Thursday, April 7, 2005

Fraud of September 11th Funds

With all the blog items on AIG, Kozlowski, and Scrushy, we sometimes lose sight of the smaller cases happening in the offices throughout the United States.  These cases can be vital, not only with respect to deterring corruption, but also with respect to exposing how some federal statutes are being used.  The topic here will be a case of a prosecution for wire fraud. And in mentioning this case it is noted that there may yet be some implications to the wire fraud statute forthcoming from the  Pasquantino case.

A press release of the United States Attorney's Office in the Western District of Michigan tells of an individual pleading guilty  "to three counts of wire fraud and one count of making a false statement on a loan application, in violation of Title 18, United States Code, Sections 1343 and 1014."  The facts as stated in the press release are:

"Smith admitted that during her tenure as Executive Director, Western Upper Peninsula Chapter, American Red Cross, from September 2001 to September 2002, she engaged in dozens of unlawful transactions in which she made personal and unauthorized use of funds obtained from the Chapter’s bank and credit union accounts, cash belonging to the Chapter or being held by the Chapter, and property that was paid for in whole or in part by the Chapter.
Smith admitted that she carried out these acts and delayed the detection of these acts by failing to report, and falsely reporting, the conditions of the Chapter’s finances to the American Red Cross’s national and regional offices. Among other things, Smith falsely reported that donations to “the Liberty Fund” – a fund set up for the victims of the terrorist attacks of September 11, 2001 -- had been remitted to the American Red Cross’s national offices. In fact, Smith had diverted these funds and others held by the Chapter to her own use."

It is important for the government (although sometimes, perhaps, it might be best left for state prosecutors) to intercede when charitable organizations become the victims of fraud.

(esp)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/04/fraud_of_septem.html

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