Tales of the Ethically Challenged: The Quiet Embezzler

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Digital embezzlement

August 3, 2012; Source: SeacoastOnline

Try this scenario: You’ve been on the job as the executive director of your current agency for just under two years. At your previous job in a nearby state, you happened to attract the attention of federal prosecutors who tagged you for having embezzled almost $1 million meant for poor families (not your own pockets). Your schemes included paying $413,000 of the nonprofit’s funds to a consulting firm that shuttled the money back to you personally. Another part of the embezzlement was having your nonprofit transfer $400,000 to a nonprofit that was really out of business—except for your role as the organization’s treasurer—and the money also ended up in your pockets. The evidence was pretty solid, so four months ago, you pled guilty to embezzlement of those and other funds—and for not paying taxes on your embezzled income—and as part of the plea, you agreed to reimburse the nonprofit $1.1 million and pay the IRS another $150,000. Maybe you thought you could dodge the problem forever—but certainly when the feds dragged you into U.S. District Court, the gig was up, right?

In March, Thomas Nelson signed an agreement to plead guilty to embezzling moneys from York County Community Action in Maine between 2005 and 2009. However…Nelson reportedly decided not to tell his current employer, Rockingham Community Action (RCA) in Portsmouth, N.H., about the charges of embezzlement or the guilty plea. In fact, Rockingham Community Action officials didn’t learn about the embezzlement or the guilty plea until last week when the U.S. Attorney for Maine issued a statement.

There are a couple problems here. First, one would think that the U.S. Attorney’s Office would have notified RCA about the investigation of Nelson at some point before the plea agreement was filed in court. Next, if Nelson was so clearly functioning at a level significantly below professional nonprofit probity, one would imagine that something—anything—would have surfaced in the review of Nelson undertaken by Southern New Hampshire Services, which oversees RCA, before he was hired for the Portsmouth job.

But there is something about Nelson to be said. Under what personal calculus would Nelson let RCA swing in the wind, only to find out about the embezzlement four months after he actually signed the papers admitting guilt? If you somehow found yourself in this position, wouldn’t you tell your new organization and find a way of politely resigning?—Rick Cohen

  • Jo

    It’s an interesting question but also begs the question of reformed…is one always a crook once one has been declared one? And what would you suggest his next job be? I’m not saying I condone his actions, i’m just asking the harder questions here. Is there room for him to have learned what he did wrong and to fix it by doing better the next time? Or is there a ceiling on power, when you hit a powerful position and you show a lack of morality, you should never be in that position of power or its facsimile again. I can see both sides of that argument working.

    Some people make screwups and never make them again. Some people go on to repeat them. How do we determine the difference.

    I would offer that in this case, he did not own his mistakes which is the part that should count. The cost of owning it is his livelihood so the stakes are really high. But owning them and showing remorse by telling your employer is certainly one way of proving that you’ve changed. Whether or not you quietly retire at that point is a discussion worth having with your employer but in a politically charged position like that, it’s certainly not an advantage.

    But it’s still an interesting question…if he had owned it and said “I can do better, please let me prove it to you” would you have felt differently, would you have wanted watch-dogs and transparency or would you have wanted his head on a platter?

  • Michael Wyland

    A few thoughts…

    1) a person guilty of embezzling $1 million is likely to have more than one ethical blind spot.
    2) such a person, once caught and in a plea agreement, may be so in need of employment that it’s against self-interest to disclose to the current employer his past misdeeds
    3) it’s not uncommon for embezzlement plea agreements to be handled very quietly, in the interest of both the victim and the perpetrator. The unusual element here is that the US Attorney issued a statement.
    4) I’m aware of at least one case where a man embezzled from a bank, agreed to restitution and dismissal, was subsequently employed in a public sector managerial position and embezzled from the new employer. The new employer, more concerned with being perceived as a good steward and enforcing the law than being perceived as lax in its accounting practices, disclosed the embezzlement and prosecuted the employee.

    For more on what motivates poor ethical decision-making, see:

  • rick cohen

    Dear Jo, yes, there is room for reformed “crooks.” Let’s assume that a “crook” was embezzling because of a gambling habit–gambling addiction can be treated–and acknowledges his crime, pays restitution, does time if the plea calls for it, I’m fully in support of giving people second chances and more. I think the issue here is that his current employer was blindsided. If he had been reformed, he could have sat his colleagues and supervisors down at his new job and explained what happened, explained the crisis in his life, explained what he has been doing and plans to do to reform, etc. All of us, or I believe all of us have screwed up royally at times. I don’t believe that people should be compelled to work under a never-ending sword of Damocles, but the first step out from under the sword is the cleansing power of candor.

  • rick cohen

    Mike, I agree with you here in general but for a couple of points. The person in question worked for community action agencies, serving the poor. There are a few community action agencies that have been hoisted by their petards (and by the ideological critics of anti-poverty agencies) due to the ethical missteps of their executives, as we have covered here in the NPQ Newswire. That said, people who want to work in the community action “industry” have an obligation to their low-income clients and to their community action peers fending off their opponents. He may have been in need of employment, but to go from one CAP to another, he had a duty of some candor with his new employer, even to the point of telling them about the embezzlement, why it happened, and what he has done and plans to do to turn his life around. In this case, the plea agreement regarding a CAP in Maine is sort of important to the CAP in New Hampshire since it is in the same business and faces critics ready to pounce if given the opportunity. I’m fully in favor of second chances in life, all of us I assume have needed seconds, thirds, and sometimes more. But there is an ethical quid pro quo needed.