa received the statements and had accountants review them at the end of the year – a typical procedure for nonprofits.

As primary guarantors on the account, Maulhardt and her husband have been told by the credit card company that they are responsible for the outstanding debt, she said. As a result, their personal credit rating has suffered.

Melanie Herman, executive director of Nonprofit Risk Management, said both the nonprofit and private sectors face ongoing problems with employee theft.

“There is no method to absolutely prevent an employee from stealing,” Herman said. “If someone is intent on stealing from an individual or an organization, there is always a way to do that.”

But Herman said there are inexpensive ways for an organization to increase its protections.

She noted that the worker “didn’t take the hundreds of thousands of dollars in one day. She took it over years. If the organization had caught on after the first day, it may have only been $2,000.”

Casa Youth Shelter provides short-term housing, food and counseling to runaway youth on an annual budget of about $900,000. Over the past 30 years, the organization has served 10,000 children and 38,000 family members, according to Maulhardt. She said its services have been unaffected by the theft.