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Embezzlement Part 2 - News - Sturgis Journal - Sturgis, MI
Kathy Jessup
9-12 minutes
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By Kathy Jessup

Tuesday
Posted Oct 21, 2014 at 10:00 AM

National statistics show most embezzlers are women, likely in their 40s, with no prior criminal record. Women generally take money to provide comfort, while studies say men embezzle to elevate their status or power. While it’s commonly believed that gambling and substance abuse are the most frequent reasons for embezzlement, a national study concluded that more than two-thirds of cases over $100,000 involve stealing to maintain or improve a lifestyle, followed by 29 percent involving gambling.

EDITOR’S NOTE: This is the second in a six-part series, “Other Peoples’ Money.” Today, the Journal looks at the anatomy of an embezzler nationally and in St. Joseph County.

National statistics show most embezzlers are women, likely in their 40s, with no prior criminal record.
Women generally take money to provide comfort, while studies say men embezzle to elevate their status or power. While it’s commonly believed that gambling and substance abuse are the most frequent reasons for embezzlement, a national study concluded that more than two-thirds of cases over $100,000 involve stealing to maintain or improve a lifestyle, followed by 29 percent involving gambling. The 2012 Marquet International Ltd. report concluded that only 2.2 percent of high-dollar cases are for basic “need” and less than 1 percent are drug-related.
Nationally, Marquet reported businesses in the financial services sector suffered 42 percent of the losses and one in four of those cases involved credit unions.
Government was the next most likely target, with 11.3 percent of embezzlement cases, followed by 9 percent of cases involving non-profit organizations.
In St. Joseph County, case records since 2008 show the gender split here was 57 percent women, 43 percent men, compared to statistics that show 60-80 percent of embezzlers nationally are women. Many low-level embezzlements here occur at retail businesses, but government and non-profits also have been targeted.
St. Joseph County government has been the victim of two embezzlement cases, the Village of Constantine had one and the Three Rivers Area Chamber of Commerce allegedly lost $50,000 over seven years at the hands of an employee.
Embezzlement differs from common theft. In embezzlement, the person who takes money and/or property has a position of trust with the victim, whether they are an employee of a business or government, an officer of a non-profit organization, or the guardian for a vulnerable individual. Michigan statutes call for stiffer penalties for government employees who steal public money and the guidelines also are tougher when people take money from vulnerable individuals. Since 2008, St. Joseph County has had four of the later cases, usually involving theft of $1,000-$20,000.
It’s said that embezzlement is the only crime other than prostitution that women are more likely to commit than men because it does not require use of a weapon or greater physical size. But the amounts and the reasons can be very different when examined by gender.
St. Joseph County’s largest embezzlements — nearly $1 million embezzled by former Parma Tube CFO Craig Balzer and more than $700,000 by Raymond Belcher from a Sturgis RV firm he co-owned — were committed by men. The largest female embezzlement conviction was Kristen Taft, a former Three Rivers credit union manager, who was charged in 2011 with taking more than $100,000 from the institution.
Court case files indicate smaller embezzlements are committed here by younger men and women, often working as store clerks.
In 2013, Crystal Whitley was ordered to pay $7,500 in restitution to a convenience store where she had worked only 61 days. During that time, investigators said she wildly overinflated the number of bottle and can deposits she refunded and pocketed the money. Nathan Brown was charged with taking $1,850 of electronics and food from a Walmart where he worked.
Across the U.S., most convicted embezzlers are first-time offenders. The ones who take the most money are usually long-time employees who have gained a high level of trust in the organization. In Marquet’s 2013 study of America’s largest embezzlers, investigators found only 20 of the 519 cases involved offenders with prior criminal records.
St. Joseph County has some exceptions.
In 2013, Andy Brown was charged with embezzling more than $100,000 from his accounting clients. He was later convicted for murdering his boss, David Locey, when prosecutors said Locey confronted Brown about the missing money. Brown had been convicted of embezzlement in Kalamazoo County before Locey hired him.
The largest case in St. Joseph County so far in 2014 charges Victor Meade with pocketing more than $100,000 in checks for mulch deliveries from a company he didn’t own. This was Meade’s second embezzling offense.
In 2002, court records show Meade was charged with taking money from a Three Rivers school employees union that he headed. He was ordered to pay $25,338 in restitution, six months in jail and five years probation. Court records indicate Meade still owes more than $24,000 from his 2002 sentence.
Clint Roberts is another two-time offender; his latest crime was charged in 2012 for taking more than $15,000 in cash, equipment and checks from the Three Rivers Little League. In 1999, court records show Roberts was ordered to pay a local couple $7,624 for windows he failed to install after being paid. Records indicate Roberts was to spend four weeks in jail over the next four years, but by 2002 he had neither served any jail time nor paid any of the restitution.
A previous record didn’t stop Amy Mucha from getting a job at a Three Rivers gasoline station in 2009, where she worked less than a month and was charged with taking $750. Court records say Mucha had already had four previous convictions on similar charges in Kalamazoo County.
When St. Joseph County later called her in to explain why she had paid none of the ordered restitution, Mucha didn’t appear. She was in a state women’s prison for forgery.
Texas-based Security Education Systems says women who embezzle significant amounts are likely to be in mid-level management or accounting jobs and usually steal for “comfort”—to pay bills, buy things to please a partner or child or to cover gambling or drug use that helps them cope with emotional or relationship challenges. Male embezzlers usually steal to pay for power and prestige, also related to underlying emotional issues.
“When I see a woman with habitual credit card or bad check or embezzlement problems, you’ll often find some childhood trauma in their past,” said St. Joseph County District Judge Jeff Middleton.
Studies show embezzlers are often the employees who take just a day or two at a time for vacation, are seldom absent, come in early and stay late and take accounting work home. The embezzler often wants total control over the accounting functions and resents having anyone oversee their work. They have excuses for problems, like blaming the computer for losing data.
Studies have found embezzlers rarely invest the money they steal, rather using it for immediate needs or wants. And once the theft has begun, offenders rarely stop on their own. Experts say the longer the embezzlement continues, the more confident the offender becomes and carelessness can lead to their detection.
In its national study of embezzlement cases involving more than $100,000, Marquet International found California had the most cases at 72 and Michigan was second with 29. Michigan ranked eighth in the total amount of money taken at just over $17.5 million and it had the most cases tied to gambling.
Nationwide, the Marquet study found the average prison sentence was 48 months for embezzling $2 million. The study did not indicate how many offenders made full restitution for what they had stolen.
Michigan’s sentencing guidelines and limited prison beds make prison time rare for embezzlers.
Most are first-time offenders and embezzlement is considered a non-violent crime. So while snatching a purse and embezzling $20,000 to $100,000 are both 10-year felonies, the purse-snatcher with a prior conviction is more likely to get incarcerated than a first-time offender who embezzles $99,999.
And judges may be persuaded that keeping the offender out of jail gives the victim a better chance of being repaid. But records show very few victims are made whole.
“Things have been devalued,” acknowledged Middleton. “The prisons are telling us, ‘Send us the people you’re afraid of, not the people you’re mad at’.“
Crowded prisons and court dockets also mean more plea-bargaining, resolving cases more quickly with lesser penalties. Kalamazoo defense attorney Gary Tibble estimates fewer than 10 percent of cases will go to trial.


Wednesday: In Part 3, we talk to a medical professional who lost $150,000 in an embezzlement from his practice.
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BY A. MARGOT MOSS
W W W. N A C D L . O R G
T H E   C H A M P I O N
20
T
he purpose of restitution is to make a victim whole
after suffering a loss from the criminal activity com-
mitted by others.
1
Making a victim whole, however,
does not always equate to fairness. Consider the nominee
owner of a medical clinic who allowed someone to use
her  name  in  exchange  for  a  few  hundred  dollars,  while
others fraudulently billed Medicare for millions of dollars
from the clinic in her name. Although the client may not
have known all the details of the plan, the scope of the
fraud or the names of the other conspirators, she never-
theless  may  be  found  guilty  of  a  conspiracy  to  commit
Medicare fraud. She may be slapped with a joint and sev-
eral $25 million restitution order even though she has no
ability  to  pay  and  even
though  she  made  less  than
one  hundredth  of  one  per-
cent of the profits.
Although   a   defense
attorney   may   represent
clients  in  “white  collar”
cases,  that  does  not  mean
the  clients  have  endless
amounts  of  money  and
assets. They may have made
a pittance compared to the
windfall  of  other  co-con-
spirators.  Moreover,  they
are often left penniless after
fighting  a  federal  indict-
ment.  In  spite  of  those
facts,  if  the  client  takes  a
plea or is found guilty, she
will  still  have  a  restitution
obligation. In question and
answer  format,  this  article
will  lay  out  the  law  and
some opportunities of mit-
igating   the   heavy   load
of restitution.
Q.
What  is  the  applicable
law  regarding  restitu-
tion?
A.
Title 18 U.S.C. § 3663A
mandates   restitution
to  victims  in  nearly  all
white    collar    cases.
It  provides  that  “the
court shall order ... that
the   defendant   make
restitution”   for   any
offense against Property
under Title 18.
2
This includes crimes of racketeer-
ing,  telemarketing  fraud,  mail  and  wire  fraud,
health care fraud, bank fraud, and securities fraud.
The general conspiracy statute within Title 18 can
also  draw  a  non-Title  18  offense  within  the
mandatory  requirements  of  §  3663A.
3
Under  the
statute,  a  victim  is  a  person  or  entity  that  is
“directly and proximately harmed as a result of the
commission” of the offense.
4
Section 3664 and Fed. R. Crim. P. 32(c) address
the  procedure  regarding  restitution.  They  direct  the
government,  at  least  60  days  prior  to  sentencing,  to
consult with all identified victims to obtain a restitu-
tion amount and to provide that information to the
probation  officer.
5
The  probation  officer  then  must
provide notice to the victims of the offense of convic-
tion, the amount of restitution, the date of the sentenc-
ing hearing, and the availability of a lien. The officer
also must inform victims of the chance to submit addi-
tional loss information through a provided affidavit.
6
The client must submit a completed affidavit to
the probation officer containing her detailed financial
information, including assets “owned or controlled by
Restitution in Federal
White Collar Cases:
Squeezing Blood
From a Stone
© Gbphotostock | Dreamstime
t
he defendant as of the date” of the
defendant’s arrest.
7
After finishing its
restitution   investigation,   probation
must submit a report to inform the
court   sufficiently   to   issue   an   order.
T
he report (either as part of the PSI or
a separate document) must include
an accounting of what is owed to each
victim, any agreement to restitution,
and the financial circumstances of the
defendant.
8
The court may rely on the
report   or   may   take   additional   evi-
dence, resolving any dispute by a pre-
ponderance   of   the   evidence.
9
The
burden of establishing the restitution
amount is on the government.
10
After   reaching   a   conclusion
regarding restitution, the court issues
an order. The court’s final order or
judgment must include the client’s
identifying information, case num-
ber, restitution amount, schedule of
payments,   any   modification   or
remission,   a   requirement   that   the
client keep her address current with
the U.S. Attorney’s Office, and iden-
tification of the victims.
11
The U.S.
Attorney’s Office (USAO) then must
file a lien against the client’s proper-
ty.
1
2
A   Release   of   Lien   is   not   filed
until the restitution has been paid.
13
Q.
Is there any circumstance in which the
court would not order restitution in
white collar cases?
A.
Under very limited circumstances, the
court does not have to order restitu-
tion when the large number of vic-
tims makes an order impractical, or
when the complexity of determining
an amount or the extensive length of
time it might take to reach a conclu-
sion would present an undue burden
on the court.
14
Q.
Does   the   court   consider   what
amount the client can afford to pay
when   determining   the   amount   of
restitution?
A.
No. The court must order restitu-
tion   to   each   victim   for   the   full
amount of loss the victim sustained
regardless of the economic circum-
stances of the defendant.
15
Q.
Then   why   must   the   client
provide all her financial information?
A.
After   the   court   determines   the
amount of restitution the client must
pay, the order must specify how and
when the restitution will be paid.
16
The economic circumstances of the
client influences this portion of the
order.   Based   upon   the   client’s
finances   —   which   includes   assets,
p
rojected earnings, and debts — “[a]
restitution   order   may   direct   the
defendant   to   make   a   single,   lump-
sum   payment,   partial   payments   at
specified intervals, in-kind payments,
[
]   a   combination   of   payments   at
specified intervals and in-kind pay-
ments,”   or   nominal   periodic   pay-
ments.
1
7
If the court permits a pay-
ment plan, the installments will be in
equal monthly payments, unless the
court directs otherwise.
18
The client’s financial disclosure
does not end at the sentencing stage.
Even after an order has been issued,
if there is any material change to the
client’s finances, she must notify the
court and the U.S. Attorney’s Office,
and   the   victim   must   also   be
informed.
1
9
Upon notification to all
the parties of a change in finances
or assets, the court may revise the
restitution   payment   schedule   or
demand payment in full.
20
Q.
Can   the   client   transfer   title   to
property to a third party to decrease
her assets?
A.
A sincere sale or donation of proper-
ty   to   another   is   permissible.   But
keep in mind that, in preparation for
the   restitution   order,   the   client   is
mandated to provide sworn infor-
mation   to   the   probation   officer
regarding her finances as of the date
she was arrested.
21
This suggests that
the government can view any change
since the time of arrest as an attempt
to hide assets, even if it is prior to
imposition of the restitution judg-
ment.
22
Similarly, with future trans-
fers of property or other assets, if the
government suspects fraud, the gov-
ernment can seek to void a transfer
with the court or attempt to collect
from the third party.
23
To determine whether a client’s
intent is meant to defraud or is free of
deceit, the court may consider several
non-exclusive   enumerated   factors,
24
including whether the transfer was to
an insider;
25
the client retained posses-
sion and control of the property;
26
the
transfer was hidden; the transfer con-
sisted of nearly all the client’s assets;
the payment received by the client for
the   transfer   was   negligible;
27
or   the
transfer occurred close in time to the
restitution order.
28
If the court finds
fraud, cancellation of the transfer may
be the least of the client’s problems.
She may also face additional charges
and a lengthier sentence if the transfer
occurs prior to the imposition of the
restitution order.
Q
.
I
f the victim receives compensation
from a third party, such as insur-
ance, does that offset the amount of
restitution?
A.
No. If a victim receives reimburse-
m
ent from another source, the court
will order the defendant to repay that
third party
after
the victim has been
made   whole.
2
9
It   may   reduce   the
amount the client pays directly to the
victim, but not the total amount of
restitution. The reduced amount due
to the victim, added with the money
that must be paid later to another
source, will equal the full restitution
amount imposed.
30
Q.
Can the restitution amount be off-
set   by   the   value   of   any   forfeited
property?
A.
In   Mandatory   Victims   Restitution
Act   (MVRA)   cases,   federal   law
requires   a   district   court   to   impose
both   restitution   and   forfeiture.
31
Because   restitution   and   forfeiture
serve very distinct purposes and are
both required by statute, a court can-
not offset the amount of restitution
by the amount of property or monies
forfeited to the government.
3
2
Thus, a
client may be doubly penalized finan-
cially.   “While   restitution   seeks   to
make victims whole by reimbursing
them   for   their   losses,   forfeiture   is
meant   to   punish   the   defendant   by
transferring his ill-gotten gains to the
United States Department of Justice
(DOJ).”
33
One goes to the victim, and
one   goes   to   the   government.   After
property has been forfeited, the attor-
ney general has the sole authority to
decide the disposition of the proper-
ty, either by retaining it or distribut-
ing it to victims.
34
The U.S. Attorney’s Office may
make efforts to assist the return of
forfeited property to victims through
two   procedures,   remission   and
restoration.
35
Remission requires vic-
tims to complete a petition to the
U.S. attorney of their district demon-
strating that they suffered a loss. If
the U.S. attorney grants the petition,
the attorney general, acting through
the   Asset   Forfeiture   Money
Laundering Section (AFMLS), com-
pensates the victim. In an approved
restoration, upon the request of the
USAO, the AFMLS notifies the cus-
todian of the forfeited property to
transfer the proceeds to the clerk of
court   for   distribution   to   victims
according   to   the   restitution   order.
The   restoration   process   avoids   the
necessity   of   each   victim   having   to
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