Embezzlement, Fraud, or Just Stupid?

[lifeguardmom]

What is the name of your state?What is the name of your state?California
We have discovered the mgr. of our nonprofit club overpaid her husband as a subcontractor and "hid" the overpayment in a separate ledger. We have also found several other "discrepancies." When does bad money management become criminal, and what responsibilities does, for example, the treasurer have if he is aware of the activity and doing nothing to expose it?

 

[CdwJava]

What is the name of your state?What is the name of your state?California
We have discovered the mgr. of our nonprofit club overpaid her husband as a subcontractor and "hid" the overpayment in a separate ledger. We have also found several other "discrepancies." When does bad money management become criminal, and what responsibilities does, for example, the treasurer have if he is aware of the activity and doing nothing to expose it?

Sound spotentially criminal to me.

A member of the board has to go to the police or the District Attorney and make a complaint. They will need to bring any and all evidence they have of the matter in order to open an investigation.

If these are accidental matters, that is not criminal. But overpaying someone and the HIDING money? If so, that is very likely embezzlement.

Contact the police or the DA immediately.

- Carl

 

[lifeguardmom]

embezzlement, fraud or just .....?

Thanks for your response. Does the district attorney, after looking at what we present, have the authority to order an audit, or must the board do this?

 

[CdwJava]

Thanks for your response. Does the district attorney, after looking at what we present, have the authority to order an audit, or must the board do this?

What usually happens is that the DA or investigating police agency, upon receiving information that identifies a likely criminal act, will seek to conduct a forensic audit of the books. They may interview involved parties as needed and may subpoena additional records from the organization and/or the officers.

Generally, the complaint must be made by a member of the board of directors for the organization involved.

However, if no criminal act can be identified, then no criminal case may be forthcoming. Their job will NOT be to identify poor accounting practices, only to try and identify a crime and a suspect(s).

- Carl

 

[lifeguardmom]

Thanks again. It seems clear that my husband, a board member, has both a moral and civic responsibility to report this. We have a good friend who is a deputy sheriff ... it seems like this might be where we begin, unless you have other advice.

 

[seniorjudge]

Thanks again. It seems clear that my husband, a board member, has both a moral and civic responsibility to report this. We have a good friend who is a deputy sheriff ... it seems like this might be where we begin, unless you have other advice.

Sounds like a good place to start.