Friday, March 14, 2008

NRCC Former Treasurer May Have Embezzled $1 Million

The Washington Post is reporting that the National Republican Congressional Committee may have been the victim of the largest political embezzling case in history.
The former treasurer for the National Republican Congressional Committee diverted hundreds of thousands of dollars -- and possibly as much as $1 million -- of the organization's funds into his personal accounts, GOP officials said yesterday, describing an alleged scheme that could become one of the largest political frauds in recent history.

For at least four years, Christopher J. Ward, who is under investigation by the FBI, allegedly used wire transfers to funnel money out of NRCC coffers and into other political committee accounts he controlled as treasurer, NRCC leaders and lawyers said in their first public statement since they turned the matter over to the FBI six weeks ago.

"The evidence we have today indicated we have been deceived and betrayed for a number of years by a highly respected and trusted individual," said Rep. Tom Cole (R-Okla.), the NRCC chairman.

The committee also announced that it has submitted to banks five years' worth of audits and financial documents allegedly faked by Ward, some of which were used to secure multimillion-dollar loans. It is a violation of federal laws to obtain loans through false statements; the crime is punishable by up to $1 million in fines and 30 years in prison.
On Feb. 1, the NRCC announced it had found some irregularities that might involve fraud, fired Ward and called in federal investigators. So how does something like that happen, the same way other cases have, opportunity.
Robert K. Kelner, a lawyer with Covington & Burling, which has been hired to oversee an internal forensic audit, told reporters he is certain only that Ward had made "several hundred thousand dollars" in unauthorized money transfers since 2004. However, he said, the year-end report filed with the Federal Election Commission (FEC) in 2006 overstated the NRCC's cash on hand by $990,000.

That may be the upper level of what Ward allegedly skimmed from NRCC coffers, Kelner said. But the total will not be known until forensic auditors finish "drilling down" to determine how much money might have been misappropriated and how much may be missing as a result of sloppy bookkeeping, he said.

Kelner said Ward was the only NRCC official empowered to use wire transfers to shift money into any account without a second approval. After transferring the money into accounts he controlled, often for dormant fundraising committees associated with the NRCC, Ward allegedly moved it into accounts for his political consulting business or his personal bank accounts, Kelner said. (emphasis added)
Embezzlement is a crime of trust and opportunity. I have personally worked on one such case involving embezzlement of PAC funds and I can tell you for a fact that the lack of accounting protections directly lead to the embezzlment in that case and the offender was not all that creative. In this case, Ward was trusted to do something important without any sort of protection. When ever one person is involved with money and there is no control, back up or secondary authority, sooner or later the temptation will come up.

The triggering event is not necessarily greed. It could be some personal financial stresser, like unexpected bills or something similar. Then it is tried once and often not caught. The embezzlement continues and eventually the person gets caught. You don't read, in this day, of many people getting away with embezzlement very often. There are simply too many records.

As I said before, cases like this are just so easy to prevent. Don't allow any one person to make wire transfers without a secondary authority. How hard would that have been? Really?

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