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CURRENT ISSUE:  May 9, 2011
VOL. 49, NO. 9   •   Oakland, CA
Other front page stories
 
Four to be ordained to the priesthood May 14
 
Sister Prejean comes to Oakland for two speeches
 
Catholic Charities’ annual appeal set for May 15
Diocesan rules guide
parishes on money
 

Parishes in the Diocese of Oakland are required to have strong financial controls and oversight — and the embezzlement charges brought by the Contra Costa County District Attorney against three people associated with St. Isidore Parish in Danville illustrate how crucial those rules are.

St. Isidore is one of the largest and wealthiest parishes in the diocese. Father Gerry Moran, pastor, wrote in the parish bulletin Jan. 30 that the parish has the highest Sunday/Christmas/Easter collection income in the diocese.

Its annual operating budget is $2.7 million, diocesan spokesman Mike Brown said.

Former office manager Kathleen Dake, 58, former facilities manager Virgilio Lukban, 46, and volunteer and career banker Evelyn Peinado, 64, are charged with embezzlement in the theft of $580,000 in parish funds between 2006 and 2010, said Det. Sgt. Allan Shields of the Danville Police Department.

Danville Police Chief Steve Simpkins said in a statement his department’s investigation found that Dake, Peinado and Lukban stole approximately $360,000 from the church through fraudulent use of credit cards. Dake is charged with stealing an additional approximately $220,000 by using checks from St. Ididore’s for personal expenses.

Mike Canizzaro, diocesan chief financial officer, explained that every parish must have a pastoral council and a finance committee, whose importance is reinforced by the diocese. The finance committees have broad oversight, advising the pastor and reviewing the annual budget, process and long-range plans. The diocese holds an annual workshop for finance committee leaders.

In addition, each parish is required to make a public annual financial report. Diocesan policy also requires a professional external financial review every three years, Canizzaro said.

When the diocese investigated, it determined St. Isidore’s internal controls were insufficient to detect and prevent a high-level, sophisticated crime like the one now being prosecuted. The diocese has worked with the parish finance committee and the pastor to prevent any future recurrences.

Both a bookkeeper and an accounting manager have been hired to ensure appropriate financial administration for cash receipts, disbursements, payroll and financial statement preparation, a diocesan statement said.

In May 2010, Father Moran noticed irregularities in the parish financial office and asked his parish finance committee to investigate.

A preliminary internal investigation led the committee to suspect a parish employee, Dake, was embezzling parish funds, the diocesan statement said. In mid-August, the committee interviewed her. The committee suspected others might be involved and engaged an accounting firm to conduct a fraud examination.

On Aug. 30, the diocesan finance office was notified by the parish and joined with the accounting firm in the investigation. The diocese then reported the crime to the Danville Police Department, which began its criminal investigation.

Dake had been employed at the parish from June 2002. She was placed on administrative leave Aug. 31 of last year and terminated on Sept. 9. Lukban began working at the parish in February 2003. He was placed on administrative leave Nov. 10, 2010, and terminated on March 31 of this year.

The Diocese of Oakland said it intends to seek restitution of the stolen funds from the perpetrators — and, if necessary, financial recovery through the courts — expressing confidence that all stolen funds will be returned to the parish through legal redress or its insurance coverage.

The diocesan finance department monitors compliance to the external review process, Canizzaro said, and all parishes due for such review are in compliance.

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