The arresting frequency of parish embezzlement

If the pastor had not stepped down, the embezzlement might have continued indefinitely. But when Father Brian Lisowski, pastor of St. Bede the Venerable, a large parish on Chicago’s Southwest Side, resigned in 2004, the Sunday Mass collection suddenly ballooned by more than $2,500 a week. A police investigation indicated Lisowski had stolen about $1.1 million during his five-year tenure. “No one suspected a thing,” says Father William Stenzel, who replaced Lisowski as pastor at St. Bede’s.

The collection had been kept Sunday nights in a large basket in the rectory where Lisowski had helped himself to cash (never checks), squirreling his spoils away in a secret safe in his bedroom. On Monday mornings the remaining contents in the basket were carefully counted and dutifully recorded by parish volunteers and then picked up by an armored car.

Why didn’t anyone notice the cash shortage? “There was a lot of rehabbing and deferred maintenance of buildings going on,” says Stenzel, “so they had all these fund campaigns and special collections. Overall, the Sunday collections were up during those years.”

Lisowski, who had signed himself into a treatment center for alcoholism, readily admitted guilt and produced all the missing money. He served two years in prison and is now free. Stenzel says St. Bede parishioners understand his actions were alcohol-related and are inclined to forgive. The parish council unanimously recommended that, if his treatment proves successful, Lisowski be returned to active ministry—though not necessarily to St. Bede.

You might consider this sad affair an anomaly, a rare deviation from the norm in Catholic institutions. But it is not as rare as you might think. A random scan of newspaper stories dealing with Catholic Church embezzlement during the month of July 2008 alone produced a dozen cases. Here are some examples:

A priest in Richmond, Virginia appeared in county court on charges of misappropriating as much as $1 million from two parishes he pastored, while supporting a secret wife and three daughters in a city 50 miles away.

A 73-year-old Omaha, Nebraska nun was sentenced to three to five years in prison for embezzling as much as $800,000 from the archdiocese. She had been the director of the Catholic Family Life Office in Omaha and was co-author of one of the church’s most widely used marriage preparation programs.

The bookkeeper of a parish in Longboat Key, Florida was arrested and charged with stealing some $330,000 from the church for personal use. Parishioners described her as “your stereotypical sweet church lady.” Her lawyer said she had been dealing with mental issues.

Prosecutors in Delray Beach, Florida were in the final stages of preparing for the trial of two former pastors of a local church accused of grand theft over a 42-year period. A diocesan audit claimed the two misappropriated as much as $8.9 million from parishioners. Time magazine called the scandal “the worst known case of embezzlement in U.S. Catholicism,” when reports first broke in 2006.

The former chief financial officer of the Cleveland diocese was found guilty in federal court of netting $750,000 in diocesan money through an elaborate kickback scheme in which he illegally steered $17.5 million in accounting and computer business to an associate. The diocese’s legal counsel and the bishop denied having any idea of the scheme.

Prosecutors in Kaua’i, Hawaii were preparing opening statements for the trial of a parish volunteer charged with misappropriating more than $85,000. Instead of depositing counted and stamped checks from Sunday Masses in the parish bank account—one of her duties—she allegedly deposited them in the account of a Catholic social club, of which she was treasurer.

Also in July it was revealed that the rector of the Marian shrine in Lourdes, France was under investigation for fraud in diverting some $700,000 in donations to the shrine to his personal account. Defense lawyers requested that the investigation be delayed until after Pope Benedict XVI’s scheduled visit to the shrine in September, marking its 150th anniversary.

“The next tsunami”?

There was nothing unique about last July. A scan of press reports almost any month will unearth similar accounts, many as strange and seemingly surreal as these. Three questions immediately present themselves: How big is this problem? Why is it happening? And what is being done about it?

Clearly, the Catholic Church is not the only victim; news stories regularly report misappropriation at Protestant, Jewish, Muslim, and other institutions. Nor are religious organizations alone affected. Almost all nonprofit institutions appear to be taking heavy hits.

A recent report by the Association of Certified Fraud Examiners estimated that in 2006 some 13 percent of the $300 billion given to U.S. charitable institutions, including churches, was lost through embezzlement—a colossal sum of $40 billion. If that 13 percent loss figure is applied to the Catholic Church, it would mean that of the $6.5 billion contributed by Catholics to their parishes in 2006, a staggering $845 million was lost to embezzlers. Catholic leaders declined to verify that figure or any other estimate.

Some experts, including Diana Aviv, president of Independent Sector, which represents nonprofits, are suspicious of the association’s estimates and recommend further research. Nevertheless, there is broad, general agreement that the situation is serious.

“We have a huge problem,” says Frank Butler, president of Foundations and Donors Interested in Catholic Activities. “Some think it’s the next tsunami to hit the church, but we really don’t know. And it’s not just here. Elsewhere in the world, especially in developing countries, there are even more serious situations.”

“No one knows the amount lost because so much isn’t even reported,” says Chuck Zech, director of the Center for the Study of Church Management at Villanova University. In any case, he says, embezzlement loss is not comparable in financial loss to the church’s loss due to the priest abuse scandal. “But coming on the heels of that scandal,” he adds, “it further damages the credibility and moral authority of church leadership. At the very least, it casts doubts in the minds of contributors about how their money is being used.”

Zech and Robert West, an accountancy professor at Villanova, wrote the report “Internal Financial Controls in the Catholic Church” that sounded an alarm in late 2006, creating concern and heated discussion in the church. The report concerned a survey questionnaire they had sent to the chief financial officers of all 174 U.S. dioceses.

Only 78 dioceses (45 percent) responded, but 85 percent of the respondents acknowledged serious problems in the five previous years. While 27 percent of respondents reported less than $50,000 in embezzlements, 11 percent claimed embezzlements totaling more than $500,000, and the rest were somewhere in between.