Inside Theft Rife, Diocese Survey Says
Across Nation, 85% of Respondents Found Embezzlement in Last 5 Years

By Stephanie Innes
Arizona Daily Star [Tucson, Arizona]
January 5, 2007

A vast majority of Roman Catholic dioceses responding to a recent national survey, including the Diocese of Tucson, reported the embezzlement of diocese or parish money during the past five years.

The thefts, totaling more than $4 million nationally, indicate Catholic churches as a group may be too trusting and need better internal financial control, said Charles Zech, director of the Center for the Study of Church Management at Villanova University, a Catholic university in Pennsylvania.

"Churches don't typically have the same control as a corporation," Zech said. "In many churches, you have one person who counts the money, deposits it and reconciles the checkbook."

Researchers sent surveys to 174 dioceses and received responses from 78, including the Diocese of Tucson. Eighty-five percent of those that responded said they had detected embezzlement within the last five years.

"Where there is money and where there are people, there is a potential for fraudulent problems," Tucson Bishop Gerald F. Kicanas said Thursday. "The best way to offset that is to have clear policies, enforce them and investigate all allegations.

"I think a lot has happened in the Tucson diocese to assure that people's contributions are properly directed. Money is a temptation, and the best way to oversee finances is to have multiple eyes."

In the local diocese last year, a man in charge of church donations at St. Francis Assisi Catholic Church in Yuma was ordered to repay $312,910 that he had stolen from collection plates. Philip Francis Martinez also was given a 90-day jail term. He admitted stealing the money while he was a church volunteer and had access to the collection plate.

Stressing that such cases are rare, diocese spokesman Fred Allison said another case of parish theft by a staff member at a Nogales church occurred three or four years ago, but he did not have more detail.

In 1991, the Rev. Joseph Octavio Tye pleaded guilty to 10 felony charges that stemmed from the theft of hundreds of thousands of dollars from two Tucson-area parishes: St. Monica's Catholic Church, on the South Side, and St. Christopher's Catholic Church, in Marana.

Tye was the associate pastor of St. Monica's from 1982 until September 1988, when he became pastor of St. Christopher's Parish. He resigned from St. Christopher's when the first police report was filed on June 1, 1989. He no longer is an active priest.

In 1979, a top diocesan financial officer, Donald C. Cozzetti, resigned after the FBI told the church of problems with its financial affairs. An external audit later revealed the diocese was missing $144,559 in assets and was strongly critical of the diocese's accounting procedures.

Federal authorities charged Cozzetti with 16 counts of scheming to embezzle about $500,000 in money and property from the church. He eventually pleaded guilty to one charge of embezzling $35,211. He was sentenced to 2 1/2 years in prison.

Facing mounting expenses over lawsuits accusing local clergy members of sexually abusing children, the diocese in 2004 filed for Chapter 11 bankruptcy protection. After emerging from Chapter 11 one year later, the diocese separately incorporated its 74 parishes. Diocese officials say the incorporations gave better controls over parish finances.

"There is now an expectation for every parish to have a financial council," Kicanas said. "Also, a corporation board in each parish must approve the budget and publish a report to the parish."

Kicanas said he was not surprised by the national results of the Villanova survey, since no system is foolproof. Also, problems often occur when people are around money, particularly in the case of people who are gambling addicts or otherwise in desperate need, he said.

But Kicanas added that he's confident the diocese, which recently hired an internal auditor, has vastly improved its internal controls, accounting system and organizational structure.

"There are procedures and policies in place that will make it difficult for any fraudulent use of donations to occur," he said. "Certainly in our diocese today, people are much more conscious that proper oversight is expected and important. Having things like locked, tamperproof bags also makes it more difficult for someone to give in to temptation."

The Villanova study, titled "Internal Controls in the U.S. Catholic Church," says that unlike businesses, churches don't have stock ownership, meaning managers might not regard themselves to be as accountable to donors as they would be to owners.

"Since churches rely on sacred belief systems, internal controls might be viewed as a secular concern and inherently evil or at a minimum unnecessary in churches," the study says. "In fact, it might be considered insulting to church workers and volunteers to even imply that internal financial controls are important."

The study should not discourage parishioners from donating, said Villanova's Zech. Collecting donations electronically could be one way to curtail theft, he said. Other measures include putting pressure on pastors and lay employees to ensure basic internal controls. And churches could take a lesson from corporations that have rotating groups of people overseeing their money, he added.

Electronic giving is how Tucsonan Bob Scala donates to the East Side's Our Mother of Sorrows Catholic Church. Scala, who is on his church's finance council, credits Kicanas with increasing financial accountability and transparency.

"I'm not talking about small, petty thefts from the donation box, but I am comfortable that we have the business controls in place that would make theft of any magnitude very, very difficult," he said. "I'm astounded at the lack of oversight in some of the parishes that have made the news around the country. I'm astonished and offended that these things happen."

Villanova researchers completed the study in December with funding from the Louisville Institute, which is a Lilly Endowment program for the study of American religion based at Louisville Presbyterian Seminary.

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