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Catholic church pilfering prolific

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Page Category: 2007 January

http://www.mcall.com/news/local/all-a1_5embezzlejan06,0,3944934.story
 

Catholic church pilfering prolific

Report: Embezzlement reported by 85 percent of dioceses.
By Genevieve Marshall Of The Morning Call
Parishioners were shocked when longtime Bath Mayor Elizabeth Fields wascharged in November with stealing $9,000 in Sunday collections fromSacred Heart Roman Catholic Church, where she served as secretary.

But a recent study by two Pennsylvania researchers has found that 85percent of U.S. Roman Catholic dioceses that responded to a surveyreported an embezzlement within the past five years.
 
 Of the 78 dioceses that reported their financial information to CharlesZech and Robert West, 11 percent said they had been embezzled out ofmore than half a million dollars. Twenty-nine percent reportedembezzlements of less than $50,000.

Police reports were filed in 93 percent of the cases where embezzlement was discovered.

''As faith-based organizations, we're very trusting of our people,''said Zech, an economics professor and director of the Center for theStudy of Church Management at Villanova University in Philadelphia.

''You wouldn't think a church person would embezzle, so we don't demandthe internal controls,'' he said. ''We figure that a lot of churchworkers would be insulted if you asked them to do the same things thatare routine in the business world.''

The study, believed to bethe first of its kind to assess embezzlement in a denomination,attributes the high rate of embezzlement in the church to a lack ofprofessionals in financial oversight positions, and an overly trustingattitude toward the people who handle church money.

Theauthors focused solely on Catholic dioceses, their area of expertise.But Zech said he believes the levels of financial mismanagement andmisconduct would be similar in other denominations and nonprofitinstitutions.

Chris Cocozza, an associate professor ofbusiness at DeSales University in Center Valley, said he was ''notsurprised at all'' by the report.

''This is no different thanthe crimes you see in a small business, a nonprofit or any otherreligious institution,'' said Cocozza, who teaches accounting at theCatholic university. ''When you can't afford the financial rigorsrequired by a giant like Merrill Lynch to keep track of every penny,things are going to slip through the cracks.''

The problem offinancial oversight within churches is compounded by the lack ofexpertise in accounting by the people handling the books, as well asthe notion that ''religious people don't steal,'' Cocozza said. Highlyqualified chief financial officers are in demand and therefore morelikely to seek the higher compensation offered outside the nonprofitsector.

The 15-page report, funded by the Louisville Institutein Kentucky, a program for the study of American religion, was releasedjust before Christmas and first written about in the National CatholicReporter. The article featured the embezzlement case at Sacred Heart inBath.

Fields was secretly videotaped in the parish rectoryplacing rolls of money into her pocket after church officials suspectedsomeone was altering collection tally sheets, according to courtdocuments.

Although the Villanova survey didn't ask thedioceses who committed the embezzlements, Zech said most werediscovered by a parish priest, followed by the parish bookkeeper, aninternal auditor, and the parish finance council.

That led Zech and West to conclude that most of the reported thefts were by lay people.

''It's the people counting and depositing the money who usually skimoff the top,'' Zech said. ''It's not a sophisticated theft. A fewhundred bucks here and there, but over time it adds up.''

Parishes and high schools have many cash transactions that do notreceive regular scrutiny, he said. Internal audits typically weretriggered after a new pastor or bookkeeper came on board.

Zechand West, an accounting professor at Villanova, said they did not setout looking for embezzlement. They chose to look at internal financialcontrols in Catholic dioceses because one result of the clergy sexualabuse scandal was a new focus on financial transparency andaccountability.

''There are plenty of folks who think thatscandal would have been uncovered long ago if churches were more openwith their financial records,'' Zech said. ''Parishioners would haveseen the large payouts for settlements much earlier and askedquestions.''

He and West sent their survey to chief financial officers in the nation's 174 Catholic dioceses, and the 78 responded.
 
Officials at the U.S. Conference of Catholic Bishops told The New YorkTimes this week that they had seen the study. Bishop Dennis M. Schnurr,treasurer of the bishops conference and head of a Minnesota diocese,said church officials were not surprised, because they have beenlooking to improve local control of money by assisting parishes withaccountability and transparency.

Matt Kerr, spokesman for the Allentown diocese, said he had seen thereport and ''the numbers seem high.'' The Allentown diocese regularlysends out 21/2 pages of recommended internal controls, he said.
 
''They are common-sense things, like the person who signs checks shouldnot balance the money statement and each parish should own a safe,''Kerr said. ''Deposits should be made on a regular basis and collectionsshould be counted by teams, and those teams should change.''

But those are just guidelines. The diocese can't mandate how parisheshandle their finances because some parishes might have only one personon staff, he said.

In recent years, there have been at leastfour cases of embezzlement in the Allentown diocese, including thecharges against Fields:

Jo-Ann Mary Dilullo, a formerbookkeeper for St. Elizabeth of Hungary Church in Pen Argyl, was putunder house arrest and ordered to pay restitution for the $121,000 shestole over four years beginning in March 2001.

In August 2005,the Rev. Ronald J. Yarrosh went to prison after he admitted toembezzling more than $23,000 from St. Ambrose Church in SchuylkillHaven, where he was an assistant pastor. During the investigation,police found evidence of child pornography on the parish computer'shard drive. He was also charged with 110 counts of sexual abuse ofchildren for the images.

The Rev. Anthony M. Drouncheck, aformer assistant pastor of St. Catharine of Siena Church in Reading,was sentenced in 2002 to two years of probation for tampering with thefinancial records of the church bingo game. He had also been accused ofrigging the church's bingo game and keeping $8,000 in earnings, buteight of the charges, including the alleged theft, were dropped.

Dioceses that reported embezzlement to the Villanova researchers did soanonymously. There is no way to tell if Allentown participated in thestudy, the authors said. Kerr said he did not know if Allentownparticipated.

Cases of embezzlement outside the Allentowndiocese include that of a former Washington, N.J., priest charged inSeptember with stealing more than $600,000 in church raffle winningsand corporate donations. The Rev. Robert J. Ascolese pleaded not guiltyin December to 32 counts of theft.

In 1998, a Catholic priestadmitted he stole $1.3 million from two Allegheny County churches. TheRev. Walter Benz died at 72 in a Catholic nursing home. He was neverformally charged.

The allegations against Benz prompted a review of all parish finances in the Diocese of Pittsburgh.

In the Villanova study, only 3 percent of the dioceses said theyannually conducted an internal audit of their parishes, and 21 percentsaid they seldom or never audited parishes.

The Allentowndiocese requires parishes to submit annual reports. It also sends thediocese's four auditors to the 151 parishes an average of once everythree years, Kerr said.

Based on their findings, the authors issued a list of recommendations for all Catholic dioceses, among them:

Establish fraud policies.

Conduct annual internal audits of parishes, supplemented by external audits every three years.

Disclose the names and professions of all members of the Diocesan Finance Council and their conflicts of interest.

Have parishes and high schools submit financial data at least annually.

Follow a uniform budgeting process and use standardized software across the diocese.

Establish a way to report fraudulent activities anonymously.

The Archdiocese of Philadelphia released a statement Friday saying manyof the recommendations made by the study are already in place.

''The loss of even one penny of parishioners' or donors' funds isunacceptable, which is why the Archdiocese of Philadelphia hasstringent financial procedures and controls in place at every level andcontinually works to improve them,'' according to the statement.

Canon law requires parishes to have a financial counsel for oversight.

Each of the 270 parishes in the Philadelphia archdiocese completes aninternal audit each year, and a detailed financial report is signed byall members of the parish finance council. Every five years, parishesreceive a weeklong external audit by the archdiocesan auditing office.

Most of the financial policies prescribed by the bishops conference arepracticed in the Archdiocese of Philadelphia, and in some cases diocesepolicies exceed the recommendations, according to the archdiocese'sstatement.

genevieve.marshall@mcall.com
 
 
 

Catholic church pilfering prolific

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