Commentary

Don Keelan: Embezzlement continues to flourish

Editor’s note: This commentary is by Don Keelan, a certified public accountant and resident of Arlington. The piece first appeared in the Bennington Banner.

Certain sectors of the Vermont economy have not recovered to pre-Great Recession levels – notably, new residential construction, as well as manufacturing. However, there is one sector which has even advanced – the embezzlement sector. As you are reading this column, someone, somewhere, is at work embezzling.

According to the 2013 Marquet Report on Embezzlement and its 50-page review of approximately 550 national cases (each with over $100,000 of funds stolen), Vermont continues to lead the nation in embezzlement per capita.

More recently, in January of this year, Vermont Public Radio’s Jane Lindholm and Devin Karambelas asked, “So why has Vermont landed at the top of the list so frequently?” and noted that “Marquet [Chris Marquet is the CEO of Marquet International] explains that there are several factors to Vermont’s high embezzlement rates. His study showed that the types of industries most affected by embezzlement were financial institutions, government entities, nonprofit organizations and small businesses.”

As many of the readers of this column have noted, this is not the first time that this author has highlighted the rash of embezzlements that have been inflicted on government entities, small businesses, and nonprofits in Vermont. However, what is different within the past three years, and most disturbing, is that embezzlement has spilled over to another sector – one that embraces fiduciary responsibilities.

According to an article by attorneys Paula McCann, Ron Morgan and John Newman in the June 2012 issue of the Vermont Bar Journal, “… we may well be on our way to another dubious number one ranking: for thefts by fiduciaries from estates of all types – guardianships, decedents estates and by agents acting under powers of attorney.”

State authorities need to see embezzlement, as well as income tax evasion, as a serious crime, and deal with it accordingly – as opposed to treating it as a “victimless crime,” as so many of our state’s attorneys have done for too long.

 

In May of this year, the Bennington County Bar Association devoted a morning session of their continuing legal education to the topic – “Thefts from Estates/Elders and Vulnerable Adults.”

A month earlier, in a commentary by NewJerseyNewsRoom.com, Bernie Weisenfeld quoted Gloucester County Prosecutor Sean F. Dalton, “This problem [elder abuse] is only going to increase as Baby Boomers become senior citizens.”

So what can be done about the rash of embezzlements in Vermont that hasn’t already been done?

While trusting someone with one’s financial matters provides a wonderful “feeling,” it is not an internal control – we need verification and we need to be diligent and consistent. Verification is not being accomplished, primarily because most small organizations don’t have the funds in which to do so.

Another needed deterrent is for state authorities to see embezzlement, as well as income tax evasion, as a serious crime, and deal with it accordingly – as opposed to treating it as a “victimless crime,” as so many of our state’s attorneys have done for too long.

By far, the most important avenue of assistance could come from my profession, the Vermont Society of CPAs – all 800 of us. While I am aware that a company’s CPA is not required to detect embezzlement/fraud when doing an audit or other work for a client, there are some things that could be accomplished.

The Vermont CPA profession should be at the forefront in speaking out on the issue of embezzlement; its silence over the years has been noticeable. Also, when a CPA is meeting with a small business or a nonprofit client, he or she should take the time to discuss the organization’s internal controls (or lack thereof) and make recommendations – even if such was not part of their engagement. And for so many nonprofits and small government entities, the CPA profession should reach out and volunteer its services; it would make an impact.

And just in from the Burlington Free Press: “A Windsor County women embezzled nearly $700,000 from a law firm and also wrote several bogus checks to the Vermont Department of Taxes as part of an ongoing fraud, according to a new federal indictment.”


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  • Question regarding “Vermont continues to lead the nation in embezzlement per capita”: does this mean there are more embezzlers per capita or there is more dollars embezzled per capita? If it is the latter the number is somewhat meaningless as of course a single $500,000 embezzlement will have a much greater per capita effect in Vermont then it would in California.

    I would like to point out an area that according to a now several years old state Auditor report our public school system has essentially been embezzlement free. I have no doubt in my mind this is due in greater part to the large number of elected school board members overseeing the system, and in lesser part to the requirement for annual audits.

  • William Hays

    The “Progressive Platform”.

  • David Miskell

    I have 3 close friends who have been ripped off (embezzled) by their employees. Two embezzlers were very close friends. They will never get back their stolen funds. One suggestion is to require all embezzlers to purchase life insurance policies that cover such theft amounts upon their deaths.

  • Wayne Andrews

    To add insult to injury most of these embezzlers end up going on disability for mental problems and their monthly disability check is exempt from attachment.

    • Annie Stratton

      I’m curious about what the source is for that claim.

      • Wayne Andrews

        Try looking up 11 US Code Section 522 (d) 10 (c)