MARYLAND AND DC PROSECUTORS CRACK DOWN ON EMBEZZLEMENT & FRAUD AT NONPROFITS
Judge Sentences Former Melanoma Research Alliance Employee to 6 Months in Prison for Alleged Workplace Theft Scheme
On Friday, October 10, 2014, Prince George’s County Circuit Court Judge Graydon S. McKee, III sentenced former Melanoma Re
search Alliance (MRA) Operations Manager, Ilyona Carter, to six months in prison for stealing more than $25,000 from the nonprofit organization where she worked. The Washington Post reported that the Melanoma Research Alliance is the largest private funder of melanoma research in the United States and it has awarded $60 million dollars in research grants over the last seven years to 145 programs. According to the popular medical website WebMD, melanoma is a type of skin cancer frequently caused by over exposure to the sun, but can also be rooted in family medical history. MRA’s website refers to melanoma as the deadliest form of skin cancer and the nonprofit organization estimates that 10,000 people will die from the disease in 2014.
In August 2014, Ms. Carter -- who is a 39-year-old resident of Greenbelt, Maryland -- pled guilty to theft of more than $10,000 in violation of Crim. Law Section 7-104 of the Annotated Code of Maryland and identity theft of more than $500 in violation of Crim. Law Section 8-301(b) of the Annotated Code of Maryland. Carter faced a maximum penalty of 25 years in prison and/or a fine of up to $25,000 for theft of more than $10,000 and a maximum penalty of 10 years in prison and/or a $10,000 fine for identity theft. Judge McKee sentenced Carter to 15 years in prison for theft, suspending all but six months, and 10 years in prison for identity theft, suspending that sentence entirely. The Court ran the sentences concurrently, which means the two sentences will be served at the same time. The Court ordered Ms. Carter to pay $25,060.02 in restitution to her former employer and to complete five years of supervised probation.
Prosecutors alleged in court papers that Ms. Carter operated a fraudulent scheme between August 19, 2013 and December 3, 2013, during which she allegedly used MRA’s credit card and the credit card numbers of donors to the nonprofit organization to pay her rent, pay for her kid’s school lunches, and to rent a U-Haul. Prosecutors allege that six of the charity’s donors unknowingly had their identities stolen by Ms. Carter during the course of the scheme. Ms. Carter caught the eye of law enforcement officials in November 2013, when a credit card company disputed a $125 charge stemming from her kid’s school lunch account. Once police investigators realized that at least five other individuals had unauthorized charges on their credit cards for the same student’s lunch account, they became even more suspicious of Ms. Carter. Further investigation revealed that all of the victims had one thing in common; they all had recently made charitable donations to the Melanoma Research Alliance. Prosecutors and law enforcement authorities chose to press charges against Ms. Carter in state court in Maryland. However, other nonprofit employees accused of embezzlement and fraud have found themselves facing federal charges.
On August 4, 2014, United States District Court Judge Gladys Kessler sentenced Tabitha Harley-Williams to 30 days in prison for Interstate Transportation of Stolen Property, in violation of 18 U.S.C. Section 2314. The maximum penalty for this offense under federal law is 10 years in prison and/or a fine of up to $250,000. Federal prosecutors allege that Ms. Harley-Williams, a 34-year-old Maryland resident, used her position in the accounting department at the Accrediting Council for Independent Colleges and Schools -- a nonprofit organization in Washington, DC -- to steal more than $144,000 in a scheme which involved creating fake employee expense reimbursement reports. The Washington Post reported that once the reimbursement payments were approved, Ms. Harley-Williams allegedly redirected the money to her personal bank account. Ms. Harley-Williams pled guilty to this offense on April 22, 2014 in federal court. Judge Kessler ordered her to pay $144,113.43 in restitution to her former employer’s insurance company. According to their website, ACICS is the largest national accrediting organization of degree granting institutions.
Theft from the workplace is a serious offense. Those who are accused of embezzlement or committing fraud against their employer could face criminal charges in either state or federal court. A criminal conviction for workplace related theft can have devastating consequences. Even if a trial judge chooses to impose a minimal or suspended sentence, as was the case with Ms. Carter and Ms. Harley-Williams, a felony conviction can result in loss of professional licenses, reduced future earning capacity, and can severely damage one’s reputation. Employees who are suspected of workplace theft should consider retaining a white collar criminal defense attorney to discuss their rights and options prior to giving any statement to law enforcement and/or their employer about workplace theft allegations. Nonprofit organizations who suspect that an employee or contractor is embezzling funds or committing fraud should consider retaining a white collar criminal defense attorney to conduct an internal investigation, recommend appropriate disciplinary action and/or disclosure to law enforcement, recommend steps to mitigate potential civil liability from affected third-parties, and recommend appropriate changes to internal controls to avoid these situations in the future.