Protecting your organization from financial crimes
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Protecting Your Organization from Financial Crimes. Hennepin County Attorney Amy Klobuchar Pat Diamond Assistant County Attorney 612-348-8406 [email protected] Statistics and Context.

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Protecting your organization from financial crimes l.jpg
Protecting Your Organization from Financial Crimes

Hennepin County Attorney Amy Klobuchar

Pat Diamond

Assistant County Attorney

612-348-8406

[email protected]


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Statistics and Context

  • According to the United Nations, the U.S. ranks 30th among the top one hundred nations in the world in per capita embezzlements.

  • According to the AMA, in a five year period, 80% of medical practices will experience an embezzlement and 70% of those embezzlers will have done it before.


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It happens in youth sports

Michael Streitz - President of Metro Sr. Babe Ruth Baseball Leagues 1990-98. Collected $350 from each participating team. 30 Teams participating $220 for insurance to be purchased from National Babe Ruth Baseball.

1999 - State Babe Ruth Commissioner learns that the national Babe Ruth Organization believes only four teams play in Metro Babe Ruth League.

Investigation showed Streitz collected money but did not forward it to the National League. Teams were playing without insurance.

Defendant had a gambling problem. Money was gambled away.



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Crook Profile

  • Male/Female equally likely but

    • Men take more $185K v. $48K

    • Non profit thefts overwhelmingly women

  • Age - nationally half over 40 but

    • Amount taken increases with age

  • Tenure - not predictive. Those who have served longer are not necessarily more trustworthy and

    • Amount taken increases with tenure. 10 plus years is four times 1-2 years.


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Crook Profile

  • 2/3 done by person acting alone

  • No oversight

  • Private sector - tends to be persons living beyond legitimate means.

  • Not for profit groups of similar interests (sports organizations, arts groups, PTA’s, political campaigns) - tends to be gamblers and drug addicts.


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Beware of Treasurer who:

  • Comes up with a bunch of excuses why financial documents can’t be produced or are lost

  • Tells others they are too important to spend time keeping track of “financial details”

  • Extends her reach in the organization to get control over incoming mail, or account statements


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Detection and Prevention

  • General Business Detection

    • Tip from employee, customer, or vendor

    • External Audit

    • Accident or Chance

    • Internal Controls

  • Smaller Non-profits

    • Change in leadership

    • Accident


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Financial Procedures

Authorization -- decision to spend money.

Payment -- mechanics of spending, whether by actual payment or reimbursement.

Reconciliation - report that money has been spent as authorized.


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Goal

  • Financial Procedures are treated like live electric wires that cannot all meet in the same person.


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Suggestions

  • Term limit treasurer

  • Routine and periodic “audit”

    • At least once a year

    • More informal or smaller organizations use two or more others on board or within organization (does not have to be expensive)

  • Bank statement goes to President or non-Treasurer Board member.


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Suggestions

  • Regular Treasurer’s reports to general membership

    • Also promotes transparency and unity in pursuing organization’s goals

  • Clear rules for authorizing expenditures

    • How done?

    • Emergency and after the fact?

  • Clear rules for payment

    • what evidence for reimbursement?


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Good Intentions Not Enough

Actually follow the rules and procedures as adopted.


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Reporting

  • Essential to integrity of organization

  • Donors/Members will be more upset when they find out you did not report

  • Don’t pass on your embezzler to another organization


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