Thanks for all of your advice. It has all been very helpful.

Our former treasurer turned himself in to the police yesterday, and confessed to what he had done. He apparently has worked with the police every step of the way, which is very beneficial to him and his family. All of the papers, deposit slips, etc., have been recovered by the police and returned to the PTO. We are in the process of getting bids for an audit and revamping some of the treasurer guidelines. We already had an audit policy in place, but (obviously) it was too relaxed in proof of evidence.

Thanks again.
ptoanne

You've received some very good advice here--not much to add. The only thing I would say is that this situation does not impact your tax-exempt status--people steal from taxable and non-taxable entities alike; this isn't an IRS issue. I would not recommend calling the IRS and adding another layer to an already complex situation.

We were in the same situation a few months ago. Our person ignored many requests for the statements. We kept saying we needed them for auditing purposes. We finally went to the bank.

JHB has all the right answers. I was advised by my boss (a fraud examiner) to go to the DA's office. He said they DA would get all the info. If we would ask for the info, he said we would never get it. But, our principal did not want to do this. She wanted it handled within the PTO.

It is a terrible thing to go through. We went through every bit of paperwork. We confronted the person. They were very angry and defensive that we would accuse them (but I think also shocked that we were so well informed!) We then presented, in letter form, all the facts and a payment plan. We had the person sign the letter and we had 2 witnesses on the letter. So far payments have been made on time. We're hoping full resitution will be made.

It is so difficult when you see their children running in the hallways. You do not want them hurt or other children to find out. We've decided to keep it within the PSO, but as jonwilson said 'you know someone is going to get wind of it'. If the parents find out, it could be very hurtful to the PSO. People may not want to fundraise if they feel their money isn't safe. Or, will the parents be upset if we're not up front with them. You know there are those parents who would LOVE the chance to humiliate someone even it means hurting the children also. We're still struggling with this catch-22.

We were all very hurt by this, it was stolen from OUR children and it was wrong. We are hoping we will not have to prosecute or humiliate this parent any further.

We've been told that this happens every day so don't beat yourself up about it. Good luck to you.

I took a leadership role in my PTO in the wake of missing funds and the disillusionment that someone we trusted could betray us so badly. It’s definitely no picnic.

You need to get your principal involved, and he may need to consult with the school district officials. Even though the PTO is its own entity, the lynchpin is the school. They'll be affected and they need to be involved in a solution. Plus, they may have expertise (legal, financial, public relations) that may be useful. They may also have district policies on procedure or prosecution that affect your organization.

Next, your group probably needs to speak with someone in the local district attorney's office to decide on a course of action. There are now legal implications - the information you are uncovering is potential evidence. On the flip side, anything negative released about the alleged culprit (that can't be fully, legally substantiated) could be considered liable/slander and get YOU in trouble.

The embezzlement may be perfectly clear, but unproveable in court.

Ultimately, you may choose a private solution where the person pays the money back, or you may press charges. But this is a critical time and you need guidance from your Board, the school officials, and the DA's office to choose the path that's right for you.

And somewhere in the midst of this mess is probably an innocent child. (The treasurer was a parent, right?) Don't forget that particular detail.

Yes, you need to be honest with your parents, but don't jump the gun. You need a plan of action as to how you will proceed, how you will announce the information, and what controls you will put in place to prevent future problems.

anne,
Sorry to hear about your groups situation. I will get better, but not before it gets a bit worse.
First, I believe in full disclosure. The executive board needs to sit down with the administration and decide how to tell the parents. Keeping it quiet is the WORST thing you can do. BUT, this disclosure should contain the next two items. Remember, trust can only be built on honesty.

Second, it seems like your group does not have an audit system to prevent these types of situations. Reviews throughout the year as well as a closeout review at the end of the school year should be the minimum. These reviews will help show that this type of situation will not happen in the future. That will be important in silencing the rogue parents.

Lastly, contact the local IRS office (you mentioned that your group is non-profit) and talk to someone familiar with non-profit organizations. After explaining the situation, the IRS will let you know if anything needs to be done. Be aware that they will probably ask why audits have not been done and what is being done to prevent this in the future.

I hope this helps and good luck.
Jon

Our PTO president just found out today that our treasurer for the past 3 years, has been stealing money from our PTO account, for the past 3 years. The new PTO board was having trouble getting the paperwork, statements, checkbook, etc., from him and passed on to our new treasurer. There was always some sort of excuse for not being able to meet us with everything. Finally, our PTO pres went to the bank to find out for herself the status of the account. Shock and disbelief hit us when we found out what he did. We should have had thousands of dollars in our bank account, and we only had half of that. (The account had been down to a couple hundred dollars, but he was able to replenish parts of it in the last couple weeks.) This was a friend. He has done more damage than I can say. He admitted to several of the PTO board officers that he did steal the money, but he was trying to "put it back." This school year is our 5th year in existence, so we did have some inexperienced parents running things. We just found out tonight about fidelity bonds. I wish we had one prior to this.

One of our many questions is: What do we do now? Do we press charges? Do we try to keep this quiet? How do we respond to parents when they find out (and you know they will)? How does this affect our non-profit status? How do we get our money back? This next school year, we will be moving into a new building, and we already had (so we thought) a sizable chunk of money for playground equipment. Who's going to want to contribute to a school fund raiser when they find out that the treasurer, albeit the prior treasurer, stole money? How can we assure contributors that their money will be going for what we say it will?

Then there is this nasty, NASTY, group of parents in our school that thrive on negativism, badmouth PTO to anyone they can, purposely cause trouble for other parents then laugh in the school halls at what they did. They are extremely divisive in our school, and our principal has absolutely no control over them. He just lets them do what they want. How do we deal with their added antics that are meant to harass and bully, especially when they are directed at PTO members and PTO board members? We fear that this nasty group of parents will make this whole embezzlement issue worse. (Yes, they can easily do that.) Our former treasurer needs help with his disease, but we're afraid this nasty group of parents will make it next to impossible for him to make things right.

We appreciate any advice. Thanks.