• April 19, 2014

Iona College Fires 2 Employees After Discovering $800,000 Fraud

Iona College Fires 2 Employees After Discovering $800,000 Fraud 1

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The main campus of Iona College is located in New Rochelle, N.Y.

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Civlo

The main campus of Iona College is located in New Rochelle, N.Y.

A former employee of Iona College defrauded it of hundreds of thousands of dollars over nearly a decade, The Chronicle has learned.

The Roman Catholic college reported on its 2008-9 Internal Revenue Service tax forms that an unnamed employee fraudulently misappropriated $80,000 per year for approximately 10 years. The employee obtained the money though a series of small-dollar transactions, approving a college credit card for personal use and fraudulently signing checks.

Dawn Insanalli, a spokeswoman for the college, declined to comment on the matter following repeated phone calls seeking further information. The president's office directed comment to Ms. Insanalli; the office of the vice president for finance and administration and the chair of the Board of Trustees did not return requests for comment.

Iona discovered the transactions during the 2009 fiscal year, and the employee was terminated after the matter was brought to the attention of Brother James A. Liguori, the college's president. Following an investigation, another employee thought to be involved in covering up the fraud was also fired.

It's unclear whether the college took legal action against the employees. The police department in New Rochelle, N.Y., where the college is located, was unable to find a record indicating that Iona had reported the incident, and Ms. Insanalli would not say whether criminal charges had been filed.

While roughly a dozen fraud cases at colleges may make news each year, scores more go unreported, said William K. Black, an associate professor of economics and law at the University of Missouri at Kansas City and former director of the Institute for Fraud Prevention. Nonprofit organizations often do not report those types of crimes because they find them embarrassing, he said, and because they do not expect to recover the money.

It is unclear whether Iona recovered any of the lost funds. Often, Mr. Black said, people who embezzle money are in financial trouble and unable to pay it back. After uncovering the fraud, Iona hired an accounting firm to perform an internal-control review, hoping to prevent a similar situation from happening again. According to the tax form, the college was scheduled to have finished carrying out suggestions from the review by October 1.

Vulnerability to Fraud Schemes

Long-term fraud schemes are not new to colleges and universities. As recently as June, La Salle University fired its vice president for auxiliary services after discovering that he had funneled several million dollars through a fictitious food company over the course of 20 years. In recent years, colleges of all types, including St. John's University, Valley Forge Christian College, and Berry College, have had employees embezzle money or defraud the institution.

Colleges and other nonprofit groups may be particularly vulnerable to that type of fraud because they often have "very weak or nonexistent" internal controls, Mr. Black said. He said colleges could borrow the fraud-prevention tricks of major companies, such as having a different employee provide documentation for a transaction that another employee conducts.

They could also improve their chances of preventing problems by conducting regular audits.

"People sort of assume that folks in the nonprofit sector are not there to make money and are, therefore, at reduced risk of being a thief," he said.

Comments

1. wjohnson15 - October 15, 2010 at 08:44 am

When I was at a university in Baltimore, an employee skimmed money off of accounts that were for outreach workers 2,000 miles away; her and her brother an accountant were let go, but no case was filed because it was a governemnt grant and the university didn't want the scrutiny. She probably got away with tens of thousands of dollars from fake payroll checks. She was caught when the employees saw their end of year tax statements

2. willynilly - October 15, 2010 at 10:33 am

The pattern continues. Why is it that the Catholic Church refuses to prosecute its internal criminals, no matter if the crimes are theft, child sex abuse, anything? Like most reasonable people, I conclude that the reasons are not to protect the criminals, but rather to protect the Church - meaning there is far more behind these crimes than immediately meets the naked eye. It seems obvious that the Church has decided that to prosecute its criminals would bring more public distain and sanctions to the Church than it would to the guilty parties. Law enforcement needs to become more proactive and begin to charge the Church, and/or its instrumentalities with aiding, abeting and harboring criminals when it/they fail to proseciute the known criminals in their midst.

3. kenneth_hunt_cfe - October 15, 2010 at 12:00 pm

This shows that all organizations are susceptible to fraud. Therefore, internal controls must be in place in all organizations to prevent fraud from occurring and to reduce the length of time that it goes on.

Kenneth Hunt MBA, CFE
www.kennethhuntcfe.com

4. blue_state_academic - October 15, 2010 at 01:49 pm

Iona absolutely ought to refer this matter to the police for a criminal investigation. This isn't nickel-and-dime stuff; these employees could go on to another employer without the new employer knowing anything about this.

5. panacea - October 17, 2010 at 07:29 pm

willynilly: you are comparing apples and oranges.

I'm not suprised by Iona's actions. The criminal system doesn't always work as quickly as we'd like it to.

6. triplebogey - October 18, 2010 at 03:29 pm

willynilly: I second what panacea said. Find another soapbox. Saying Iona's decision to not report this to the local authorities is somehow connected to the sex scandal (appalling, shameful, and humiliating as it is) smacks of an ax to grind.

7. triplebogey - October 18, 2010 at 03:30 pm

Quick edit: blue_state_academic is right, and Iona ought to report the crime to authorities to help other institutions avoid possible loss.

8. concernedforiona - October 22, 2010 at 06:12 pm

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9. suite129 - October 22, 2010 at 06:58 pm

To those who take delight in bashing the Catholic church, you should try using your brains. Iona College is answerable to its board of trustees, not the Vatican. Wilynilly lumps the negative issues together just to take a cheap shot at the Church. Direct your comments to the Iona College situation, which is similar to what happens at non sectarian schools. The article is biased in mentioning other religious schools. If the author thinks that financial fraud is not common among the nation's elite schools and publics, think again.

10. aud1tor - October 23, 2010 at 06:34 pm

How horrifying another story of fraud at a higher education institution. As noted in the article often fraud or theft goes on for years due to a lack of internal controls. This is typically the responsibility of the Controller when it comes to the finances.

Unfortunately for Iona College they obviously had a Controller
and accounting staff that were not qualified or experienced to realize the theft for 10 years. Any accountant worth a grain of salt would notice this large amount of funds missing each year if they were properly delving into the the accounting details.

If the above post holds any validity then Iona needs to address their hiring/promotion practices as well as internal controls.

The college should definitely have pressed charges as the bad publicity from it would still be better than the bad publicity generated from what is now looking like a cover up.

11. anfuller - October 26, 2010 at 08:34 am

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