It is easy to think that individuals accused of white collar crimes are wealthy executives or members of the C-Suite. In fact, most white collar crimes are committed by regular individuals who give in to temptation, having access to more money than they could have ever imagined for themselves. Such seems to be the case of Lorraine Shanley.
Ms. Shanley is accused of embezzling money from Survivors of the Shield, which helped families of law enforcement officers who died in the line of duty. Her husband was an officer with the NYPD who died on the job. Since his death, she had become increasingly active in the charity, ultimately volunteering to be treasurer.
She oversaw nearly $2 million worth of donations during her tenure, with 99 percent of those coming directly from NYPD officers. And in the seven years of her serving as treasurer, prosecutors are accusing her of stealing around $410,000.00 for her own personal expenses. She is alleged to have pulled funds from the charity to pay for dental work, her granddaughter’s private school tuition, concert tickets, and her own son’s criminal defense team (worth about $63,000.00).
She has been charged with bank fraud and aggravated identity theft. If convicted, she could face a prison sentence of up to thirty years. This case is unusual. In recent years, police-focused charities have been more heavily scrutinized, with some even being revealed as fraudulent. But the fact that the suspect, in this case, was herself a police widow seems unusual.
She was authorized to use the bank account of the charity and its credit card to cover the costs of operating expenses. However, some records show that she used another charity official’s signature on multiple checks she wrote to herself and other family members over the years. Her activities were discovered after the officials were reviewing the organization’s tax forms in 2017. They could not determine the reason for the discrepancies and reached out to the Department of Justice.
It is not unusual for non-profits to be the victim of financial crimes. According to electronic filings with the IRS, over 1,100 tax-exempt entities have reported some level of theft of embezzlement. The reality is likely much higher given how infrequently fraud is detected, and the various regulations which compel charities to report fraudulent incidents.
Charities can be an easy target. Most of its board members are volunteers, and may not have a strong background in finance to be able to spot discrepancies in accounts. Additionally, once donations are given, donors do not typically receive anything in return, so would not notice if something is missing. In contrast, for-profit customers would almost certainly sound the alarm if they paid money and did not receive the service or goods.
In 2015, the American Museum of Natural History in New York claims that it lost $2.8 million after one of their employees sent a wire transfer after falling for an email scam. While the incident was reported, no suspects have been identified and the money has yet to be returned.