School audit reveals embezzlement of funds by employees

The audit reports released by the office of the Louisiana Legislative Auditor have revealed that several charter schools in New Orleans are facing problems with embezzlement of funds by employees. The audit reports have disclosed federal crimes involving an employee of Lusher, who allegedly embezzled funds amounting to $25,000. She potentially violated two ethics codes and Lagniappe Academies failed to conduct criminal background checks on some of the employees.

The auditors assigned a “D” grade to Lusher, which indicates fraud and abuse within the school. The remaining two schools have been given a “C” grade, which indicates compliance issues. In other words, adequate measures were not adapted to capture the errors or the abuse. A D grade also includes control and compliance issues. The audit reports cover the fiscal year, which ended on June 30, 2012.

The auditors claim that a high-ranking employee in the business office of Lusher, embezzled funds amounting to $25,000 by forging checks made out to her. The embezzlement was discovered through internal checks and the employee returned the money after which the school increased the safety threshold.

Embezzlement of funds is a federal crime, which is punishable by either fine or imprisonment. Under Louisiana State law, embezzlement is a type of theft. The penalty for embezzlement can include a fine of $3,000 and 10 years in prison.

The audit revealed a violation of state ethics laws relating to a contract with a vendor that had not been approved by the board and employment of siblings as co-principals. Violation of ethics in the state of Louisiana can result in suspension, reduction in pay or fine. The audit reports for Miller-McCoy will be submitted to the Louisiana Board of Ethics, which will decide if further investigation needs to be conducted.

Source: The Times-Picayune, “School audits uncover issues at Lusher, Lagniappe, Miller-McCoy,” Danielle Dreilinger, Jan. 22, 2013

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