Two longtime nuns at St. James Catholic School in Torrance allegedly embezzled as much as $500,000 in tuition, fees, and donations, perhaps spending some of the money on trips and gambling at casinos while telling parents the school was operating on a shoestring budget, officials and parents said.
The figure represents only what auditors have been able to trace in six years’ of bank records and might not include other cash transactions, officials from the Archdiocese of Los Angeles told parents and alumni at a meeting Monday night at St. James Catholic Church in Redondo Beach. An audio recording of the two-hour meeting was obtained by the Southern California News Group.
The apparent scandal came to light last week when the church’s small, K-8 school announcedthat it had notified police that Sister Mary Margaret Kreuper, and Sister Lana Chang, who both had retired earlier this year, were “involved in the personal use of a substantial amount of school funds.” But the nuns had expressed remorse, and the archdiocese and the church were not pursuing criminal charges.
Kreuper was the school’s principal, and Chang taught there.
The revelation comes four years after a car struck and killed four people as they left a Christmas concert at the church, including a 6-year-old boy.
Michael Meyers, the church’s monsignor, told the crowd of a few hundred people that the archdiocese launched an internal investigation six months ago after the organization performed a standard audit of procedures ahead of Kreuper’s retirement after 28 years at the school.
Around the same time, Meyers said, a family happened to request a copy of a check made out to the school, and the staff noticed it had been deposited in a bank account other than the schools.
That’s when Kreuper became “very nervous and very anxious” about the upcoming financial review and requested that the staff alter records, the monsignor said. Meyers said he alerted an archdiocese internal auditor performing the review that “something was off” and that the auditor confirmed his suspicions.
The archdiocese then hired an independent forensic auditor for a deeper review.
Without the red flags raised by the check, Kreuper’s “strange” behavior and a tip made to an archdiocese ethics hotline, officials said the school would never have known about the problem.
The improper use of the funds had been going on for at least 10 years, Meyers said. The parish and the school have always run in the black, so it appears no one had suspicions.
“The systems that were set up were dividing people, so nobody knew what was happening,” Meyers said.
A retired FBI agent hired by the archdiocese interviewed school staffers and the nuns.
“When he was talking to Sister Mary Margaret, she did acknowledge that she had been taking all the money, so that’s not a question,” Meyers said.
He said no other staff members are suspected of wrongdoing, but a bookkeeper who was unaware of the long-running scheme has voluntarily taken a leave of absence to preserve the integrity of the investigation.
Funds raised by the school’s nonprofit education foundation were not affected, officials said.
Auditors told parents the “long forgotten” church bank account was opened in 1997 and that bank records before 2012 no longer exist. Only Kreuper and Chang knew about the account, they said.
They described a system in which Kreuper handled all checks made out to the school for tuition and fees before handing them over to bookkeeping staff for processing. The principal allegedly withheld some of the checks and deposited them into the other account, endorsing the back with a stamp that read, “St. James Convent” instead of “St. James School.”
The sisters used a majority of the money for “personal gain,” officials said, though some of it was “recycled” back to the school.
Meyers said the money would have ended up in the school’s reserve funds.
The sisters expressed deep remorse, officials said.
The archdiocese is cooperating with Torrance police, but is unwilling to be a “complaining party,” archdiocese lawyer Marge Graf told parents. She said the decision was made because the nuns’ order, the Sisters of St. Joseph of Carondelet, has agreed to pay the school full restitution and impose “severe sanctions” on Kreuper and Chang.
When a parent asked what the money was spent on, the attorney said: “We do know that they had a pattern of going on trips, we do know they had a pattern of going to casinos, and the reality is, they used the account as their personal account.”
The nuns, described by many as best friends, have been removed from ministry, according to a letter from the order read aloud during the meeting. Meyers said they have been moved to separate convents. Church officials did not say whether the order’s restitution agreement hinged on the archdiocese not pursuing criminal charges.
Meyers and other officials pledged to make changes to prevent abuse in the future, noting that new principal Noreen Maricich has implemented an online payment system for tuition that draws funds directly from parents’ bank accounts.
Reactions in the stunned crowd ranged from disappointment and anger to calls for forgiveness.
Many parents were outraged with the decision not to press charges, with some remarking that if the nuns were lay people, they would certainly be in jail. Others called for the restitution to be used to give teachers pay raises and for expenses they said Kreuper claimed the school could not afford, such as awnings for an outdoor eating area.
Jack Alexander of Redondo Beach said in an interview with the Southern California News Group that he and other parents are considering banding together to act as a complaining party to Torrance police themselves. But without cooperation from the archdiocese, he is doubtful the effort would lead to prosecution.
“We were an ATM, and people know it and they won’t ask for justice,” Alexander said.
The approach sends the wrong message to students, he said, that money is more important than morals.
“They are trying to recapture money, not get justice,” Alexander said.
Paul Eakins, a spokesman for the Los Angeles County District Attorney’s Office, said prosecutors have not been presented with a case yet from Torrance police. Sgt. Ronald Harris said police will confer at some point with the District Attorney’s Office.
“Our office doesn’t decline to charge simply because the victim’s future cooperation is problematical,” Eakins said. “However, if a victim is not presently cooperating, we may consider that as a factor in determining whether a case can be successfully prosecuted.”
Many in attendance questioned how the school could claim in a parent letter that the embezzlement did not affect the students’ education, and they criticized officials for hesitating at first to reveal the full, six-figure estimate. Some have called on Meyers to resign.
Denise Sur, a longtime St. James parishioner who put four children through the school and spoke at the meeting, said in an interview that she was disappointed that details were not provided immediately.
“The archdiocese and our parish leadership have to be held accountable for the poor process as well as what occurred,” she said.
Tony Liakos, a parent who also spoke at the meeting, said in an interview that the news is another blow to a church community still reeling from that tragic crash in December 2014. It’s a good school, he said, and he doesn’t want its attributes to be overshadowed by these two incidents.
“The biggest thing is I’d prefer to see this not hurt the school more than it already has,” he said in an interview.
Samantha Pierce, a Torrance resident who has attended St. James for more than 30 years and whose son graduated from the school, said the controversy underscores a failure of church leadership. Only a police investigation can be trusted, she said.
“They convicted the sisters before they actually have the facts on hand, that is the thing that disturbed me the most,” Pierce said.
She expressed skepticism that the nuns acted maliciously, even given their apparent admissions of guilt.
Kreuper was known to forgive tuition debt and offer assistance to families experiencing financial hardships, Pierce said, and she took trips to Las Vegas because she visited a friend from a Catholic school where she used to teach.
A spokeswoman for the Diocese of Las Vegas could not be reached on Wednesday. Kreuper has a past address and P.O. Box in Las Vegas, public records show.
If the nuns indeed misused funds wrongfully, Pierce said she would forgive them.
Other parents said it was well-known that Kreuper and Chang traveled often and went gambling, but that they claimed they have gifted the trips by a rich relative.
“These nuns took a vow of poverty and said, ‘Oh no, we’ve got a rich uncle,’ ” Alexander said. “The rich uncle was the parents of the St. James students. These 2 Nuns Suspected in $500,000 Theft From Catholic School Had a Taste for Gambling, Church Says.”