Question

The article below, “Nuns Stole $500k And Spent It On Gambling And Vacations” by Brendan Cole, appeared in Newsweek on December 9, 2018:

“Two nuns in California allegedly stole more than $500,000 from the school they had been at for years, which they spent in casinos and on vacations. Bank records show Sister Mary Margaret Kreuper and Sister Lana Lang had been embezzling funds from St. James Catholic School in Torrence for at least a decade, the Press-Telegram reported.

But officials from the Archdiocese of Los Angeles told parents and alumni of the school that auditors have not been able to trace all of the money trail.

Kreuper had retired as the school's principal earlier this year and she dealt with the school fees, which she allegedly withheld and deposited into an account only she and Chang knew about, the paper said.

While investigators found the two gave some of the stolen money back to the school, the rest was used for their "personal gain." Kreuper has admitted she took the money and expressed remorse.

Monsignor Michael Meyers, the pastor at St. James Catholic Church sent a letter to pupils’ parents stating that Sisters of St. Joseph of Carondelet, the nuns’ order, is cooperating with the parish and the Archdiocese to find out how much money was taken.

“Our community is concerned and saddened by this situation and regret any injury to our long relationship with the families of the school,” the Order said in a statement.

“The Sisters of St. Joseph both desire and intend to make complete restitution to St. James School,” the Daily Breeze reported.

Police have been informed but the Archdiocese does not intend to pursue criminal proceedings against the sisters. “At our school, we have initiated additional procedures and oversight policies for financial management and reporting responsibilities,” Meyers wrote.

Archdiocese lawyer Marge Graf said the nuns’ order agreed to pay the school full restitution and impose “severe sanctions” on Kreuper and Chang. Graf said: “We do know that they had a pattern of going on trips, we do know they had a pattern of going to casinos, and the reality is, they used the account as their personal account.”

There have been calls among some parents for the pair to be charged while others said they should be forgiven.

Jack Alexander of Redondo Beach said that the pair would often go traveling and gambling, claiming they had been given the money by a rich relative. “These nuns took a vow of poverty and said, ‘Oh no, we’ve got a rich uncle'. The rich uncle was the parents of the St. James students,” he said.”

Required:  

In order for fraud to occur, two elements must be present, opportunity and motivation. Please make reference to the text in the article above that supports/describes each element.

In addition, there are several important characteristics (different from opportunity and motivation) that appear in many fraud cases. Please describe at least two of these characteristics that are described here: Small amounts regularly over period of time (skimming)  Lack of audits or supervisory oversight  Trusted employee  Collusion (2 or more employees)  No vacation (or works during vacation)  No background checks when employee was hired  Government, non-profits, religious – highly susceptible

Answer 1

Opportunity is created by one's privileged position as accountants, the complexity of which is yet to be fully investigated.

In this case, Kreuper was the school's principal earlier this year and she dealt with the school fees, which she allegedly withheld and deposited into an account only she and Chang knew about, this created a opportunity for her to misappropriate the money and use this in gambling.

offenders usually use their positions as to deceive others when they were confronted with a special crisis or some personal gain which give them motivation for criminal offence.

In this case, Sister Mary Margaret Kreuper and Sister Lana Lang had been embezzling funds from St. James Catholic School for personal gains like going to vacations or gambling etc.

SOME CHARACTERISITCS OF FRAUDS.

Small amounts regularly over period of time (skimming)

Usually in most fraud cases people used to steal or misappropriate small amounts so that the same can't be traced easily while auditing, also small amounts does not leads to an emergency situation for an inquiry or special auditing.

Lack of audits or supervisory oversight

Audit should be conducted on regularly basis so that all the activities of an organisation can be verified and any kind of fraud can be detected on time.