Embezzlement expert reacts to Sheriff’s Office investigation at Old Adobe School

Amid recent embezzlement claims at Old Adobe School and former restaurant Reel & Brand, The Index-Tribune spoke with certified fraud examiner Lorraine Aho to discuss embezzlement’s schemes, frequency and opportunity.

Although Reel & Brand was a private business and Old Adobe School is a nonprofit, both cases share the fundamentals of all embezzlement cases that Aho has investigated over the past 25 years.

“It starts with an inciting incident,” Aho said. “Somebody gets a bounced payroll check. The electricity doesn’t go on one day … You get a tax bill in the mail.”

Embezzlement is the siphoning of money from a private business, nonprofit or government organization to enrich oneself through cash or material goods. And an embezzlement scheme can take a multitude of forms, including multiple employees collaborating together or a singular worker.

How does embezzlement happen?

In the Old Adobe School case, the Sonoma preschool had notified the public in January of an impending shutdown unless $40,000 could be raised to pay for bills and teachers’ salaries. On Jan. 19, Sonoma Police received a phone call alleging approximately $40,000 in funds had been embezzled from the Sonoma preschool.

“My own theories on the matter is that nonprofits are less likely to report,” Aho said. “So while I see nonprofit embezzlements, I think there's a lot more that gets swept under the rug and do not get reported because they're dealing with donors.”

But with the tip from the call, law enforcement detectives poured through the finances of the organization and interviewed school staff to learn about who had the opportunity to extract dollars from the preschool.

“Sometimes they follow a script. An employee who is trusted misappropriates money that was trusted to them and uses it not for their benefit of the company they’re employed by,” Aho said.

On Feb. 13, Sonoma Police and Sheriff’s Office detectives finished an investigation that found evidence an employee had allegedly used company credit cards and the payroll system to embezzle up to $40,000 from the organization.

As of Tuesday afternoon, the District Attorney’s Office was still reviewing the case.

What is needed for embezzlement?

Aho said embezzling requires three things: pressure, rationalization and opportunity. The first two are present at nearly every organization. Opportunity, however, is found in specific jobs where company funds are transferred or received.

It is often committed by employees who have access to payroll, but embezzlement can be performed as simply as skimming money from a bake sale.

Even if an organization does learn about embezzlement within its operation, it’s not always reported, Aho said. This particularly affects nonprofits, which she believes deserve more scrutiny for the dynamic between reputation and fundraising.

“Donors don't want to think that they gave money to an organization that didn't take care of it and allowed it to be embezzled,” Aho said. “When it's not your money, you're playing with house money.”

How can organizations protect themselves?

Aho ascribed it to a fox threatening a hen house. The only thing an organization can do to protect itself from a from is “locking your damn hen house door,” Aho said. In this case, a lock is a set of oversight and control over a company’s finances.

“Put in all the controls. And it doesn't mean that you don't trust the person,” Aho said. “Just because I want to countersign a check, (it) doesn't mean I don't trust you. It's just policy. And I try to tell people that: stick to the policy.”

There is no 100% guarantee these efforts will protect organizations. But organizations can be more transparent when embezzlement occurs to eliminate stigma for other organizations who fall victim to it.

“Don't whisper it. Shout it out. Stop victim shaming,” Aho said about organizations harmed by embezzlement. “It happens to everybody. We need to just normalize it and say it's happening to everybody.”

Chase Hunter covers the Sonoma city government, breaking news, crime, agriculture, housing and homelessness. Contact the reporter at chase.hunter@sonomanews.com or at chasehunterb.weebly.com