"It is also worth noting that for every theft such as this you hear about, there are several you do not. I know of another player in this field that was victimized in a very similar manner as the WK&S, but as far as I know they never publicized the theft. I think victims do that in hope of someday getting restitution, instead of prosecuting and putting the culprit in jail, which virtually ensures you will never see any restitution."


In this case, the convicted felon is on disability and has stated that fact publicly in court. As such, the disability money will be garnished, perhaps a small amount, but still there will be some restitution. Also, the court action appears to have helped the organization bring "closure" to the theft. While the thefts were occurring, morale was extremely low with long-time volunteers rarely showing up and useful projects grinding to a halt. Once word got out of what had happened, help was offered from a number of sources, including some of those long-time volunteers. In this case, going to court was the best possible scenerio.



"I think the simplest way to deter this type of fraud is to require credit cards for all transactions, or as much as possible. For sales, probably 90% will be by credit card already, so that won't be a problem. For payments, require volunteers to use a company credit card, and have someone besides the Treasurer review the statements every month. If someone then spends $20K at Home Depot it will show up right away on the monthly statement, if not sooner: many credit cards will deny such out-of-the-ordinary large transactions. And many credit cards have built-in protection against fraud and theft."


What is described here was brought up to the convicted felon's fellow officers, the President, Vice President and Secretary, all of whom claimed at the time that nothing was wrong and he was "...trusted..." It became obvious that not one of them ever took the time to review the monthly bank statements and/or credit card statements. Other actions such as the convicted felon having large sums of cash on hand during the middle of the week were never questioned by these officers. A system of checks and balances WAS in place but the three other people who were charged with a feduciary responsibilty to the shareholders, let alone to the volunteers, abdicated their duties. A simple review of the books would have shown that theft began the very first day the accounts were handed over.


Rob

Rob brings up some good points. I mentioned earlier that I have an acquaintance who stole while she had a gambling addiction. Not the type you would expect at all. That's often the case. This isn't TV, the crooks don't all wear black hats, and they're not all the stereotypical methhead type.

I think it would be good to have the checks and balances in place and enforced somehow. Maybe all three people have to sign a report each month saying they've reveiwed the books. Make it so they cant say "well, i trusted him", and also make it so they can simply say "I'm just following the rules, nothing personal" when the crook trots out the old "Don't you trust me?" line. People don't like to confront others, especially where they're essentially accusing them of stealing. independent audits every quarter or at least yearly are probably good too if there's any decent amount of money involved.

In the current instance, the lesson that many organizations should learn from this unfortunate act, is that those in charge need to be capable of making decisions that are in the best interest of the organization, be it a non-profit or a for-profit, and that those decisions may not be popular but necessary. It appears from observation that the officers in control at that time seemed more concerned with "personal" issues and not business decisions. A review of the minutes from their numerous meetings reveals......nothing, as they saw fit to record no minutes. It became apparent fairly early in the tenure of the convicted felon that people were being manipulated, lied to, and facts distorted to promote a few at the expense of many. The current President, Mr. Blatt, summed it up for the judge during the sentencing when he said the actions of the convicted felon were "...deliberate and malicious in an effort to destroy to Company..." For the other officers to allow these actions to take place, even partake in such actions, speaks to their character and abilities, or lack thereof. Careful selection of officers is of paramount concern for all organizations, a seemingly simple task.

A review of the expenses paid for by the Company during the 2013 fiscal year reveals invoices paid to the Fort Wayne 765 group for the convicted felon and his brother to ride first-class around Horseshoe Curve, lawn care of their parent's yard, numerous appliances purchased at Best Buy, tires and auto servicing at Firestone, a vacation trip to Strasburg, PA and the attractions in that area, etc, etc, etc. And the statement by the Public Defender is misleading at best; the convicted felon reviewed the fiscal paperwork more to dispute the total arrived at by the new Officers of the WK&S, not in an effort to help with his prosecution. This fact was made abundantly clear during the preliminary hearing when the PD claimed "...they (WK&S) only subtracted the starting balance with the ending balance to come up with the number". The Berks County DA knew of the efforts made to arrive at the total and showed the Court that any statement like that was pure fiction and even the matha didn't add up to bear out that statement.

Rob

I suppose the question I have is whether or not there are any laws or regulations indicating what information the board of a 501c must provide to the membership. Can board meetings of a 501c be kept secret or confidential? Granted one can look at the 990s, but from a day to day aspect, can financial data and board minutes, be kept locked up and not available to the membership to review? With a more open board and books, could the WK&S situation have been avoided?

Quick answer is the WK&S is not a 501C corporation, rather a "Pennsylvania Amusement Enterprise" as stated in the charter issued February 11, 1963, (Yes, ironic) so I suspect that line of thought is not applicable in this instance.

From my experience, the common practice of many entities, be they Governmental, For-Profit, Non-Profit, is that any "Board" elected by a group may resort to the "executive session" for discussions about sensitive issues, generally related to employment terminations, lawsuits, fiscal impropriety and the like. As in everything, the laws vary from State to State and also from Company to Company. Bylaws usually provide the guide in this aspect of business. In this instance, an Annual Report has been prepared as required by PA law and distributed to the shareholders. The 2013 Annual Report had the Condensed Balance sheet prepared by the convicted felon, not the Company account who explained after the fact that he had requested financial reports repeatedly and was denied everytime. The Sheet was a total fabrication and fraud, and upon examination could be found that it lacked even the simple addition and subtraction to balance the books. Federal Income Tax forms, PA State Tax forms, PA Sales Tax, County Real Estate tax, local Amusement tax, all failed to be paid during the tenure of the convicted felon. When asked about such matters, none of the fellow officers appears to have asked to look at the books, instead took offense that anyone would question their abilities, or lack thereof.

There are many lessons to be learned from this incident.

Rob