At first glance, the two churches don't have much in common. One is a large, historic congregation, in Washington, DC. The other, a smaller, much younger congre gation in a small Virginia town. Big differences, right? That changed in late December, when the former finance director of the DC church was arrested and charged with stealing more than $500,000 from that congregation during a six-year span. And less than a week later, the former bookkeeper of the Virginia church was accused of stealing about $300,000 over five years.
Both suspects used the money for big-ticket purchases—real estate, cars, jewelry, and furniture—according to the charges filed.
Embezzlement is on the rise in churches of all sizes. One major church insurer logged 32 embezzlement-related claims in 2009, up 12.5 percent from its recent annual averages. "Regrettably, financial misconduct tends to be more predominant in economic down times," says David Middlebrook, a Texas-based attorney specializing in church law.
Fraud experts often refer to a three-legged stool for embezzlement risk: opportunity, need, and organizational ethos.
Opportunity often is born out of non-existent or poorly managed financial controls.
In terms of need, church leaders must pay attention to hardships in the lives of their employees. The most common scenario for church fraud involves longtime employees who face an unexpected financial stress—a job loss for a spouse or an extended illness with hefty medical bills for a family member.
Some studies suggest the average tenure of a church employee who commits fraud is seven years. "These employees don't start off thinking they're going to steal," says Frank Sommerville, another Texas attorney. "They think they're going to borrow from you and pay you back when things improve."
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