Big Four firm KPMG is being sued by a Lansing, Michigan branch of United Way after the discovery of a $1.9 million embezzlement by the branch's former finance chief.
"The United Way hired experts to protect itself," said United Way lawyer, Powell Miller. "We think if they had done their job properly, this wouldn't have happened."
Employees of Capital Area United Way discovered the embezzlement, which is estimated to have occurred over a period of at least seven years. Former vice president for finance, Jacquelyn Allen-MacGregor, worked for the United Way for 20 years, during which time she wrote more than 300 checks to herself on the United Way account, forging the required signatures of co-signers, then destroying the cancelled checks. The checks were not posted to the United Way books but instead were recorded as pledges never received.
In February of this year, Ms. Allen-MacGregor pleaded guilty to the embezzlement, saying she used the stolen funds to purchase horses for her business, Celebration Quarter Horses. This spring the United Way has been able to recover nearly half of the stolen money by cashing three theft insurance policies and by selling some of Ms. Allen-MacGregor's assets.
The agency hopes to recover additional funds from its two accounting firms, KPMG, which acquired the Lansing area branch of CPA firm Main Hurdman, former auditor for the Capital Area United Way, and Maner, Costerisan & Ellis. The United Way is pursuing arbitration with Maner, Costerisan & Ellis but may pursue action in court at a later date.
The lawsuit against KPMG claims the audit firms KPMG and Main Hurdman were negligent and that they should have detected the embezzlement. Main Hurdman audited the Capital Area United Way from 1985 through 1998. Maner, Costerisan & Ellis performed the 1999 through 2002 audits.
"We think if they had done their job properly, this wouldn't have happened," said Mr. Miller.