Religious sisters may have spent embezzled money on travel and casinos

Two sisters who retired from St. James Catholic School in Torrance earlier this year told parents school was operating on a shoestring budget, while allegedly embezzling as much as $500,000

St. James Catholic School in Torrance on Monday, Dec. 3, 2018. An internal investigation at the school found that two nuns who worked there allegedly misappropriated a “substantial” amount of funds for personal use over a period of years, the school announced recently. (Photo by Scott Varley, Daily Breeze/SCNG)

See previous CalCatholic story, “Religious sisters found to have stolen money from Redondo Beach Catholic school”

Two longtime nuns at St. James Catholic School in Torrance allegedly embezzled as much as $500,000 in tuition, fees and donations, perhaps spending some of the money on trips and gambling at casinos while telling parents the school was operating on a shoestring budget, officials and parents said.

The apparent scandal came to light last week when the church’s small, K-8 school announced that it had notified police that Sister Mary Margaret Kreuper, and Sister Lana Chang, who both had retired earlier this year, were “involved in the personal use of a substantial amount of school funds.” But the nuns had expressed remorse, and the archdiocese and the church were not pursuing criminal charges.

St. James Catholic School’s former principal, Sister Mary Margaret Kreuper, and former teacher Sister Lana Chang. (image from KTLA5)

Kreuper was the school’s principal, and Chang taught there.

Michael Meyers, the church’s monsignor, told the crowd of a few hundred people that the archdiocese launched an internal investigation six months ago after the organization performed a standard audit of procedures ahead of Kreuper’s retirement after 28 years at the school.

Around the same time, Meyers said, a family happened to request a copy of a check made out to the school, and the staff noticed it had been deposited in a bank account other than the school’s.

That’s when Kreuper became “very nervous and very anxious” about the upcoming financial review and requested that the staff alter records, the monsignor said. Meyers said he alerted an archdiocese internal auditor performing the review that “something was off” and that the auditor confirmed his suspicions.

The archdiocese then hired an independent forensic auditor for a deeper review.

Without the red flags raised by the check, Kreuper’s “strange” behavior and a tip made to an archdiocese ethics hotline, officials said the school would never have known about the problem.

The improper use of the funds had been going on for at least 10 years, Meyers said. The parish and the school have always run in the black, so it appears no one had suspicions.

A retired FBI agent hired by the archdiocese interviewed school staffers and the nuns.

“When he was talking to Sister Mary Margaret, she did acknowledge that she had been taking all the money, so that’s not a question,” Meyers said.

Auditors described a system in which Kreuper handled all checks made out to the school for tuition and fees before handing them over to bookkeeping staff for processing. The principal allegedly withheld some of the checks and deposited them into the other account, endorsing the back with a stamp that read, “St. James Convent” instead of “St. James School.”

When a parent asked what the money was spent on, the attorney said: “We do know that they had a pattern of going on trips, we do know they had a pattern of going to casinos, and the reality is, they used the account as their personal account.”

Many parents were outraged with the decision from the Archdiocese not to press charges. Some remarked that if the nuns were lay people, they would certainly be in jail. Others called for the restitution to be used to give teachers pay raises and for expenses they said Kreuper claimed the school could not afford, such as awnings for an outdoor eating area.

Jack Alexander of Redondo Beach said in an interview with the Southern California News Group that he and other parents are considering banding together to act as a complaining party to Torrance police themselves. But without cooperation from the archdiocese, he is doubtful the effort would lead to prosecution.

Other parents said it was well-known that Kreuper and Chang traveled often and went gambling, but that they claimed they were gifted the trips by a rich relative.

“These nuns took a vow of poverty and said, ‘Oh no, we’ve got a rich uncle,’ ” Alexander said. “The rich uncle was the parents of the St. James students.”

Full story at The Daily Breeze.

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Comments

  1. Charges should be pressed. The nuns should go to jail. Darn right a lay principal would have the book thrown at her. Why soft treatment for the nuns? Parents are right to be up in arms. Shows you can’t trust anyone who works for the church these days. Don’t trust a thing they say. Verify everything. Get records and proof of anything. So much corruption. How many times did that nun tell students that stealing is a sin? Hypocrite! Archbishop Gomez blows it again with another bad decision. I will never trust the church in Los Angeles.

  2. Steve Seitz says:

    This is not a misdemeanor — it’s felony grand theft. Since when does the D.A. need the support of the aggrieved to press charges?

  3. They won’t be prosecuted? Has the church learned nothing from the abuse scandals? First they covered up and protected child molesters. Now they protect embezzlers?

  4. As far as criminal referrals go, it is the of the Los Angeles County District Attorney. The CSJ and L.A. Archdiocese can only recommend that criminal charges not be pursued.

  5. Foes the “full restitution” as represented by the Los Angeles Province of the Congregation of St. Joseph, include interest?

  6. Hippo Gus says:

    Foregoveness is perfectly fine and is not conditioned on anything, except sincere contrition on the part of the penitants, not just because they “got caught.”

    At the same time and for the dignity of the offending persons, restitution is right and just.

  7. St. Christopher says:

    Hahaha — a real knee-slapper. Of course these nuns will not be charged. They are not stupid. They see the uncomprehendingly opulent ways in which bishops and others in the Church live, even as the institutional Church is nearly dead. These men — the bishops — reward themselves with trips to a very posh resort in Baltimore to discuss “sexual abuse” in the Church . . . and they came away with nothing (with the Vatican’s help). And, how many of the bishops, and priests, have stolen money from the collection basket (e.g., Abp. Weakland comes to mind; many others). These nuns were only learning to play the game. Pray for them to remember the 7th Commandment.

  8. Many Catholic institutions have lousy [i can’t use the vulgar word] accounting controls. As the first article said, the only financial review was after twenty nine years when they retired. Any wonder publicly listed companies require ANNUAL audits?? Given limited Church resources, perhaps rotating audits of everyone every five years would have caught this earlier.
    If $500k is the ‘correct’ figure, and over 29 years, that’s less than $20 k per year.
    Was there an independent school or parish accountant or bookkeeper?

  9. Once again the church looks after its own and to heck with those they shepherd.

  10. Alex Farnese says:

    Meanwhile, there are dioceses throughout the country which are quietly transferring assets to charitable trusts, under the control of the bishops and behind the scenes, in order to insulate each diocese from liability. So, even of civil and criminal liability is found, there won’t be any assets to go after.

    The sisters’ order, the Congregation of St. Joseph of Carondelet, will probably also use this strategy.

  11. What next? I am afraid to ask?

  12. Jack Flash says:

    Why is this news? Everyone should know that the church care about two things, and two things only: protecting the wealth and power of the church.

  13. helen wheels says:

    perhaps they were simply
    investing with a very high
    risk tolerance.

  14. Anonymous in L.A. says:

    Quote from article”

    “We do know that they had a pattern of going on trips, we do know they had a pattern of going to casinos, and the reality is, they used the account as their personal account.”

    Question raised when news first broke a week ago:

    What was the relationship between the sisters? When they went away together, did they have separate rooms?

    • Della Rovere says:

      Have these two, so-called close friends, maintained their vows of chastity relative to each other, or was there an unnatural physical relationship also?

      Will their superiors at the CSJ in Los Angeles respond to this, since it logically follows their behavior already?

    • Al Fresco says:

      Separate rooms while on their gambling junkets is not the question. If they shared the same hotel room, did the room habe two beds?

  15. How many other men and women religious of various religious orders and communities have engaged in tje same type of practice?

    Logic dictates that other incidents have occurred and, given the penchent for secrecy at all levels, there were and are other incidents.

  16. helen wheels says:

    Rick Shaw:
    you point out the most relevant form of risk here
    but i still wonder if they had a well diversified
    portfolio of tax-free municipal bonds ?

    • Not knowing what is in their investment portfolio, any answer would be hypothetical. However, with respect to tax-free bonds, having them in the portfolio could be considered mismanagement, since the congregation is tax exempt to begin with. Therefore buying tax advantaged instruments would be illogical.

  17. The archdiocese has changed its tune after parents and laity complained and threatened to withhold financial contributions. Now the archdiocese is going to press charges. Those nuns are going to jail!

  18. Patricia J. says:

    The funny thing is that the sister in charge of finance at the department of catholic schools is from the same order of nuns.

    • Anonymous in L.A says:

      The order to which they nelong ste not “nuns.” The CSJ of Carondelet is an order of “religious sisters.”

  19. Sister Act got caught.

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