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It Can Happen In the Best of Families PDF Print E-mail
Written by Donald McMahon   
Tuesday, 17 May 2011 00:02

Webmaster's Note: This was one of the darkest events in the history of the GFA. Our president/treasurer embezzled our entire treasury to the tune of almost $12,000, effectively bankrupting the organization. It left the author of the Grinnell genealogy holding the bag for thousands of dollars in obligations with a printer who happened to also be the printer used by his employer. It resulted in a loss of innocence that such an event can can cause. Almost in the same breath, it marked the rebirth of the GFA, thanks to a quick infusion of cash by several nameless members which paid the printing bills, and paved the way for putting us on the solid financial footings that we continue to enjoy today. The name of the former president, at the suggestion of several board members, has been removed, instead replaced with a simple [former GFA President].

The Final Chapter on the Embezzlement of GFA Treasury Funds

by Don McMahon, GFA Treasurer

What may be the final legal action occurred in Renton, WA on March 22, 2000 when Judge Leroy McCullough, in open court, ordered [former GFA President] to make restitution to the Grinnell (sic) Family Association, Inc. in the amount of $11,950.08. Payment is to be made through the Clerk of Courts and sent to the attention of Bruce Grinnell at his address in Williamstown, MA.

However, there is no date by which restitution must be made. Since the ordered amount of restitution closely matches the amount independently calculated by the present GFA treasurer, the GFA board is pleased by the court decision. Also, while the decision of the court is on the side of the GFA it is still not known when and if funds will actually be restored.

The above legal action followed a judgment and sentencing in King County superior court on January 14, 2000. That court judgment found [former GFA President] to have committed the felony of embezzlement of GFA funds. At that time a date was set for a restitution hearing and [the former GFA President] was sentenced to in-home imprisonment for one month, required to provide two months of community service, and further restricted from handling funds as a fiduciary representative.

Bruce Grinnell, the Grinnell Family Attorney, has been diligently pursuing the case against [former GFA President]. His primary goal as GFA attorney has been the restitution of funds. The GFA owes Bruce a debt of gratitude for his efforts in pursuing the criminal suit.

As indicated in an earlier GFA newsletter, [former GFA President] embezzled approximately $11,800 from the GFA treasury while [the former GFA President] was acting as treasurer in the 1997 to 1999 timeframe. The amount of funds misappropriated was essentially equal to the total amount of GFA funds at her disposal while acting as GFA treasurer. This amount was calculated primarily by adding up the cost of genealogy book sets published by Graphics Illustrated, adding in an estimate for membership dues, adding in funds received from the former GFA treasurer, Jim Coplien, and subtracting legitimate GFA expenses.

Although [former GFA President] rendered monthly statements to the GFA board detailing receipts and disbursements of the GFA treasury account, the Seafirst treasury bank statements subsequently received by the GFA indicate that the reports submitted were falsified. As established by the Seafirst bank statements, [former GFA President] in fact began misappropriating funds immediately after funds were obtained from the former treasurer, and continuously depleted the GFA treasury account both by writing numerous checks to herself and by making partial cash withdrawals while making legitimate deposits.

The embezzlement was ended when an independent new treasury account was established under the control of the present treasurer using funds donated by interested individuals who wished to discharge legitimate GFA membership obligations and who wished the GFA organization to continue. To eliminate the possibility of additional funds flowing to the treasury account controlled by [former GFA President], dues solicitations were quickly prepared under the auspices of the new GFA treasury, thereby making it impossible for [former GFA President] to send out equivalent dues notices and misappropriating additional funds.

The misappropriation of funds was initially detected by Lawrence J. Grinnell, our present GFA president through non-payment of Graphics Illustrated bills for genealogy books. Larry sent e-mails to other board members indicating that a potential problem existed. He indicated that he was unable to contact [former GFA President] because [the former GFA President] would not answer the telephone, would not respond to ordinary postal letters, and would refuse to pick up registered mail.

When Mable McMahon made a subsequent contact, [former GFA President] said that [the former GFA President] knew of no problem and indicated that [the former GFA President] would send a new check to Larry for the printing bill. While most directors did not initially believe there was a problem, the issue could not be ignored after the lapse of time necessary to send the duplicate check had passed. At that point a new GFA treasury account was established as indicated above.

During this time interval and shortly after, James S. Grinnell, the former GFA editor, at the request of the GFA, made several trips to [former GFA President]’s home and work location to elicit her cooperation in transferring GFA funds from the old treasury account to the new and transferring GFA records to the new GFA Committee Chairman. No cooperation was forthcoming.

However, several months later past president Ed Grinnell, who was a co-signer of the Seafirst account, was able to get copies of the Seafirst bank statements. At that time, it was discovered that the account contained only about $100.00, and therefore it was known that the funds were in fact missing.

While [former GFA President] was at fault for embezzling GFA funds it is all too apparent after the fact that the GFA had established no cross checks to prevent such an eventuality. The treasurer was not bonded and no duplicate bank statements were sent to the co-signed of the account. In fact the situation in this case was even worse. Due to the lack of volunteers at the Asheville GFA meeting in 1997, [former GFA President] had assumed the roles of President of the GFA, GFA Treasurer, and GFA Membership Chairman. Basically, the lack of volunteers handed the entire control of the GFA organization over to a person whom we know in hindsight had already embezzled many thousands of dollars of GFA funds.

As a result of this embezzlement of treasury funds, the GFA has been restructured so as to constitute a set of directors whom the membership vote for and who in turn select the names of the GFA officers who carry out the actual work of the organization.

With the new structure, the directors can remove and replace ill or non-performing officers without a quorum vote of the membership at an annual meeting. This allows the GFA to act legally, quickly and decisively as needed. Also in the future the GFA will require that the board of directors receive actual copies of GFA treasury account bank statements and may require that the treasurer be bonded.

Finally, GFA members should be aware that the immediate members of [former GFA President]’s family are as distraught as most GFA members are over her embezzlement of GFA funds.

Last Updated on Sunday, 11 September 2011 11:34