Embezzlement rising in Maine

Staff illustration

David Holt is more cynical now.

Protecting your board or business: Experts' advice

Maine Assistant Attorney General Leanne Robbin says:

— "Keep a number of checks and balances. Don't have one person with access to the post office box."

— "If you are managing a business, make sure that you are looking at the original bank records. Don't rely on your administrative assistant or others. And if you've got a board, make sure that the board that is overseeing a nonprofit or a small business is looking at the actual bank records directly from the bank and not simply a rehashed balance sheet by the employees."

— "If possible, make sure that it's not just one person that has the ability to withdraw money from the account. Either the person who owns the business is the only person who has the signing ability or (be sure) that there are at least a couple people involved to make sure that those checks are authorized."

University of Maine School of Law Adjunct Professor Dan Boxer says:

— Conduct regular audits, internal and external.

— If the company or nonprofit has a board, have the internal auditor report to it. "You can't have the internal audit squelched by the person they work for."

— Include whistle-blower and anti-retaliation policies in the workplace so someone who reports potential dishonesty doesn't face repercussions. "Whistle-blowing isn't a bad thing; it's a good thing, but you've got to encourage it and protect it."

The longtime Norway town manager worked with Deborah Wyman while she was slowly, secretly stealing $117,592 from the town as its community development director. Wyman went to prison in 2006 and got out in 2007.

"One of the lessons that I learned is just because you know and like people doesn't mean that they won't steal from you," Holt said. "Maybe they need the money, maybe they have a sick child or maybe they're self-obsessed. There's lots of reasons why people steal."

In Maine, inside crime seems to be on the rise.

For a 16-year run from 1987 to 2002, the state didn't see more than 20 embezzling arrests per year. Some of those years, there were as few as five.

In 2011, there were 56, according to numbers soon to be released by Maine State Police.

They've embezzled from towns, banks, libraries and lawyers. On Tuesday, the former Milo town manager became the latest, sentenced to 60 days in jail for stealing $48,000 from a Kiwanis Club.

Theories abound: There's more crime. There's the same amount of crime but more people getting caught. There's less reluctance by victims to report. More willingness by police and the state to investigate and prosecute.

"It does seem like there's been this epidemic of embezzlements, because we're certainly getting them," said Assistant Attorney General Leanne Robbin.

Last year, she successfully tried Bettysue Higgins, a secretary who stole $166,717 from the Maine Trial Lawyers Association. Earlier this year, Robbin built the case against Maine Turnpike Authority Executive Director Paul Violette, who pleaded guilty before trial to misappropriating close to half-a-million dollars.

When former State Sen. Peter Mills took over Violette's job, he called friends at Skowhegan Savings Bank for advice.

"I said, 'How do you keep people from making off with small amounts of money over long periods of time?'" Mills said. "It starts slowly. That's what happened to Paul Violette. It started slow, then, bam! It just came to a fairly significant crescendo."

The whys

According to Uniform Crime Reporting figures kept by Maine State Police, the state had nine embezzling arrests in 1987. The low of five came in 1998. Between 2002 and 2003, the number jumped from 19 to 34 and with the exception of 2004 (26), it has stayed high and climbing.

Adult arrests are split nearly evenly between men and women.

In 2010, the city of South Portland had the most embezzling arrests, accounting for about one-third of the 43 statewide.

Embezzlement differs from theft because the suspect is in a position of trust, said South Portland Police Detective Reed Barker. It can be a tricky crime to categorize.

A bakery worker eating cookies all night without paying for them would face a charge of theft by unauthorized taking, Barker said. It's the responding officer's discretion whether to further classify it as shoplifting or embezzling — consequences are the same. Barker would consider that example embezzling.

"They get caught with their hand in the cookie jar," he said.

Robbin and her colleagues have ideas about what might be behind the rise. One is increased law enforcement training. The National White Collar Crime Center offered a free, weeklong training session in August on records crimes at the Maine Criminal Justice Academy. The center will return in May.

Another theory: In a sour economy, people risk being caught sooner.

"If you give someone a big pile of money and they're embezzling it, it's usually not going to be discovered until the money is gone, and it's more likely to be used up in this economy," Robbin said.

Higgins wrote 220 checks to herself, mostly buying virtual goods in virtual worlds in the Facebook game YoVille, then she doctored bank statements, Robbin said. The head of the Maine Trial Lawyers Association discovered the theft when he wrote a check and it bounced. "Then the executive director runs off to the bank, gets the real statement and goes, 'Oh, my God.'"

Another theory: Prosecutors are more willing to try embezzling cases and judges are more willing to impose jail time than a decade or two ago.

"Even though it's a nonviolent crime, there's a really good reason for sending a white-collar criminal to jail," Robbin said. "White-collar criminals, more than other criminals, are more likely to be deterred if they read about jail sentences in the newspaper.

"It's probably not going to stop the person with the anger management problem or with the horrible motive for killing somebody from doing that," she said. "But if you're forging a series of checks or stealing other people's money over a period of time, it takes a lot of forethought. If you've read about somebody who's actually done some jail time for doing that, you might think twice that, 'This is not just going to be my pocketbook. This is not just going to mean my job. I'm going to go to jail. I can't imagine going to jail.'"

Most embezzling cases can be tried by local district attorneys or the AG's Office. As more money is involved, the length of any possible prison time as goes up. Higgins was sentenced to three-and-a-half years in prison. John Duncan served two years after stealing close to $300,000 from clients and the law firm Verrill Dana in 2008. A judge handed a Waterville woman, Paula Caron, a three-year sentence for embezzling almost $1 million, also in 2008. She had been bookkeeper for the family business.

Violette's sentence: three-and-a-half years.

The turnpike has since gotten most of that back from Violette and bond companies, but there's still an uphill battle, Mills said. "The public perception is we're raising all the tolls to pay for all the money that Paul Violette stole. It's completely untrue."

'We assumed everything was kosher'

Dan Boxer uses the Maine Turnpike Authority and trial lawyers cases as examples in class. He's an adjunct professor at the University of Maine School of Law.

Even after all of the high-profile cases, there's confusion, he said, about how one can catch an embezzler.

"There's a distinction that a lot of organizations just don't get and it's pretty basic on what we call internal audit and external audit," Boxer said. "An external auditor is the classic outside auditor (who) comes in and audits the books and says, 'In our opinion they're keeping the books according to normal accounting standards.' That has nothing to do with whether somebody is cooking the books internally."

And it's not how to find out.

"They didn't find Paul Violette," he said, referring to the agency's many external audits. "Internal audit looks more at things that can go wrong within the organization. A lot of your embezzlers would have been picked up in a heartbeat with a good internal audit."

It can scrutinize minutia, questioning expenses at random. Until a year ago, the turnpike didn't do internal audits.

"The board, I think, quite justifiably, said, 'Gee whiz, we have an auditor every year and they charge us $10,000 or $15,000 to audit the books and we assumed everything was kosher,'" Mills said. "But in a $100 million annual budget, what they're checking for is gross compliance.

"The report didn't get down to the level of trying to figure out whether travel expenses were slightly padded," he said. "(Violette) would report going to Europe for a toll society conference. He would go two or three days early and stay two or three days late. And then he had all kinds of travel expenses around that were superficially justified as business trips and they weren't at all. And then there were these gift cards. Once they were authorized and purchased, they became the equivalent of cash in his hands. He said he gave them all away. He didn't."

Quarterly internal compliance audits were adopted as part of an MTA reform bill. Last October, the authority also added a whistle-blower policy. (See sidebar for experts' advice on how businesses and boards can protect themselves.)

Holt, town manager in Norway for 23 years, said his town does things differently post-Wyman, though, "I'm not so sure in our particular case that all the controls in the world would have (worked.)"

"One of the banks involved was allowing Debbie to (deposit) checks made out to the town directly into her own accounts," Holt said. "If it was a check that we didn't know was coming in and she took it and put it in her own account, if the bank's going to allow that, then there's not much we can do."

He doesn't believe more people are embezzling, but that more businesses and boards are turning in employees.

Nationally, Maine falls in the middle of the pack with embezzlement arrests per capita, according to the the FBI's Crime in the United States 2010: 31st out of 50.

"Did we check on ourselves? Not as much as we do nowadays," Holt said. "I know that I'm honest and I know that we make it clear that we expect everyone around here to be honest, and I know that we use the best procedures we can use. Can I promise everyone that something like that would never happen again? I'd be foolish to do so."

kskelton@sunjournal.com

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Comments

 's picture

tougher prison sentences

Maybe if they had tougher prison sentences people would think twice about stealing. These criminals getting outing in 6 months or a year is hardly a deterrant.

Mark Elliott's picture

The real question to ask is:

The real question to ask is: Is the crime on the rise? Or is the apprehension on the rise??..........I am willing to bet, the crimes have been going on all along, we've just become a bit more vigilant and those that are stealing are now getting caught.

PAUL ST JEAN's picture

A sign of the times we live

A sign of the times we live in. These are not criminals, but basically, good, honest people making horrific choices.

Diana Currier's picture

'

Jeesh it would almost be worth it, you see the sentences for a million??

Tom Knight's picture

Bank responsibility

So we get the little guy for embezzling but don't go after the fat cat bankers? I'll bet a good lawyer could sue the banks for improper depositing techniques. Was the teller her sister? Come on. Let's be fair!

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