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Former staffer admits to embezzlement of Minneapolis Area Synod funds

The Rev. Ann Svennungsen, bishop of the Minneapolis Area Synod, has instituted new fiscal procedures to ensure better protection against embezzlement.

Former ELCA Minneapolis Area Synod (MAS) staffperson Raenay Rock Hendrickson confessed February 14 to embezzling synod funds while serving as administrator/bishop’s assistant. Hendrickson had served as bookkeeper for the synod from 1996 to 2012. The embezzlement of funds began as early as 2005 and continued until her departure in June 2012, as part of staff changes requested by newly-elected synod bishop Ann Svennungsen.
Hendrickson had worked in the synod office since 1996 under three bishops — the Revs. David Olson, Craig Johnson, and Glenn Nycklemoe — before her brief tenure under Svennungsen.
Svennungsen assured synod leaders “the evidence is that Ms. Hendrickson acted alone.” The embezzlement was discovered during the initial stages of the 2012 auditing process. The investigated has indicated approximately $100,000 in missing funds.
Representatives of the synod have notified law enforcement officials and are cooperating with an investigation. In an emailed letter February 15 to all congregations and rostered leads of the MAS, Svennungsen explained, “With the help of legal counsel, we are pursuing every avenue of recourse that is available to us, trusting that God works through the protective structures of society, including law enforcement and the courts.”
Svennungsen also said the synod is attempting to be as transparent as possible during the investigation, acknowledging that there are some legal and privacy restrictions. She also announced that new processes and procedures of financial oversight are being initiated.
Among the structural changes for the synod are the separation of financial duties, the conducting of annual audits, and the creation of standing audit and finance committees, as well as other best accounting practices.
“I regret that this serious breach of trust may tarnish the confidence you have in our synod’s financial stewardship,” said Svennungsen in the February 15 emailed letter.

Putting procedures in place

While preparing in the fall of 2012 for the financial audit, which had not been done for several years, staff began noticing that “there were things that didn’t quite add up,” according to Svennungsen. “So we began a more in-depth investigation, and brought in WayPoint, Inc., to undertake a forensic audit.” The WayPoint team includes several Lutherans who have worked previously with the Internal Revenue Service and the FBI.
It appears that the funds embezzled affected synod ministries, as the funds were taken after the 55 percent allotment to ELCA churchwide had already been paid.
“It is significant that insurance will cover all losses, which means that [the synod] can attempt to make amends to affected ministries.”
The synod has filed claims with Church Mutual Insurance Company (CMIC) and Chubb, its insurance carriers. These insurers require a report to law enforcement, and they will decide any issues of civil litigation, according to Tammy Pust, an attorney with Parker Rosen in Minneapolis and legal counsel to the MAS.
“In the civil system, whenever someone owes money for something, a voluntary lawsuit is an option,” Pust further explains. “Every insurance policy includes [a clause] that, if a claim is filed with an insurance company, that company can initiate a lawsuit; this is called a subjugation right.”
“At that point, the primary work of the initial party is to put greater fiscal controls in place,” which both Pust and Svennungsen assure has taken place.
Such controls will determine future levels of coverage, according to Brian Arndorfer, vice president of claims for Church Mutual. “Depending on the level of crime coverage requested by the policyholder, varying levels of constraints and controls are required in order for coverage to be provided,” he told Metro Lutheran.
“When CMIC is notified of a potential embezzlement, we initiate an investigation that includes a detailed request for appropriate documentation from the policyholder that supports the claim. … A copy of the police report and any warrants or statements is also required. … Upon receipt of that documentation, a detailed review is undertaken, potentially including the utilization of a CPA to provide an analysis of the losses sustained due to the embezzlement,” Arndorfer continued.
“The ELCA is working with the insurer to adjust the loss,” Melissa Ramirez Cooper, public relations manager for mission development for the ELCA, told Metro Lutheran. She encouraged representatives of church groups to review the risk management materials available at the ELCA website:
Arndorfer likewise stresses material available on the CMIC website. He says, “CMIC always reviews the insurability of accounts and the coverage in place. Where appropriate, additional controls may be required to continue certain coverage. Other options include premium adjustments and increasing deductibles to offset the potentially increased loss exposure.”
The Rev. Larry Wohlrabe, bishop of the Northwestern Minnesota Synod of the ELCA also has experience with embezzlement by staff. In 2012, shortly after his election as bishop, Wohlrabe determined that the synod treasurer had stolen funds. Though that case is still awaiting trial, Wohlrabe has reflected on his experiences, offering “Eleven Things I Have Learned from Dealing with Embezzlement” (see below).

A tragedy for all

Svennungsen wants to assure ELCA congregants that “we are aware that transparency is important, that people need to know [the public details of the case], and we will comply as we are legally able.” She also hopes that that is not the only story that Minnesotans hear about Lutherans. “I want people to know the many ways we are doing ministry in our communities,” she explains. “My sadness includes that readers may not know about Welcome House, supported by Diamond Lake Lutheran Church [Minneapolis], where homeless women and their families are cared for, and the many other [positive] stories of congregations being present.” She finds hope in the many other stories that need to be told.
“I do ask for prayers for all people involved,” she adds. “During this Lenten Season, we all stand on level ground beneath the cross, including Raenay.”
Svennungsen is also aware of the damage done to the synod’s reputation. “We recognize God’s call to faithfully steward each gift we receive. We will work tirelessly with our insurers and with law enforcement to recover the embezzled funds, to discern how they affected the ministries of our synod, and to make amends as best we can.”

Eleven Things I Have Learned form Dealing with Embezzlement

1. Rigorous background checks and reference checks on all prospective employees (or volunteers with financial responsibilities) are essential.
2. No single employee or volunteer should have sole access to the organization’s accounting system or financial institutions. (This means more than having two persons signing checks and having strict controls over credit/debit card usage!)
3. Your organization’s financial staff person should not simultaneously hold a similar position in any organization with which your organization has financial dealings.
4. Inquire about the financial management practices of every organization that partners with (or receives funds from) your organization. Expect organizations to which your organization gives financial support to send you receipts; compare the dollar amounts on those receipts to the financial records of your organization.
5. Ramp up your expectations of your organization’s finance committee. Expect members of the committee to meet regularly so that the organization’s financial system and bank statements are regularly examined by “many eyes.”
6. Ramp up your expectations of persons who serve on councils, boards or committees with responsibilities for financial oversight. Teach members of such groups how to read and understand financial reports. Encourage them to ask questions. Don’t tolerate ignorance.
7. Pay as close attention to off-budget accounts or funds as you pay to budgetary accounts/funds. Regularly review your organization’s restricted or designated funds; make sure that expenditures from these funds are in keeping with donor intent and/or with the policies of your organization.
8. Always, always, always conduct an annual audit of all your organization’s financial funds and accounts. Even if you don’t hire a CPA to do it, appoint knowledgeable volunteers with some financial expertise (who are not currently on the council or board of the organization) to examine the financial records of the organization. Trust, but verify!
9. Insofar as you are able, maintain a healthy climate within the organization. When things become chaotic in a system or organization, such chaos can provide “cover” for someone who wants to embezzle.
10. Expect staff and volunteers to maintain clean work areas, to keep up on filing of documents, to lock or otherwise secure important documents, etc. Simple messiness can be a hiding ground for embezzlement or other financial misconduct.
11. Consider accessing ELCA Office of the Treasurer and ELCA Office of the Secretary web resources for guidance concerning audit controls and risk management/security matters. Here are several webpages with content that may be useful: the-Secretary/Congregation-Administration/Insurance-and-Risk-Management/Security.aspx
UPDATE (March 4): An earlier version of this story incorrectly stated that “Raenay Rock Hendrickson confessed February 14 to embezzling approximately $100,000 in synod funds.” While she has confessed to embezzling funds from the synod, she has not stated a particular amount. The amount stated reflects the amount the synod is aware of.

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