Cash in the Bathroom Plumbing?

Lest anyone believe I only pick on the Catholic Church, let’s look at the recent revelation a plumber found $600,000 stashed away behind a toilet in  Joel Osteen’s church.  To be clear, the original theft had been reported to the authorities, and no one is claiming Osteen or any of his staff is connected to this theft. Nevertheless, the sheer size of Osteen’s church and the amount at stake has caused a stir. 

I used this situation as a case study in my forensic accounting and auditing class. I showed the class  some of the videos about this sordid affair.  An example of one of these follows. 

The class came back with some interesting  comments.  I have included some of these as well as my thoughts about them. 

  • Another NFP fraud?  It seems NFP organizations do not take internal controls seriously.  Sadly, this is often the case.  Many NFPs are way too trusting.  No reputable person should balk at being subject to internal controls. “Trust but verify” not only works in Strategic Arms Limitations, but also in running an organization.  What donor wants to see their hard earned and generously donated money simply disappear?  Donors have been known to stop giving after such an event. 
  • How could you leave that much money in a safe?  Any bank would be willing to come each Sunday and pick up this deposit.  To be sure, that is certainly a correct comment.  I have participated in NFP fundraising events involving  less than one-tenth of that amount of money.  The local  bank was more than willing to come and pick up the deposit right away as an accommodation to a good customer. 
  • What does the Fraud Triangle tell you about potential persons of interest?  The Fraud Triangle states any fraud is the result of someone feeling financial pressure, having the means and ability to rationalize the theft. Given the fact the safe seems to have been easily opened and the perpetrators knew where to hide the money, we would be looking at an inside job. This perhaps establishes the means.  What was the pressure and the rationalization though?  
  • Why was the loot never retrieved?  The person(s) who hid the funds was not able to retrieve the money.  Why?  Were they fired for other causes? Did someone suspect them of the theft?  An “outsider” to the organization would not count on being able to access the bathroom again, and accordingly, the funds. Could this be a “spite” theft, where the perpetrator(s) were simply doing this to embarrass the church and really didn’t want the money? In any event, any checks became stale long ago (the original theft occurred in 2014!) or the makers have put a stop on them. 

This story just seems so odd my students (and I) believe more will come out. Stay tuned.  

Unfortunately, there can be collateral damage to all NFP organizations from such an event.  Some believe situations such as this are a reason why churches should be taxed.  While this seems like a non sequitur, stranger things have happened.

NFP management needs to understand that theft and fraud of such consequence will often result in not only bad press for that organization, but for all NFP organizations.  During this Pandemic any decrease in donations or other revenue resulting from such bad press can have catastrophic consequences to an NFP, even if the organization was not the cause of the bad press.  The major lesson for all NFP management:  Let’s be careful about internal controls.  You don’t want to be on the front page of a local newspaper, sheepishly discussing why the hard earned money of the donors ended up missing because of a fraud or theft. 

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