Ohio Woman Pleads Guilty to Embezzling $500k from Volunteer Fire Department

A part-time administrative assistant for the Falls Township Fire Department pled guilty yesterday to stealing for than half-a-million dollars from the fire department.

Kristie L. Howard, 52, pled guilty in Muskingum County Common Pleas Court to felony counts of theft, telecommunication fraud, and eight counts of forgery. In exchange for her guilty plea, charges of money laundering, 219 counts of forgery, and engaging in a pattern of corrupt activity will be dismissed pending sentencing. She faces more than 10 years in prison.

The case is not unusual in some respects and unusual in others. Theft from volunteer fire departments by trusted insiders continues to be a major problem, so there’s no surprise there. The amount stolen is in the average range of what we see these days. How she did it, is not at all uncommon. The thieves typically start small, (sometimes rationalizing to themselves why they deserve a little extra because of their hard work). Once they realize no one is paying attention, the next theft is a little bit easier, as is the next and the next.

According to the Time Recorder, Assistant Muskingum County Prosecutor John Litle explained how Howard did it:

• In 2010, she stole $2,000, Litle said in court. In 2011, she stole $57,591.41. In 2012, $95,469.58. All of those thefts, Litle said, were from forging checks.
• In 2013, she began paying off her own credit cards, Litle said, and made $13,145.54 in credit card payments. That same year, she stole $90,091.12 in checks.
• In 2014, she stole $42,746.17 in checks, made $53,063.24 in credit card payments and $54,694.68 in unauthorized transactions.
• In 2015, she made $96,361.88 in unauthorized transactions and $63,329.78 in credit card payments.
• Last year, she made $5,158.84 in unauthorized transactions and $5,322.63 in credit card payments.

Howard’s theft was discovered in February last year, keeping her 2016 totals to just $13,000.

What is somewhat unusual is that Howard was an administrative assistant. The most common source of insider theft is the fire company treasurer, followed by the fire chief. Here are the totals from the 356 cases of insider theft in my database:

• 139 Treasurer
• 132 Fire Chief
• 27 President
• 6 Clerk or Administrative Assistant

The solution is not complicated: oversight. Seven simple steps fire companies can take:

1. All accounts (banking, investment and credit cards) should be subject to an internal review/audit monthly when the statements come in.
2. All statements should be mailed to the person responsible for the internal review/audit, who must not be someone with check signing/credit card authority. Steps must be taken to prevent those with check signing authority from accessing the original statements until the review has been completed.
3. All expenditures should be properly authorized, and supported by receipts and documentation.
4. Checks over a designated dollar amount should require 2 signatures (my recommendation is $500).
5. Those with check signing authority should be prohibited from signing checks to themselves or a family member
6. Those with credit card authority should be prohibited from using the card for any personal reason, even if past practice/promise/plan is to reimburse the fire department at a later date.
7. The fire department should have an external audit every 2 to 3 years.

Incidentally, insider theft from firefighter unions is also a recurring problem… with the same 7 step solution!

Here is more on the Falls Township story.