An Introduction to BETRAYAL

There are times in the life of any individual or organization when they are challenged by events entirely beyond their control. One such event happened in the life of our Goodwill that challenged us to our very core. That event was the fraud committed by Carol Braun. We take pride in our corporate values and our integrity. We were exposed and vulnerable. The real mark of an organization's strength is its capacity to weather the most difficult storms. I believe that "Betrayal" is a testament to the strength and integrity of our Goodwill. It is a living testament to our capacity to learn from our hardships and mistakes. The book has found its way to every corner of America and has served to comfort and inform others who have faced similar circumstances. This book is dedicated to the men and women of Goodwill, our "People". We are stronger, more resilient and more compassionate as a result of this experience. We hope that Betrayal will, in some small way, ease any personal or professional challenges the reader may face and we stand ready to help.

Bob Pedersen Chief Visionary & Storyteller Goodwill NCW

BETRAYAL

by Jed Block and the people of Goodwill Industries of North Central Wisconsin, Inc.

© 2004 by Goodwill Industries of North Central Wisconsin, Inc., Menasha, Wisconsin

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TABLE OF CONTENTS

Foreword……………………………………………………………..Page 1 Chapters 1-30………………………………………………...……………..5 Epilogue…………………………………………………………………….74 Postscript……………………………………………………………………78 Appendix Mission, Vision, Values…………………………………………….81 Who’s Who list……………………………………………………..82 Chronology of Events……………………………………………....84 Communications Plan………………………………………………91 Q & A document……………………………………………………94 Sample Communication letters……………………………………..99 Victim Impact statements………………………………………….107

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“The capacity to love is proportionate to the capacity to be betrayed.” -- John Le Carré

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Foreword

We learned the hard truth behind the axiom, “If people want to steal from you, they can.” A trusted, 27-year employee cunningly embezzled more than half a million dollars from Goodwill Industries of North Central Wisconsin, Inc. over a seven-year period. She was able to steal from us despite a sophisticated financial system that we continuously strive to improve. The same thing could happen to you. Loss-control specialists agree that if someone is willful and has the intent, any system can be overridden. The crime against us occurred on my watch. I was devastated on two levels – personally, betrayed by a friend, and professionally in my role as president and CEO. On a personal level, I felt shame, embarrassment and anger. I also experienced a profound sense of loss of innocence and a challenge to my fundamental capacity to trust. Before the embezzlement was discovered, I was an ardent fan of the employee who committed the fraud against us. Often, I brought people to her office and bragged about her professionalism and dedication. I went out of my way to help her through difficult times in her personal life. I excused her shortcomings and recognized her contributions. She was, after all, a senior employee who had made significant contributions to Goodwill’s success. Even after it was clear that she had embezzled from us, I found myself not wanting to believe that she was guilty. Professionally, the discovery of the fraud and its aftermath have been one of the most trying times of my 32-year career in human services. For months, there was not a waking hour when I was not occupied with some aspect of the crime. I had to maintain my composure in the face of adversity and place Goodwill’s future above my personal feelings. Perhaps because I had to keep a stiff upper lip and not allow myself to grieve until months after the discovery, I continue to struggle with anger and resentment issues related to the crime. Dealing with the media was difficult, frustrating, time-consuming, and embarrassing. Also, our organization had initiated a new business line to provide accounting services to other nonprofits. To deliver those services, it is imperative that our organization be beyond reproach. In the wake of the embezzlement, I had to appear before the boards of those other nonprofit corporations to reassure them and deal with their concerns about potential loss of funds related to the crime committed against us. Of course, the embezzlement made selling our accounting services much more difficult.

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Our organization also contracts with several governmental agencies to provide essential services. Consequently, we had to prove beyond a reasonable doubt that those contracts were not affected by the crime. In addition, the situation required me, as an organizational leader, to take my eye off the ball. The year following the embezzlement was the first year in my leadership history with Goodwill that we were not able to develop some new opportunities to serve our community. We can only speculate about the negative impact of $500,000 worth of lost opportunities for an organization like ours. We do know, however, that $500,000 would allow us to provide more than 250 needy infants and toddlers with physical therapy, speech therapy, and educational services for the children and their families. Or, to put the loss in another perspective, we would have to sell more than $2 million in merchandise in our stores to generate $500,000. Furthermore, we cannot begin to assess the value of the damage done to our reputation, image, and trust levels in the communities we serve. Because of our experience, we now truly understand that tragedy is part of the human condition; bad things happen to good people. We didn’t deserve to be victims of fraud. Neither did our donors, volunteers, customers, partners, and communities. The lives of the woman who committed the fraud and her family are shattered. She had an exemplary work history, and now she lives in prison. Bottom line, with fraud there is no winner. And there is no joy in retribution. So, why would an organization – hurt, besmirched and humiliated by such circumstances – put together a book about its painful experiences? Once the case escaped the spotlight, why not complete the damage control, tidy things up, salvage what can be saved, let memories fade and people forget, and move on? For one thing, we want to do our part to expose fraud and bring it out in the open. Fraud is a dirty little skeleton in our business closets, much like sexual harassment was before being confronted. After our loss hit the news, I was amazed at how many people consoled me with words like, “You’re not alone. It happened to us, too.” For a variety of reasons, a cloak of secrecy surrounds fraud, cultivating a syndrome of secrecy. Many organizations cover up fraud and pass problem people on to others. In addition, long before we were victims of fraud, we were a learning organization. With this book, we hope to capture the teachable moments of our experience so that we can heal, learn, and document our history for future members of our team. And we want to share the lessons we learned to benefit the greater Goodwill family; nonprofit, profit and governmental organizations; and others.

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Our ability to deal with this situation was shaped long before any hint of trouble was discovered. We learned very quickly that it’s too late to establish credibility with the media and the public after catastrophe strikes. We also soon realized a greater appreciation for the true meanings and substance behind such words as honesty, integrity, and accountability. Perhaps the most significant lesson we learned was about trust, verification and being open. Ironically, as a result of being betrayed, we ultimately rediscovered why it is so important and right to trust and be forthright with people who are part of the team. First and foremost, though, we were humbled by our experience and reminded of human frailty. So, this is not a cookbook offering recipes or formulas for success. Rather, it is a teaching tool. Our goal is to inform, educate and inspire people to avoid, prevent or manage similar situations. In short, how to lead in uncertain times.

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

June 2004

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Chapter 1

When the phone rang in Bob Pedersen’s office shortly after 10 a.m. on Friday, May 16, 2003, it had a normal ring. The president and CEO of Goodwill Industries of North Central Wisconsin, Inc. had no idea that such a mundane sound would set into motion one of greatest challenges of his 32- year career. “Bob, there’s something important I need to talk to you about. Can I come down?” asked Steve White, chief financial officer of the organization that has been consistently ranked among the top 15 Goodwill agencies nationwide. While waiting for White, Pedersen returned to the paperwork on his desk. Before the phone rang, he had just finished going over next week’s schedule with Sara Saxby, executive coordinator for the human services provider that employs 750 people and serves a 35-county area with a $28 million budget. At this point, Pedersen had no clue that his schedule and well-laid plans would be turned upside down for the next six months. White arrived promptly and got to the point. “Jackie Draws and Carol Braun told me Wednesday afternoon that we might have to make an adjusting entry to last year’s cash balance to correct a mistake that Carol made earlier in the year.” Pedersen’s reaction was typical for him. Calm, fatherly. Rather than jump to conclusions or make snap judgments, he asked thoughtful, fundamental questions. Is it an increase or a decrease? How much? What accounts are involved? What’s the discrepancy? Is it a significant variance that will require us to do something exceptional? Was it a legitimate error, or do you suspect it could be something more than a mistake? Even though the adjustment in question would result in a $77,000 cash balance increase, White was concerned. The situation was brought to his attention less than two days before at 3:30 p.m. Wednesday, May 14, near that end of the third day of the annual audit. Any mistake from the previous year should have been caught and corrected long ago. The books should not have been closed at the end of the year until everything was in balance. If an adjustment was necessary, it should have been handled then. “You know Carol, Steve. She’s made mistakes before. She works fast and doesn’t always make the best decisions,” Pedersen said. “I realize that,” White said. “Jackie is giving her the benefit of the doubt. Carol told Jackie about it on Monday, when the auditors arrived. Jackie was going to be out of the office much of Tuesday, so she told Carol to look into it and get back to her with a complete explanation as soon as possible. But by Wednesday afternoon, Carol still hadn’t followed up with Jackie. When Jackie pressed her, Carol had no paperwork to support her adjustment, which oddly involved four entries and were spread among different accounts. Usually, if an adjustment is necessary, it involves a single entry.” “Are the auditors aware?” Pedersen asked. “Yeah, besides Jackie alerting them on Monday after Carol told her, I went back to them first thing Thursday morning,” White said. “What do they think?” “They weren’t too concerned. Their initial assessment was that since our income went up, and expenses were down, it probably wasn’t a big deal. So, they’re auditing cash and our bank reconciliations and comparing them with the general ledger, ” White said. “Steve, what’s your take? How does it feel to you?” “I think we need to probe more.”

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“Get on it, then. Do whatever you have to do and keep me posted, please.” White left the office. Pedersen was mildly puzzled. He knew Carol’s work habits. As Goodwill had grown, Carol was more and more challenged. That’s one reason why Jackie Draws was hired a year earlier as director of finance and supervisor of Carol. In his gut, Pedersen wanted to trust Carol. She probably made another mistake and another bad judgment call. “Maybe this will clear itself up,” he thought. But Pedersen also was concerned. Concerned enough that he immediately telephoned Gary Lichtenberg, treasurer and past chair of the local Goodwill’s board of directors. “Gary, as you know, we’re in the middle of our annual audit,” Pedersen said. “We found some accounting irregularities, and I need someone outside management to lead a team to determine the extent of the problem.” Later in the day, after consulting further with White, Pedersen followed up his phone call with a memo.

To: Gary Lichtenberg From: Bob Pedersen Date: May 16, 2003 Subject: Accounting Issues, Carol Braun

Gary, this morning Steve White reported that there are some accounting irregularities that were under the control of Carol Braun. This is the second occasion wherein Carol has made some significant errors in judgment and was less than forthcoming in alerting her team. We have contacted Joe Galarowicz, CPA for Virchow Krause, the firm doing our audit. He is contacting a staff fraud investigator to explore the need to initiate an investigation. I would like you to lead a team to determine the extent of the problem and suggest remedies. We will be meeting at 9 a.m. on Tuesday, May 20. The team members available to you are Steve White, Jackie Draws, Billy Jo Higgins, CPA, Virchow Krause, and Joe Galarowicz. The objectives of this team will be to determine if there is fraud, review the accounting processes that failed to surface this issue earlier, suggest remedies, and make a recommendation regarding Carol’s future with Goodwill. Thank you for your willingness to serve as a leader in this effort.

Bob

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Chapter 2

Despite some challenges, Jackie Draws and Carol Braun had a good working relationship. Goodwill Industries of North Central Wisconsin hired Draws 14 months earlier to fill a new position, director of finance. Among Draw’s responsibilities was supervising Braun, a senior employee who then had 26 years of service with Goodwill. During that time, Braun had reported directly to the chief financial officer and actually filled the CFO role on an interim basis on three separate occasions when the position was vacant. When Draws joined the organization, Braun was asked to help her learn the systems. Braun acquainted Draws with Goodwill’s accounting processes and procedures, showed her bookkeeping practices specific to Goodwill, and filled her in on “who was who” in the organization. Draws found Braun to be helpful, pleasant, friendly and “the sweetest person you could ever work with,” and the two shared a mutual respect. “You’re going to love it here,” Braun told Draws. “Goodwill is a great place to work and was so smart to hire you.” A Certified Public Accountant, Draws was previously a 10-year employee of Virchow Krause & Company, the firm that won the bid to perform Goodwill’s current annual audit. As a senior manager originally based in Madison, Wisconsin, Draws had performed audit and consulting work in the public and governmental sectors. After being transferred to the Fox Valley area where Goodwill is located, she decided to make a career shift and try the nonprofit world. Things couldn’t have worked out better when she learned of an opening at Goodwill and was offered the job. While interviewing Draws, Goodwill officials made it clear that supervising the 63-year-old Braun, who had been promoted to controller five years earlier, was part of the package. Although growth had since caused the controller position to stretch Braun’s capabilities, the message to Draws was, “We ‘put people first.’ Carol is a valued employee. You’re going to have to find creative way to become part of the solution if you take the job.” During the 14 months she worked with Braun, Draws was sensitive about taking responsibilities away from Braun, who seemed to struggle with the change. She resisted giving up bank reconciliation duties and oversight of the employee travel expense and credit card programs. Draws perceived Braun’s resistance as a way of protecting her job and position. On the other hand, Braun supported efforts to segregate job responsibilities and reorganize accounting functions to strengthen internal controls. She referred to such safeguards as “criss-crossing.” Yet, as controller, Braun believed things like signature stamps should remain under her control, rather than being secured in a central location, such as the vault. Three weeks before the audit began, Braun’s future was discussed during a meeting in Bob Pedersen’s office. Pedersen, Steve White and Draws brainstormed about Braun’s retirement and how to gracefully retire a senior employee who had reached a point in her career where she was overpaid for her performance. In the Goodwill culture, it’s important to recognize someone’s contributions, loyalty and other strengths, rather than focus on shortcomings. Was there a better position for Carol in the organization as she moved toward retirement? What would her position look like if it were refocused? How would a first-class organization handle the situation? Those were among the thoughts that ran through Draws’ mind as she approached Braun’s office on Wednesday afternoon to ask, once again, for the supporting information that resulted in an incorrect year-end cash balance.

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“Carol, do you have those journal entries for me?” “No, not yet. I can’t find the work papers.” “Well, I need to have them now,” Draws said. “I’m sorry. I don’t know what could have happened to them.” “Carol, I’ve been thinking. When we closed the books for the year, did you ever tell me that cash was off? I can’t remember you saying anything. Did I miss something?” “No. I just knew it was off, and I knew you were busy,” Braun said. “Well, we need to tell Steve right now. Do you want me to do it? Or, do you want us to do it together?” “Let’s both go in, and I’ll tell him,” Braun said. Steve White’s reaction to Braun’s stammering revelation was guarded. He assumed a poker face, listened, and asked a few questions. A short time after the pair left his office, White called Draws to get her assessment. He wondered aloud how Braun could have made $77,000 in adjustments on the books to correct a cash mistake and not tell other members of the team. Wasn’t that grounds for termination, especially considering bad judgments she made in the past? “You know Carol,” Draws said. “She’s disorganized and, in your words, ‘a random error generator.’ She’s a rapid trial-and-error processor. It results in mistakes. But that’s the way she figures things out.” Outwardly, White could only shake his head in frustration. In his gut, he resolved to ask the auditors to bring in one of their fraud examiners.

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Chapter 3

It was not surprising that Gary Lichtenberg was the first person Bob Pedersen contacted upon learning of accounting irregularities. Lichtenberg, a 13-year member of the local Goodwill’s board of directors, was elected to the board just a month after Pedersen had been named president and CEO. In a way, the pair grew up in the agency together. “We are stewards” was at the core of Lichtenberg’s Goodwill philosophy. “Sometimes we’re stewards of people. We’re also stewards of the donations people give us. Sometimes, they give us a box of stuff and ask us to sell it, and then we’re stewards of people’s stuff.” Lichtenberg brought financial expertise to Goodwill. Before retiring as a bank executive, he had served as chief financial officer for a number of institutions. His duties had included investor relations and being the lead contact for internal audits. Earlier in his career, he had worked in the public accounting and audit area for the Arthur Anderson certified public accounting firm. On the Goodwill board, Lichtenberg had held virtually every officer position, including chairman of the board for three years. Currently, he was treasurer, immediate past chair, member of the executive and board development committees, and a director of the Financial Information and Service Center (FISC). FISC is a nonprofit service agency that assists people experiencing money management and financial difficulties. It was one of the partner nonprofit agencies that contracted for Goodwill’s bookkeeping services. When Pedersen asked Lichtenberg to lead a team to look into accounting irregularities, Lichtenberg’s response was, “Sure. Whatever we need to do, we’ll get it done. I’ll be there.” Based on his experience with a bank fraud case, Lichtenberg knew Pedersen was smart for involving someone on the board immediately. Among the directors, Lichtenberg was most familiar with Carol Braun. He often advised members of the accounting department how to set up reports and present and communicate them to the board. “I thought a lot of Carol and her contributions and dedication,” Lichtenberg said. “She was always quite prepared and did a good job. Over the years, she did yeoman’s work with the budget and presentations. Once in a while, she seemed kind of flighty, like she had a lot on her plate and not enough time to do it all. But she always wanted to please and do a good job.” Lichtenberg’s style as a leader was to involve people. “Get a lot of eyes, ears, insights, and perspectives from all directions around the table. Listen and ask questions. What do we know? What don’t we know? What do we have to do now? Who’s going to do it?” He never dealt with people on a need-to-know basis because he didn’t like being treated that way. If he knew something, he shared it. He informed people, “Here’s what is going on. You make the decision.” Lichtenberg was impressed that the auditors were notified of the situation immediately. He also agreed with Steve White’s quickly arranging for a fraud examiner to be involved.

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Chapter 4

On Tuesday, May 20, 2003, Goodwill’s Bob Pedersen, Gary Lichtenberg, Steve White, and Jackie Draws met with Joe Galarowicz, Billie Jo Higgins, and Howard Marklein of Virchow Krause & Company. Based in Elkhorn, Wisconsin, Marklein was a partner, Certified Public Accountant, and Certified Fraud Examiner for Virchow Krause. The purpose of the meeting was to determine if there was a need to initiate a fraud investigation. Marklein, who had more than 25 years’ experience in the accounting industry and devoted a significant part of his time on fraud investigations, asked Pedersen to summarize the situation. According to Pedersen, Carol Braun made an error reconciling Goodwill’s checking account at the end of the year. She was unable to find and correct the error, and she did not bring it to management’s attention until May 12. Instead, she made an adjusting journal entry to the cash balance at year-end. This was not the first time that Braun had used poor judgment and was less than forthright. Two years before, a vendor who purchased salvage shoes and clothes from Goodwill had fallen $160,000 behind in making payments. Twenty thousand dollars would have been high, according to Goodwill’s standards. Braun did not alert Pedersen to the situation, even after he had inquired twice about aging receivables. After Goodwill pursued the account, the vendor paid $50,000. However, the vendor soon lagged behind again, and the situation was only brought to light after the vendor called and asked Goodwill to stop shipping salvage. Ultimately, Goodwill wrote off $65,000 of the debt. During her annual performance evaluation, Braun was further questioned about the situation and given a reprimand. Oddly, six weeks after Goodwill cut the vendor off, Braun asked if Goodwill would resume doing business with the client. As Marklein listened to the story, he completed a mental checklist in his mind. When Pedersen finished, Marklein asked some questions about Braun. What kind of house did her family live in? Had any of her personal creditors ever called Goodwill? How was her marriage? What kind of car did she drive? How was she to work for? What kind of hours did she work? Did she take vacations, and where and how did she spend them? Outside of work, what were her interests? Did she have any inconsistent patterns of behavior? For instance, is she extremely detailed in one area and lax in another? Marklein followed his line of questioning with an explanation of what he called the “Fraud Triangle.” Typically, he said, the three corners of fraud are: 1) Motive; 2) Ability to rationalize; 3) Opportunity. Motive involves need and what drives the crime, Marklein explained. “People just don’t wake up and decide to steal one day.” Possible motivations include gambling, large debt, financing an extramarital affair, alcohol and other drug dependencies, excessive medical bills, or even the need to keep up with an ex-spouse by living an extravagant lifestyle. “The ability to rationalize has to do with the psychology of why people steal,” Marklein said. “People need to be able to sleep with themselves. They must justify the behavior in their own minds.” Examples of rationalizations are: I’m here all the time; I’m underpaid; I work harder than anyone else; I’ve been here the longest; I don’t get an expense account; What I do is so important, yet I’m not valued; The place would fold without me; I work for a bunch of jerks. “Opportunity means that a person is in a position of trust and has access to funds,” Marklein said. It can happen when there is not adequate segregation of duties or internal accounting controls.

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By the time he was finished, Marklein could tell by the looks on people’s faces that he was striking some sensitive chords. Jackie Draws felt the hairs on the back of her neck rise when Marklein explained rationalizing fraud and having the opportunity. Steve White recognized how Braun’s schedule could fit the profile – she worked at all hours, including evenings and weekends, and regularly took work home to do on the laptop computer that Goodwill had furnished her. Her vacations were rare and never long. When Bob Pedersen thought of the level of control that Braun had and rumors about her husband’s health and business difficulties, he realized, “We may have two or three legs of the stool here.” Looking around the room, Gary Lichtenberg could feel the audit already taking on a different temperature and tact. Marklein broke the silence. “I think you better dig deeper,” he told the Goodwill contingent. “What do you suggest?” Pedersen asked. “Well, never before in your audits was there reason to believe that anything on the financials was misstated.” Marklein said. “This changes the whole emphasis of an audit. We should be looking at things in much more detail. We should lower the level of materiality. Look at every transaction and disbursement as it relates to the suspected area. We need to do some random sampling. To prove anything, we must design tests and procedures to determine if there was, in fact, stealing. And any of those things might lead us down a different path.” “Of course, we’re relying on your expertise,” Pedersen said. “Could you put something in writing about how we should proceed and what it will cost?” “Sure, we can develop an engagement letter right away and submit it for your approval,” said Galarowicz, the Virchow Krause partner in charge of the audit. “In the meantime, you should review your insurance coverage.” When the auditors left, Pedersen polled the Goodwill attendees. Did they think Carol Braun had committed fraud? Steve White couldn’t believe she was capable of it. In the previous 25 years, there had been no errors or exceptions noted on any audit. But he wondered if they should consider suspending Carol or putting her on a paid leave if they conducted an investigation. Jackie Draws said, “No. It couldn’t be. That’s just not her style. Considering the triangle he talked about, Carol has no motive. It’s not going to be that she took money.” Gary Lichtenberg agreed. “Not Carol. I think she just had the debits and credits backward.” Pedersen felt some relief. His gut was telling him that Carol wouldn’t do anything like this to them. It had to be some kind of a mistake. The auditors had a different opinion. From their experience with other clients, they believed that some kind of fraud was involved. As they returned to the Virchow Krause offices, Marklein said, “I don’t have any proof yet, but I’m willing to bet lunch that she’s stealing.”

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Chapter 5

The Goodwill audit was set up in two phases. The first phase, when the accounting irregularities were revealed, occurred during the week of May 12 – 16, 2003. A week’s break from the audit was scheduled for May 19 - 24. Phase two, when the process was to conclude, was set for May 27 - 30 (Monday, May 26 was a national holiday to observe Memorial Day). On May 21, the day after the meeting with the fraud examiner, Bob Pedersen e-mailed a memo to Nancy Heykes, the local Goodwill’s chairman of the board and an attorney, to keep her up-to-date. Previously, Pedersen had telephoned and e-mailed Heykes with preliminary information. Pedersen also sent copies of the e-mail to Gary Lichtenberg and Gregg Curry, the other attorney on Goodwill’s board. The memo read:

Nancy, we met yesterday with the representatives from Virchow Krause and Gary. The plan is to conduct a fraud investigation. We will be receiving an engagement letter from Virchow. Once I am in receipt of the letter, I would like to call a meeting of our Legal Committee and discuss the facts, as we understand them to date. Virchow suggested we look at our insurance coverages and additionally tee up our Legal Committee in the event we have an issue of fraud. I am copying Gregg on the earlier correspondences to bring him up to date. We are keeping this issue closely held for the moment until we can determine the extent of the problem or even if we have a problem.

Bob

Pedersen also consulted with Lichtenberg, the leader of the team looking into accounting irregularities, about Carol Braun. “Gary, do we put Carol on administrative leave while we investigate this thing?” Pedersen asked. “Maybe not,” Lichtenberg said after thinking a moment. “If there’s something going on, why flag it? The auditors are on board already. What do you gain? If something is going on, it will show up pretty quick. And you may get more out of Carol in a comfortable setting. Don’t send a message if you don’t know what it is.” So, the decision was made to allow Braun to continue working through the audit. On Tuesday, May 27, the day the auditors returned to begin phase two of the audit, the Legal Committee met with Pedersen and Lichtenberg. Steve White, Goodwill’s chief financial officer, was unable to join them because he was in Ohio for the week, attending to family matters. The group reviewed the engagement letter from Virchow Krause that summarized a proposed fraud investigation and suggested the materiality of the audit be reduced from $30,000 to $5,000. “Materiality” refers to the level of detail of an audit. The materiality amount is a subjective judgment that can be based on a number of factors – an organization’s revenue… sales… assets…gross profit…equity…industry type…or any combination of such factors. In essence, materiality is determined by answering the question, “What amount would the financial statement have to be in error for it to be an issue?” In other words, if the financial statement were in error by a certain amount, it would be materially misleading. The material amount, and any amount above it, identifies the transactions that the auditors examine. Lowering the materiality of the audit from $30,000 to $5,000 would authorize the auditors to look at much smaller and many more transactions than they would have examined. The Legal Committee agreed to the proposal.

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In addition, the Legal Committee discussed potential employment issues related to the investigation and was briefed about Virchow Krause’s audits of cash, bank reconciliations and the general ledger that began during phase one. Those audits were still under way because some errors and discrepancies had been found, and it would be necessary to get cancelled checks from the bank to rectify them. After the meeting, Pedersen instructed Jackie Draws to request copies of the cancelled checks from Wells Fargo Bank. When Draws telephoned the bank, she was informed that all cancelled checks were returned routinely to Goodwill. Draws asked Braun for the cancelled checks, and Braun retrieved a box from the vault. Draws delivered the box of cancelled checks from the vault to Billie Jo Higgins, the Virchow Krause senior accountant on the audit. “That’s when I really began to question Carol’s integrity,” Higgins said later. Unbeknown to Draws, when Higgins had asked Braun for the cancelled checks during the first week of the audit, Braun told Higgins that the bank did not return cancelled checks to Goodwill. The auditors soon discovered that some of the cancelled checks they needed to reconcile cash, bank statements and the general ledger were missing from the box. The numbers of the missing checks indicated that they were from the manual checkbook, which raised the eyebrows of both Higgins and Draws because the manual checkbook was no longer used. Draws had identified the manual checkbook as a security risk soon after she was hired the year before. To remedy the situation, Draws arranged for the manual checkbook to be computerized to eliminate the out-of-date practice and have it conform to Goodwill’s other accounting procedures. Draws now recalled that at the time of the conversion, Braun had objected because she considered the manual checkbook essential to handling emergencies, such as last-minute requests for funds and computer snafus. Braun had reassured Draws that the manual checkbook was safe because it was in her hands, and she was the only person who ever wrote checks from it. Nevertheless, Draws had the manual checkbook function converted to the data processing system. After being automated, tested and put in place, the manual checkbook became obsolete. Draws and Higgins decided to “lay low” with the knowledge that manual checks were still written during the past year. Draws placed another call to the bank to obtain copies of the missing cancelled checks. She was told it could take up to 48 hours to fulfill the request.

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Chapter 6

On Thursday morning, May 29, 2003, the first copies of the missing cancelled checks from the manual checkbook arrived via e-mail in Jackie Draws’ inbox. The first check for $1,510.65 was made out to Carol Braun for reimbursement for office supplies. The second check for $771.20 also was made out to Carol Braun for travel expenses. The third check for $1,470.09 caused Jackie Draws’ heart to flutter. It, too, was payable to Carol Braun. But it was for medical reimbursement. Two other checks – for $850.30 and $790.20 – also were to Braun for medical reimbursement. As she digested the information, Draws began shaking. “You don’t just have $3,000 in medical reimbursements,” she thought. “And anything like that would be run through Human Resources on the payroll system, not handwritten checks.” Draws called Billie Jo Higgins to her office to see what she had discovered. Of the initial batch of nine copies of cancelled checks, seven were written to Braun within a month for a total of $8,905.02. The other two checks were made out to Master Electric for $6,165. Draws called Bob Pedersen to share the information. Pedersen said he’d be right down. In the meantime, Draws printed the checks. When Pedersen arrived, they went into the privacy of Steve White’s office to take a closer look and confer. After discussing the obvious – the mysterious checks to Carol Braun – the line of questioning switched to Master Electric. Who were they? Draws placed a quick call to George Burns, Goodwill’s director of environmental services. He would know if Master Electric had done work at any of the facilities. Burns had never heard of a Master Electric.

16

Chapter 7

Something was not right. Bob Pedersen felt compelled to look into the Master Electric checks personally. This was not out of character for him, even though Jackie Draws was the immediate supervisor of Carol Braun, the writer of the checks. Pedersen considered everyone who worked at Goodwill a teammate and contemporary. As a leader, he reserved the right to communicate directly with any member of the staff if he perceived a problem. His leadership style was open and transparent. If someone, for instance, on the loading dock had a question about Goodwill’s financials, Pedersen would stop, explain the numbers, and, if necessary, follow up with a highlighted copy of the financials. Now, Pedersen would personally pursue the Master Electric cancelled checks, just as he had driven out to the mall, bought a copy of When Bad Things Happen to Good People, and signed the book for Carol when he had learned that she was having family problems. In a nutshell, his philosophy as a president and CEO was, “I am a servant-leader.” The Internet listed telephone numbers for a nearby Master Electric in Green Bay and a Master Electrical Services in New London. Pedersen first called the Green Bay number. He identified himself, explained that he was checking records, and asked, “Have you done any work for Goodwill Industries of North Central Wisconsin in the past year?” A quick check of the books brought the response, “No, we have not.” Pedersen went through the same exercise with the New London firm. It, too, had not done any work for Goodwill. But almost as an afterthought, the person on the phone said, “There is an unlisted one-man shop in Neenah run by Wesley Braun that’s also named Master Electric.” Those words gave Pedersen pause. Carol Braun’s husband was Wesley, and they lived in the Town of Menasha, which was adjacent to Neenah. Pedersen’s next call was to the Braun residence, but there was no answer. Next, he telephoned the Associated Bank in Green Bay, where the Master Electric checks had been deposited. He learned he could not find out anything about the account without a subpoena. Pedersen called an emergency meeting of the Legal Committee. Nancy Heykes and Gregg Curry met with Pedersen, Gary Lichtenberg, Billie Jo Higgins, and Jackie Draws as more copies of cancelled checks rolled off Draws’ printer. So far, none of the checks had been recorded in the general ledger. In contrast with Tuesday’s informational meeting, angst was the overriding mood of this session. Evidence of fraud continued to grow, but no one wanted to believe it. In an effort to give Carol Braun any benefit of doubt, Curry concocted scenarios and explanations that were not necessarily fraudulent. But none of them held up. Finally, Curry suggested that it was best to confront someone as soon as you knew you had a strong case for fraud. Pedersen wanted to make sure that they had all their ducks in a row. “What, if anything, should we do now?” The consensus was to call a strategy meeting for the following morning to discuss possible action steps. The meeting would involve the Goodwill leadership team and Bob Craanen, an attorney and consultant whose practice focused on employment law. Pedersen instructed his team to clear their calendars for an important 9 a.m. meeting that could last most of the next day.

17

Chapter 8

Carol Braun did not come to work on Friday, May 30, 2003. On Thursday afternoon, as the Legal Committee discreetly met to discuss the cancelled checks made out to her and Master Electric, Braun decided to take vacation time on Friday and Monday. In hindsight, some people thought Braun had not been herself during the second week of the audit. She seemed nervous and edgy. Someone noticed Braun fumble and drop things. Jackie Draws recalled reassuring her by saying, “We just have to explore things more closely because of the journal adjustment,” when Braun expressed concern over the deepening investigation. Another coworker said, “I could tell on Thursday that there was something wrong with Carol.” But the people closest to Braun at Goodwill did not think she had acted differently. Kathy Eldred, a program assistant who had worked with Braun for eight years in the Accounting Department, routinely took afternoon breaks with Carol. They often sat in Braun’s car where Carol would smoke. On Thursday, Braun informed Eldred that she was taking the next day off. Eldred didn’t give the information a second thought until she realized later that it was one of the last things they ever talked about. After she returned from break, Braun brought the required vacation form into the office of Nancy Thiel, payroll coordinator, at about 3:30 p.m. Braun had hired Thiel in November 1985. Not only had they worked together for 18 years, Braun and Thiel became close friends and confidants. Virtually every day for the last six years, they had lunch together. Braun didn’t mention vacation when the pair had lunch on Thursday, and Thiel thought nothing of it when Braun handed her the vacation form and nonchalantly informed her that she was going to make it a long weekend by taking Friday and Monday off. Thiel assumed Braun was going to use the time to prepare and recover from the annual celebration that the Brauns held every year around Memorial Day to observe multiple family birthdays. Braun’s husband Wesley, a daughter, daughter- in-law, and grandson had birthdays that fell within a week. Nor did Thiel notice anything strange about Braun during recent weeks. Thiel knew Wesley, each of Braun’s children, and most of her 10 grandchildren. As Braun’s sounding board, Thiel also was privy to things about Carol’s life that other people were not. Thiel knew that Braun was upset when Jackie Draws was hired. Braun resented that she no longer reported directly to the CFO or had any supervisory authority, particularly when it came to the younger women hired by Draws to take over some of Braun’s responsibilities. Thiel also was aware that Braun, a high-energy person who could get bored easily, did not have a good marriage. Braun confided in Thiel when the husband of Carol’s youngest daughter and the wife of Carol’s oldest son had an affair that broke up the two families, displacing her daughter and grandchildren into Wesley and Carol’s home. Thiel was there to listen to Carol as Wesley suffered through extreme depression, breakdowns, and a diagnosis of lung cancer. Braun was the main breadwinner for her extended family and, for years, held a second job as a saleswoman for a department store. She rarely missed work, even though she had a host of health problems, having undergone multiple surgeries on her feet, hands and back. On days she couldn’t make it to Goodwill, Braun would often ask Thiel to box up the work on her desk and drop it off at her house. Rather than use all her vacation, Braun preferred being paid for unused vacation time. She told Thiel about her daughter’s financial problems and legal expenses. One Sunday morning, Thiel saw a bankruptcy filing for the Brauns in the newspaper. That same week, Braun talked to Thiel about filing for a divorce from Wesley.

18

Thiel also considered Braun one of the hardest working and most caring, conscientious and honest people she ever knew. Braun often worked well past the normal quitting time of 4 p.m. and frequently came in to work on weekends. “She was supportive and wonderful to work for. She knew everything about Goodwill. She also was the Goodwill watchdog and very careful with money,” Thiel said. Braun even secretly complained to Thiel if she thought a new employee was over compensated. As a supervisor, “Carol was a control freak. If something was wrong, she would always fix it herself,” Thiel said. “The title, ‘controller,’ really fit her. She had to have her thumb on everything you did. And she didn’t like change,” Eldred said. “She was the matriarch of her family, whether it was her personal family or her Goodwill family. If you had a problem, she was someone you could talk to because it wouldn’t go anywhere else. She was my second mother.” Braun took a lot of work home, according to Eldred. “She always said, ‘I can’t get any work done here. I’m always interrupted.’” Because of Braun’s back problems, Eldred often lugged a suitcase full of work out to Carol’s car. Thiel concurred. “She used to carry two briefcases home with her.” Eventually, because of Braun’s back, her staff bought her a suitcase with wheels to transport her work more easily. “But Carol did not like change.” She wouldn’t use the suitcase until one day when Thiel transferred the materials to it from the briefcases at the Braun home. “That’s just Carol,” was how Eldred summed up Braun. “As you got to know her, she wasn’t as crusty as she first came across. She was very likeable. When she let her guard down, she warmed up. She had a sense of humor, when you found it.” Eldred recalled the night years ago when she was let into Braun’s fold. The small accounting team – the A-team – went out for supper as they occasionally did. There was the usual bantering and good-natured ribbing around the table. Eldred made some smart remark to Braun. Braun affectionately retorted, “You, a------.” “That’s when I knew I was accepted and that Carol liked me,” Eldred said. That’s also when the “A” in A-team took on a whole new meaning.

19

Chapter 9

“The smartest thing I did all year long was to trust the capable professionals on our staff,” Bob Pedersen said about the May 30th strategy meeting designed to discuss the next steps. “We got everyone together who was responsible for an area that could be affected by the situation and asked them to maintain confidentiality so that we could be open. Because of our culture, I didn’t want to be giving orders to people without them knowing why, expecting blind obedience.” Besides Pedersen, participants in the meeting were: George Burns, director of environmental services; Nancy Coonen, chief information officer for information technology; Scott Copeland, chief operating officer for retail and logistics; Bob Craanen, attorney and consultant for employee law; Jackie Draws, director of finance; Brad Gustafson, director of loss prevention; Karen Laws, chief operating officer for development, communications and marketing; Gary Lichtenberg, member of the board of directors and leader of the team looking into accounting irregularities; Sara Saxby, executive coordinator; Renee Waterman, director of human resources; and Keith Wilk, chief operating officer for programs and services. Steve White, Goodwill’s chief financial officer, was still in Ohio, but Jackie Draws maintained close contact with him and kept him abreast of developments as they unfolded. The mood of the meeting was somber. There was a sense of doom in the air. “It was like I was at a wake for a very good friend,” Scott Copeland said. “You knew what was going on, but you had no control over it.” Yet, a wisp of hope lingered. “We couldn’t imagine there wasn’t some logical explanation,” Karen Laws said. Pedersen also clutched to that thread. “Up until one hour before we called the police, I had hoped we missed something – a mistake, incompetence, anything – to explain what was happening.” So that everyone would be working from the same set of facts and have a common starting point, Pedersen began the meeting with, “Here’s what we know as of 8 a.m. today.” He reconstructed what had been discovered and put the information in the context of a timeline. “Bob’s message was, ‘We’re here to figure out what we’re going to do,’ ” Keith Wilk said. “He had tried to keep all doors open that it wasn’t fraud, but the doors were closing. Otherwise, he wouldn’t have called all of us together like he did.” Pedersen distributed a handout that summarized the objectives for the day:

Mission: To properly manage solutions to the challenges created by suspected fraud on the part of a trusted staff member. Issues: Transparency, clarity, focus on facts and not speculation, reporting requirements, communications, impact on internal and external stakeholders. Today’s Work: Understand the facts, establish a process, develop talking points, decide on a course of action, assign roles and responsibilities, prepare action steps. Work Products: Action plan, communication plan, personnel action plan, security plan, a means to follow through and monitor plans. Key Players: Goodwill staff and board, Virchow Krause, insurance carrier and local representative, Menasha Police Department, Winnebago County District Attorney’s Office, the media. Care and Concern for Affected Parties: Guilt, anger, fear, mistrust, misplaced loyalty, concern for Carol.

20

Public Trust and Perception: Need to convey the facts, act professionally, be fearless in the pursuit of truth, respond directly and humanely.

The group started to chip away at possible courses of action, listing them on flip charts. Among the suggestions was cutting off Braun’s computer access since she had a Goodwill computer at home that was networked with the organization’s system. It also was suggested that Braun’s access to the buildings’ security systems be eliminated, because she possessed keys to all Goodwill facilities and often worked evenings and weekend hours. The team took a mid-morning break, allowing Nancy Coonen to shut down Braun’s computer access. When the meeting resumed, Coonen reported that Braun had not tried to access the system that day. Jackie Draws also had some news. She checked her e-mail during the break, and another copy of a cancelled check had come in from the bank. It was made out to Master Electric for $2,750. More copies would arrive later in the morning. The check caused the cloud over the room to grow darker, and the discussion turned to employment issues. If the tables were somehow turned, could Goodwill be exposed to lawsuits involving age discrimination, slander, or defamation of character? Was mental illness part of the equation? Bob Craanen said one option would be to suspend Braun temporarily, pending a police action or investigation. Another option was termination of employment, based on the discrepancies, performance, negligence, willful misdirection, or possible insubordination. Craanen grew confident that there was a strong case building to terminate Braun’s employment. The best scenario would be if she admitted committing the crimes and explained how she accomplished them. It would not be wise for Craanen to be included in the meeting with Pedersen and Braun to try to extract a confession. That would make Craanen a witness to the case and prevent him from representing Goodwill in future employment actions. Gary Lichtenberg and Renee Waterman would serve as witnesses at the meeting between Pedersen and Braun. Sara Saxby would take notes, and Pedersen would have copies of the cancelled checks available to confront Braun. The meeting with Braun would be set up for Monday, giving the team the weekend to prepare. Craanen advised participants to conduct themselves as if they were being taped. Taping was allowable, as long as Braun was aware of it. However, some judges do not view tapes positively. Craanen said it would be best if Braun were to submit a written statement. Noon was approaching. Copeland and Laws offered to go out for sandwiches and bring them back so the group could have a working lunch. As the food order was put together, some team members continued to work on strategy lists. Others headed for the restrooms. Draws went to check her e-mail. The hairs on the back of Draws’ neck stood up straight as a batch of 23 copies of checks came across her computer screen. When they emerged from the printer, she ran them back to the meeting room. “We’ve got some more checks,” she announced. Draws and Lichtenberg assembled them in order by date. Lichtenberg saw a pattern and said, “This is the real deal.” Draws lobbied for bringing in Braun as soon as possible. “We know what’s going on,” she said. “Do we have to wait until Monday? She’ll have the whole weekend, and all the while it will be hanging over our heads. I don’t know if I can stand it. I could call Carol and tell her I need her to help with something today.” The group agreed that Draws should try to call Braun in for a meeting that afternoon, and Braun’s employment would be terminated.

21

Chapter 10

“Carol, I need your help on some things with the audit. Could you come in this afternoon?” That’s how Jackie Draws asked Carol Braun to come to Goodwill on May 30, 2003, when Braun was taking a day of vacation. Characteristically cooperative, Braun agreed to be there by 1 p.m. While waiting for Braun’s arrival, the strategy team discussed final arrangements for the meeting. Draws would bring Braun to Bob Pedersen’s office where he, Gary Lichtenberg, Renee Waterman, and Sara Saxby would be waiting. After Draws excused herself, Pedersen would begin the meeting. Brad Gustafson would call the police. If Braun would break down during the meeting, a phone call would be placed to Carol’s daughter, Tina, who worked at a neighboring travel agency. Many of the staff members knew, liked and respected Tina because Goodwill used the agency’s travel services. Braun would be asked to turn in her computer, keys, corporate credit cards, and mobile phone. Draws would notify the Goodwill staff by e-mail that Braun’s employment had been terminated. “Jackie was incredibly strong,” said Karen Laws, Goodwill’s chief operating officer for development, communications and marketing. “This was when things started to become surreal. We all returned to our offices and just waited.” Draws heard the customary rattle of Braun’s keys as she approached her office. “Thanks for coming in, Carol,” Draws said. “We need to go over some stuff in Bob’s office.” The walk from Draws’ office to Pedersen’s is long. The straight corridor runs the entire length of the building, approximately 100 yards, and Draws’ and Pedersen’s offices are at opposite ends of the hall. Interspersed along the way are various departments, offices, and intersecting hallways. Draws’ knowledge of what was about to happen, Braun’s intuition that her scheme was unraveling, and a strained silence charged the air with a tension that made the walk interminably long. Seated at a conference table and waiting for Braun were Pedersen, Lichtenberg, Saxby, and Waterman. After Braun joined them and Draws left, Pedersen asked, “Carol, is there anything you want to tell me?” Braun burst into tears. “Yes. You don’t deserve it – you two of all people,” she sobbed, gesturing to Pedersen and Lichtenberg. She fumbled in her purse and produced a folded sheet of paper, which she handed to Pedersen. It was a typed confession. In Braun’s unedited words, it read:

May 29, 2003 Goodwill Industries of NC Wi Robert Pedersen – my idol Steve White – my inspiration – one of the best bosses I have ever had Scott Copeland – my friend – someone you learn to really respect and enjoy working with. Keith Wilk – a really great leader – & someone nice to work with. Goodwill Board – especially Gary, Dave, Nancy, & everyone else. You do not deserve this. I’m really sorry about it I don’t know what ever made me to ever do anything like this. Goodwill is my life. It is what I live for. And, I will certainly be lost without it. After my Father died, I had inherited a sum of money, and started to really go to Oneida. Well I got tied up In this, & all of that was gone, & I needed money to cover the checks I wrote out. What started out to be Only one time and never again, didn’t end. I’m really happy its over. I will now be able to stop worrying, However I will never forgive myself for doing this to the people I love most. I will really miss my job – it was My life. Again – I’m really sorry this happened. Carol

22

Pedersen quickly read the confession and then asked, “Carol, what did you do with the money?” “I spent it in Green Bay at the Casino,” Braun said, blotting tears with a tissue. “When did it start?” “Two to three years ago.” Pedersen glanced at the letter and her words that noted she began going to the Oneida casino in Green Bay after her father died. He was sure that her father had died longer than three years earlier. “Does your family know?” Pedersen asked. “They are not aware.” “How long has it been going on” “Three years,” Braun said. “It was after the 100-percent-clear audit by Grant Thornton.” “Did you use any other method than handwritten checks?” “No.” She paused and then corrected herself, “There may be a few computer checks made to Master Electric and me.” She broke down again. Through the sobs, she said, “You are my life. It was a dumb thing. I love this place. My family is going to be so hurt, especially Tina.” Pedersen felt she was looking for a hug. To comfort her, he touched her arm. After Braun collected herself, he asked, “Is there any money left?” “No, there is no cash left.” Sobs broke out again. Through them, she said, “It started after Lloyd left…I spread it into accounts…Master Electric is Wesley’s company…He knew…He said not to do it…I am 100 percent to blame.” Again, Pedersen tried to comfort her. “What did I do to all of you, especially you?” she said, looking at Pedersen. “And when Lloyd left, Gary was here to help me.” She turned to Lichtenberg and then she broke down again. Lloyd Williams had been Goodwill’s chief financial officer from 1976 to 1996. It flashed through Pedersen’s mind that if Braun began embezzling during Williams’ reign, the fraud had been going on longer than two to three years. When she collected herself, Pedersen said, “Carol, we have an obligation to deal with this.” She sobbed back, “I wanted to end my life because it’s not worth it for what I’ve done.” As Pedersen rose from his chair, so did Braun. He gave her the hug she seemed to be looking for. When she collected herself, Braun handed Pedersen another note for Jackie Draws, her credit cards, keys, and cell phone. She said her computer could be picked up at her house. Considering the emotion of the situation, the session could have dragged on throughout the afternoon. To move the process along and because her confession wasn’t as refined as he thought it should be, Pedersen asked Braun to type a more complete statement on his computer. Saxby stayed with Braun, and Pedersen, Lichtenberg, and Waterman left the room. Pedersen took the note meant for Jackie Draws to her office. The unedited text read:

May 30, 03 Good By to all of the special people at Goodwill. I have a lot of friends here that I will really miss. This was not worth it; I will miss all of you. Nancy Thiel – my special friend – Nancy Coonen, Audrey, Kathy, Mary, & everyone else. Jackie – It was great to be able to know you and work with you. You have a great future at Goodwill. The mistake I made in the bank balance was really an error. At year end two account that we Made a lot of adjustment to, inventory adjustment – & fringe expense – were set up my a percentage

23

Basis spread over all accounts & that is why I adjusted it there. No other reason. However to reverse It you will have to do a JE against account 227 & 225 to off set the expense. I picked this up in February when I discovered something was wrong & the adjusting entry to increase cash at yearend Shouldn’t have been made. You may not believe me but all the other accounts are in order. Cash was Adjusted at that time so all reports and cash reports are correct. For month end JE, I will make a list & transfer all related files to month end. Weekly Sales & Processing & Monthly for May are updated with quotas and last year information. Once the sales come in after Saturday – You just have to re-enter the weekly totals into the work sheets And change to a value, you will remember what to do. Everything else is done on these reports. Sorry & I will really miss this great job. Carol Braun

24

Chapter 11

As Carol Braun began typing her statement on Bob Pedersen’s computer, Sara Saxby told herself, “I can do this.” A scene from her first day at Goodwill leaped from her subconscious. Pedersen gave her a tour of the facilities. At Braun’s office, he said, “This is Carol Braun, our controller. Thanks to her, we haven’t had an audit exception in 26 years,” Saxby, hired as executive coordinator the previous October, had known Braun for less than eight months. During that time, Braun was very accommodating and nice to Saxby, whose new responsibilities would lighten Braun’s workload. Braun welcomed Saxby’s taking over her duties associated with making arrangements for the board of directors. However, Braun wouldn’t let go of coordinating Pedersen’s travel plans or taking care of his credit card account. Braun enjoyed having a high profile with Pedersen and felt comfortable arranging his travel itineraries because of the affiliation her daughter Tina had with the travel agency that Goodwill used. Braun stopped typing. She was breathing deeply again, almost hyperventilating. “What else do they want me to say?” Braun asked. “Maybe how long it’s been going on,” Saxby said, handing her a glass of water. “Where you took the money from…Information to help figure out what’s been going on.” As Braun resumed typing, she asked Saxby, “Do you gamble?” “No.” “Don’t ever start. It’s a terrible thing.” Braun paused. She turned to Saxby and began crying again. “My kids are never going to understand, especially Tina. She’s so Christian.” Giving Braun some fresh tissues, Saxby said, “Carol, if they’re Christian, they’ll stand by you and forgive.” On this day, in this setting, Saxby saw Braun as a pitiful, disgraced, broken woman. It was a challenge to keep the fragile Braun on task. She seemed to be mixed up. She would stop, start, stop, and she corrected her work repeatedly. Very emotional, Braun was not comfortable when silence dominated the room. She would replace it with commentary. “Don’t ever do this, Sara. It all started after my father passed away. I hit a dime jackpot up in Minocqua and got hooked.” “Did your kids ever say, ‘Mom, you’re going to the casino a lot?’” Saxby asked. “Yes, but I didn’t pay any attention.” Tears reemerged. “Wes didn’t like what I was doing. He knew, but…It’s all my doing.” Saxby was watching a woman different from the one she had known. This was not the Carol Braun who never had a hair out of place. Every week, she went to the beauty parlor to have the same conservative hairstyle reset. It never changed. For years, she was the epitome of professionalism for the women she supervised. Dignified…always dressed in dark colors…most of the time slacks, occasionally a skirt…never without heels, despite her foot problems. Realizing she needed to talk to Pedersen, Saxby waited until Braun seemed calmer, collected, better. Then she told Braun she had to step out for a moment. She asked Renee Waterman to come in and be with Carol. “I’ll be right back,” Saxby told Braun. Saxby found Pedersen behind the closed door of her adjoining office. “Bob, I don’t think Carol has any idea the police are coming. Her view of this is distorted. I think she thinks that everything will be okay and a repayment plan will be set up or something.”

25

Pedersen assimilated the information with the other data in his head. He thanked Saxby and said he expected the police any minute. She returned to Braun, and Waterman rejoined Pedersen and Lichtenberg. In all, until the police arrived, Saxby stood by Braun for a little longer than an hour. The unedited statement that Braun drafted during that time read:

To Goodwill Industries of North Central Wi I have made a huge mistake. I started writing checks to myself about 3 years ago. I also than got my husband involved by writing out checks to Master Electric Company & having him deposit them in his account & have him write out a check to me to deposit in my account. My husband doesn’t gamble – & was very upset with me when ever I gave him a check to deposit – He stated he wanted no part of this & kept begging me to stop, said he only did it because he loved me, He also new how I felt about GWI, & the great People here. He also new I was treated very well here and was hurting myself and also The good people at GWI. I was going to Oneida about 3 or 4 times a week, I would write out my personal checks, than I would write out a check from GWI to myself to cover my checks. I wrote checks out to myself, usually handwritten ones, to cover my check that I wrote out of my checking account. They were usually coded to the 210 account which was an accrual account. To reconcile this account at the beginning of the year I did an accrual In this account, for Utilities, Waste Management, Target, & others, I did apply the offset against these accounts. I have no idea how much, I could go through my bank statements and let you know. I slowed down going to Oneida in about October of last year, because I was feeling really guilty about this. Carol Braun

26

Chapter 12

Armed with Carol Braun’s three typed statements, investigators David Jagla and Mark Mauthe of the Menasha Police Department started interrogating Braun at the Goodwill offices shortly after 2 p.m. on May 30, 2003. “We began by telling her why we had been called in,” Jagla said. “She admitted everything. She came across as a very nice lady, cooperative, a grandmotherly type.” But Jagla also had the impression Braun was minimizing things and that she was mostly sorry for having been caught. Her initial estimates of the money she had taken from Goodwill were less than $100,000. Bob Pedersen sat in on the 90-minute session. “The police did a masterful job of keeping the situation under control,” he said. “It was gut-wrenching. Carol was like a deer caught in the headlights. She was in shock. She recited the gambling mantra. But her dates didn’t line up. She was either in a fog or misleading us. There were lots of inconsistencies.” During the interrogation was when Pedersen first recognized the tug of war between compassion and anger going on inside him. He was feeling compassion for a hurting peer professional, someone he valued, cared for, worked with, and trusted for 13 years. Today, she was broken, and he felt her pain. Pedersen had made rehabilitation his career. Goodwill focuses on helping people and improving their lives – people who are down on their luck, disadvantaged, devastated, in need, people like the Carol Braun being interrogated today. Prior to Goodwill, Pedersen had devoted 20 years of his life as an executive for the Brown County Association for Retarded Citizens in Green Bay, Wisconsin, and the Pinellas Association for Retarded Children in St. Petersburg, Florida. “Bob is a second-chance kind of guy,” said Nancy Heykes, Goodwill’s board chair. “He looks for the best in people and helps them build hope, start over, and work on their strengths.” As Pedersen sat with the police and Carol Braun, he felt an anger welling. Questions began rolling around in his mind. How could you do this to us? What will our donors think? How could you steal money given to help our consumers? What will the board do? After all we’ve been through, how could you do this to us? “I remember thinking, ‘This is how you must feel if you discover your spouse has been unfaithful and cheating on you for years,’” Pedersen said. When the interrogation concluded, and the investigators stood to take Braun into custody, she looked to Pedersen for another hug. As he did so, Pedersen thought, “This is last hug I will give her.” Pedersen suggested to the police that Braun might be a candidate for a 72-hour hold to assess her mental state. Jagla and Mauthe drove Braun to her home in the Menasha squad car to secure the Goodwill computer. Braun’s husband Wesley and a daughter who had moved back home with her children were there. “They seemed to know what was going on. They weren’t shocked or obviously upset. When we left to go to the station, Carol just said, ‘I’ll be back,’” Jagla recalled. Carol Braun was fingerprinted, photographed and, because of her cooperative nature, released later that evening pending further investigation. She was picked up by a daughter who drove Braun back to Goodwill so they could retrieve her car.

27

Chapter 13

After the police took Carol Braun into custody shortly before 3 p.m. on Friday, May 30, 2003, Goodwill’s management leadership team reconvened. The pressing topic was, “How do we get through the weekend?” “It was as if there were a death in the family. We needed to be with other people who had a stake in what was going on,” said Karen Laws, the executive in charge of development, communications and marketing. Like the survivors in an immediate family, members of the team addressed, “Who do we need to tell, and how are we going to tell them?” Informing members of the greater Goodwill family, especially those closest to Braun, was a priority. New lists began filling the flip charts. The first items were: • Tell the people closest to Carol. • Bob is the spokesperson. • Be absolutely honest. • We have friends, and people trust us. “Although we were scared and shaken, it ended up being one of the most extraordinary experiences in my life as a member of a team,” Laws said. “People came together to help each other like a team in a locker room. We had no frame of reference for dealing with something like this or the emotions. Instinctively, we just went back to the values of the organization and our mission and vision. In hindsight, our communications did not start at this meeting. We had a history of open, honest communication.” The action list went on to include: calling individual members of the board of directors at home during the weekend; setting up a special board meeting for 8 a.m. Monday; alerting George Kessinger, president of Goodwill Industries International; personally contacting Goodwill stakeholders and partners as soon as possible; and mobilizing the resources of the Goodwill Employee Assistance Program. At some point, the realization surfaced that the arrest would show up on the police blotter the next day, and they would have to deal with the media. Pedersen had close personal contacts with the local newspaper. As the principal spokesperson, he would call them the first thing Saturday morning. “There was never a discussion about what we would say to the media,” Laws said. “That was not part of it. No script or spin was needed. This was just about a real loss, and we were going to be honest and completely forthright. Bob is an accomplished speaker. He knows Goodwill and what we stand for. It’s part of him. Our plan was to deal with everything honestly, transparently and head-on as things unfolded.” After responsibilities and timelines were assigned, and the meeting began to break, the weekend became a blur, according to Laws. Friday evening melted into Saturday, which somehow became Sunday. Her plans were scrapped to enjoy a long weekend with her son, who was home for a visit. On Sunday morning, he kidded her, “If you’re not going to have breakfast with me, I’m never coming home again.” Throughout the weekend, “there were a lot of ups and downs. We were too frightened to laugh, so there was not the typical joking around that we have at some of our meetings. But it wasn’t morose, either. I guess the mood was thoughtful, but it kept shifting,” Laws recalled. “All of us were concerned about Bob, as well. He truly is our leader and was strong, but we knew this was just devastating to him.” 28

When the meeting adjourned at 3:45 p.m., Pedersen asked Jackie Draws to bring members of the finance staff to his office so he could personally talk with them about Braun. Priscilla Schultz, an accounts payable specialist, and Clare Zimmerman, an accountant, were the only members of the finance department other than Draws working that afternoon. They had been hired less than a year ago, during the previous July, to lighten Braun’s workload. When Draws simply asked them, “Can you come with me?” they knew something was wrong. The trio made the long walk to Pedersen’s office in dead silence. “You could feel the tension in the air,” Schultz recalled. Earlier in the day, Zimmerman had remarked to Schultz, “There’s been an awful lot of closed doors around here.” Schultz agreed, “There must be something up.” Typically at Goodwill, doors remained open. But they noticed that the auditors and others had been involved in a number of private sessions in Draws’ office. Draws also had been going to a lot of meetings. Schultz and Zimmerman actually speculated during the afternoon that the vacationing Braun might be in trouble. The auditors had asked questions about two outstanding checks and a bank statement. Another employee had called and said an internal e-mail to Carol kept coming back undeliverable. “Carol must have made a bad entry or a really bad mistake on a procedure or something” was the impression that Schultz shared with Zimmerman. But as they walked to Pedersen’s office, they began to doubt themselves. “Did I make the mistake?” Schultz wondered. “It was like going down to the principal’s office in school,” Zimmerman said. “You always think the worst.” Pedersen was waiting for them. “Carol Braun has been terminated from Goodwill. Some money is missing, and the police are investigating,” he said. “Whoa. Wait a minute. I’ve got to catch up,” said an overwhelmed Schultz. Pedersen tried to offer some levity. “Well, catch up fast. My head has been spinning for days,” he said. Schultz and Zimmerman were “shell-shocked. The meeting didn’t last long, but it seemed like a lifetime had passed by the time we got back to our desks,” Schultz said. Braun had been “like a grandma” to both of them. “What is Carol going to do?” Zimmerman kept asking herself. “I felt terrible for her grandchildren, who she admired and talked about so much.” Jackie Draws then sent an agency-wide e-mail to all teammates, informing them that Carol Braun no longer worked at Goodwill. However, with normal business hours ending at 4 p.m., and it being a Friday, few people were still at work to get the message. When he received the notice in his office, Pedersen cringed at the thought of teammates learning about the situation from the newspaper. He resumed telephoning the homes of four staff members who were among Braun’s closest friends. He had assigned himself the responsibility of talking to each of them personally because he knew how close they were to Carol.

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Chapter 14

Nancy Thiel had taken Friday afternoon off to do some shopping. As she walked through the Fox River Mall, her cell phone chimed. It was her husband, calling from home. “Bob Pedersen just phoned and he wants you to call him at work.” “That’s strange. I wonder what’s up,” said Thiel, Carol Braun’s closest friend and confidant at Goodwill. “I don’t know. But he sounded pretty serious and wanted to talk to you right away.” She promptly punched Pedersen’s number. “Nancy, something very bad has happened, and I wanted to tell you personally. We terminated Carol Braun’s employment today,” Pedersen began. Thiel abruptly stopped walking. She stood still in the middle of the busy mall corridor, not fully comprehending the rest of the one-sided conversation. While other shoppers veered around her, only a few words stuck to her memory…Accounting irregularities…Missing money…Something really serious…Arrested. She next found herself in her car, telephoning her husband from the mall parking lot. “I don’t know how I got home. I was in shock,” Thiel said later. Following a night when she couldn’t remember sleeping, Thiel went into work on Saturday morning, hoping to find out more from anyone who would be working that weekend. The executive area was teeming with activity. Lists were being refined and letters drafted. Thiel ran into Pedersen. “I know it’s not politically correct, Bob, but I need a hug,” she said, adding, “I feel like someone has died.” “Nancy, someone did. The Carol we knew has died.” Thiel slept little the next two nights, preoccupied with thoughts of Braun, wondering how Carol was handling things, and expecting a call from her at any minute. Yet, Thiel dreaded a call. “I wouldn’t have known what to say. That’s why I couldn’t call her.” Thiel was astounded. “I felt bad because I saw no signs. How could this happen out of the blue? She always told me so much. I felt betrayed. The Carol I thought I knew was my friend. The Carol I knew would never have done this. She would not have done this to her children, especially her grandchildren.” When gambling was revealed as Braun’s primary motive, Thiel reflected about the past and searched for clues she had missed. Yes, when Carol supervised the accounting department, a couple of times she led the group up to the casino in Green Bay for a night of fun. But that was only twice in the 18 years they had known each other. Once, Carol stayed after Thiel and some of the other women got bored playing the slot machines and opted to go home. But Wes had shown up that time, and no one thought a thing about it. Thiel also recalled Carol occasionally saying that she had gone to the casino with her family. But that was no big deal either. Carol only mentioned gambling in the context of having won a little. The strangest thing for Thiel to understand was how a high-energy person like Carol could enjoy sitting at a slot machine. Then, in the last five or six years, Carol, Nancy, and other employees passed some lunch hours playing cards for pennies. Carol had acquired a liking for a rummy game called Liverpool. The most remarkable thing about that was how incredibly lucky Carol could be at cards. “If Carol needed the money for the children, I could understand that. I could forgive. But not for gambling.” Thiel said. “Anything else, I would have stood behind her all the way. But I don’t buy

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gambling as being the illness that caused her problems. If you have to make a conscious effort to get the money, then drive 30 to 40 miles to lose it, that’s not spontaneous enough to be an addiction. That’s more of a lifestyle.” Thiel also thought about Braun’s power over another addiction – cigarettes. “Carol was strong about controlling her smoking. Sometimes, we wouldn’t go to lunch until 1:30 because she was in the middle of something. She certainly could control that.” In addition, if Braun had a problem, she did not seek help for it, even though she knew how to use the resources. “Carol went to the Employee Assistance Program and the United Way for her daughter when her daughter needed help. But she didn’t go for herself,” Thiel said. In the end, Thiel felt she had been betrayed. “I truly thought she cared deeply for me. But I didn’t have a clue, and I thought I was a good judge of character. I didn’t know her. I thought it was a two- way street and that we were very much alike. But Carol was living a double life. She was a very good actor and, at the end, she was playing the role of the person she used to be. I felt bad I couldn’t be there for her family, and I will never be able to go that extra mile with someone I work with again. I will never get that involved.”

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Chapter 15

As soon as the minute hand clicked past 8 a.m., Bob Pedersen felt it was okay to telephone someone’s home on Saturday morning. He called Andrew Oppmann, executive editor of The Post- Crescent, the newspaper that has served the Fox River Valley since 1853. Pedersen considered Oppmann a colleague and friend. They were members of the same Rotary Club and worked together each year on the “Sack It To Goodwill” campaign, an annual donation drive sponsored by The Post-Crescent, The Bay Lakes Area Boy Scouts, and other volunteers. The previous year, 337,800 pounds of goods were collected to be sold in Goodwill’s retail stores and support local job training efforts. As a result of the partnership, The Post-Crescent and Goodwill received the 2002 Business Partnership of the Year award during the community’s annual “Celebrating Our Volunteers” recognition festivities. When Oppmann answered the phone, Pedersen came right to the point. “Andrew, I need you to know something, and I need your help. I’m calling to ask for some guidance.” After Pedersen briefly summarized the previous day’s events, Oppmann explained that, as a member of the Fourth Estate, he was ethically bound to maintain an appropriate distance from the principals in such a situation. He suggested, though, that it’s typically wise for a person in Pedersen’s predicament to be honest, forthright, and communicative. Oppmann also said that a reporter from the newspaper would call Pedersen later that day. Ed Culhane happened to be The Post-Crescent reporter on duty for the weekend. He called Pedersen shortly after 1 p.m. to conduct a telephone interview. Culhane was a senior member of the newspaper staff. Although much of his time now was devoted to the outdoor beat, which included hunting, fishing and environmental issues, his experience had crossed all editorial departments of the paper, and he had written virtually every kind of story. Pedersen knew Culhane and was comfortable with him. He was a seasoned, good writer and, years before, the two had belonged to the same book club. During the interview, Pedersen was as honest and candid as possible, while mindful of Goodwill’s legal responsibilities as the former employer and accuser of Carol Braun. He also had to juggle his roles as a person and a business executive. Pedersen, the private individual, was concerned for Carol and sensitive as to how the article might affect her. Publicly and professionally, protecting the interests of Goodwill and its stakeholders was paramount. When he was unsure of an answer to a question that Culhane posed about the audit, an accounting matter, or the investigation, Pedersen avoided stonewalling the reporter or making an inaccurate response. Instead, he provided Culhane with the names and telephone numbers of Joe Galarowicz of Virchow Krause, Gary Lichtenberg of the board of directors, and David Jagla of the Menasha Police Department. “I was just trying to be as up-front as possible,” Pedersen said. “By referring the reporter to the experts when it came to technical matters, I could minimize misspeaking or making mistakes. I think it also strengthened our credibility. Even though it didn’t occur to me at the time, those people could say things that I could not.” Culhane also asked Pedersen if he was available to come to the newspaper office that afternoon to have a new photograph taken. Culhane had checked the photo files, and the only shot of Pedersen was of him smiling broadly, which was not appropriate to accompany this story. On his way to The Post-Crescent, Pedersen stopped at Goodwill to put together a press kit to ensure that Culhane would

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have adequate and current background information. Pedersen’s daughter and grandson, who were in town for a weekend visit, rode along. A staff photographer took a serious photo of Pedersen under dim lights. When Pedersen emerged from the room, a member of the news department offered, “You’re doing the right thing. By not trying to play games, you’re handling this exactly right and will be much better off.” “That made me feel confident that we were going about things in the proper way,” Pedersen said. “Throughout this ordeal, when I needed some kind of a boost, it came from somewhere. People would say some little thing, or something would happen to lift my spirits. That comment was one of them.” Pedersen’s resolve was renewed to communicate openly and honestly. “You can never go wrong being honest and sincere. The public deserves the straight scoop. Anything else would have been counter culture to the values and beliefs that guide our organization.” Another thought recurred to him. “We’re a learning organization. We learn from failures. If we don’t fail, we’re not risking enough.” Pedersen spent the rest of Saturday on the telephone, calling members of the board of directors. He was able to talk personally with 16 of the 18 directors to apprise them of the situation, alert them of the newspaper coverage which was sure to run in the next day’s edition, and confirm Monday morning’s special board meeting, which Sara Saxby had begun arranging on Friday. He left long recorded messages for the two directors he could not reach and asked them to return his call. George Kessinger, the president and CEO of Goodwill Industries International, was also on Pedersen’s telephone list. Kessinger appreciated the call and was able to provide support and understanding based on a run-in that he had with an embezzler. Just as he was about to retire for the night, Pedersen’s phone rang. It was Sara Saxby. “Did you see the 10 o’clock news on Channel 5?” Pedersen had not. Apparently, the sister television station of The Post-Crescent had been alerted to Culhane’s story, and the anchor read a brief, breaking news report about the embezzlement. As Pedersen tried to sleep, he fretted about the employees who had to learn about things from the TV news and the others who would read about it on the front page of the Sunday paper.

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Chapter 16

On Sunday, June 1, 2003, The Post-Crescent featured the following article.

Goodwill stung by embezzlement Former controller tells police she lost money gambling

By Ed Culhane Post-Crescent staff writer

MENASHA — A 27-year employee with Goodwill Industries was taken into custody Friday by Menasha police after she admitted to embezzling large sums of money from the non-profit organization. Police confirmed Saturday that 63-year-old Carol Braun of Neenah is the subject of a criminal investigation into the missing funds. Robert Pedersen, Goodwill’s president and chief executive officer, said auditors have not yet determined the total amount of the loss, which was discovered during the annual independent audit of the organization’s finances. He said it is possible the amount could be in the hundreds of thousands of dollars. Braun, who was the agency’s controller, told detectives she lost the money gambling at various Wisconsin casinos, said Lt. Larry Bonneville of the Menasha police. She was released from custody while the investigation continues, he said. Criminal charges are pending. Bonneville said the investigation will cover at least the past three years. Pedersen said he fired Braun Friday, prior to her interview with police. He described her as being remorseful and distraught. When contacted Saturday by The Post-Crescent, Braun declined comment. In addition to the harm she caused an outstanding public service agency, Pedersen said, Braun left behind a cadre of bewildered and traumatized colleagues. “It hurts,” Pedersen said. “I worked with her for 11 years. I have been a fan of hers. This is like a death in the family. The human side of this is the side that is really painful. There is a sense of betrayal. This is a person who people loved and respected and admired, and she was leading a double life.” Goodwill carries a sizeable insurance policy against losses from theft, Pedersen said. It is too early in the investigation, however, to know how much of the loss is covered. “This is not going to affect the ability of Goodwill to continue to pursue its mission,” Pedersen said. Goodwill Industries of North Central Wisconsin administers 24 separate programs designed to help people with special needs to achieve independence and to contribute to the overall well-being of their communities. In 2002, the Menasha-based organization served 9,631 people in its 33-county service area and placed 330 people into competitive jobs in the marketplace. It is consistently ranked among the top 15 Goodwill agencies in the country, Pedersen said. “This is a first-class organization that was hurt by a person who has a problem,” he said. Pedersen pledged a timely and thorough investigation and a full public accounting, perhaps within a month. The auditing firm that discovered the irregularity, Virchow Krause & Company, will meet with the Goodwill board of directors to outline the extent of the ongoing audit. “We are going to continue until we are satisfied that we understand the full scope and scale of this,” Pedersen said. “It is important to emphasize that the process is working. We will have a full public accounting and disclosure. We are hoping to have the bulk of the work done in 30 days. Even along the way, if we have numbers we are confident about, we will share those numbers.” It was not immediately clear how Braun initially escaped the attention of auditors. In her position as controller in the finance department, she managed the general ledger, income and expenses, cash accounts and payroll. She had control of check stamps and the ability to put Pedersen’s signature on checks. Goodwill performs accounting services for other non-profit agencies, Pedersen said, but Braun did not work on those accounts and they were not affected. In her 27 years, this was the first audit to indicate a problem, Pedersen said. Goodwill regularly changes auditors, every two or three years, so that the books are periodically checked by fresh eyes, he said.

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Joseph Galarowicz, a partner with Virchow Krause, confirmed Saturday that his firm conducted audits for Goodwill in 2000 and 2001 and is currently auditing the 2002 fiscal year, which ended Dec. 31. He said Goodwill contracts for thorough, independent audits that meet all industry standards and guidelines. “We are going to work with Goodwill to find the facts,” Galarowicz said. “The facts will tell the story, as far as the severity of the problem.” Pedersen said he first became aware that something was wrong on May 16, when Virchow Krause reported discrepancies. Pedersen said auditors do not inspect each of the thousands of transactions that take place during a year. Instead, any transaction or account above a fixed dollar amount is examined. When auditors were not able to reconcile one of the accounts being scrutinized this year, the scope of the audit was expanded to include smaller transactions. Pedersen said once that process began, the losses were discovered. “At Goodwill, we have continually improved our (financial) systems,” Pedersen said. “Since this has happened to us, I have done a lot of research. No matter how sophisticated your systems are, if someone is willful and has the intent, they can break that system. Loss specialists will tell you that any system can be penetrated.” He said he is anxious to finish the investigation, give the public a full accounting and then move on with Goodwill’s mission. He said Goodwill’s annual budget, approaching $27 million, is augmented by the efforts of more than 2,700 volunteers who give more than 20,000 hours of their time each year. Among the dozens of companies who have formed partnerships with Goodwill is The Post-Crescent, a sponsor of the Fox Cities “Sack It To Goodwill” campaign, which in the past eight years has collected more than a million dollars worth of clothing and other goods for Goodwill’s 17 retail and training centers and for emergency assistance to more than 9,000 individuals annually. In 2002, Goodwill and The Post-Crescent were awarded the Business Partnership of the Year award at the annual “Celebrating Our Volunteers” event. Pedersen said that while he clearly was angry and hurt by Braun’s actions, he also feels sympathy for her. She needs help, he said, but she will have to find it elsewhere. “This is a human being who made a very critical error in life and who is now going to have to pay the consequences for that.”

Bob Pedersen was pleased with the coverage. “The article was the very best thing we could have done,” he said during the aftermath. “The story was complete and answered all the questions. We were able to communicate all the pertinent details and clearly inform our publics. That allowed us to begin to move forward.” On Sunday afternoon, Pedersen began contacting the other nonprofit agencies that were customers of Goodwill’s accounting services. The first call he placed was to the home of Rebecca Thompson, executive director of the Fox Cities Community Clinic, one of 34 separate organizations housed on the Goodwill campus. The clinic was a founding agency of the campus in 1997, and Goodwill had performed its accounting and financial functions since the clinic’s inception that year. “Bob wanted to make sure that we knew about it from him personally,” Thompson said. “Even though he didn’t believe we were affected, he gave me his personal assurance that if any agencies lost anything, Goodwill would make them whole.” Thompson had not seen the paper or any TV news. “I was stunned. The nonprofit sector has huge challenges, and everyone works so hard with very few resources. To have something like this happen was very sad. I appreciated his call and probably would have been offended if I heard it on the news.” Ultimately, Pedersen and Steve White made a presentation to the clinic’s board of directors on June 10. They provided a detailed update of the investigation, reported the changes being implemented to prevent a similar situation, and promised to keep management posted on new developments. The clinic’s auditor requested that the clinic be included in the scope of the investigation and given full disclosure of reports generated by the Goodwill fraud audit.

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Chapter 17

When the Goodwill office opened for business on Monday, June 2, 2003, the board of directors was assembling for its special meeting at 8 a.m. Besides Bob Pedersen and the 13 directors who were able to attend, Goodwill teammates George Burns, Scott Copeland, Jackie Draws, Brad Gustafson, Karen Laws, Renee Waterman, and Keith Wilk participated, as well as Joe Galarowicz, the Virchow Krause partner in charge of the audit, and employment attorney Bob Craanen. After Nancy Heykes, the board chair, called the session to order, Pedersen apologized for some of the directors having to learn the details of the case from The Post-Crescent. However, he noted that was necessary because of the sensitive nature of the situation and how quickly the investigation developed into a criminal complaint. Pedersen also assured the board that three of its members had served important and active roles by shepherding Goodwill’s leadership and the auditors through the process. Those directors were Gary Lichtenberg, leader of the team established to look into accounting irregularities, and Heykes and Gregg Curry, both attorneys appointed to the ad hoc Legal Committee. After Pedersen summarized the chronology of events from May 16 through June 1, there were reports from Lichtenberg, Heykes and Curry, Galarowicz, and Waterman. Lichtenberg was impressed with the quick and professional work of Goodwill’s leadership team and staff. “It wasn’t a pretty situation. But they were timely, did their job competently, and made full disclosure,” he said. Heykes and Curry reviewed the legal discussions that had taken place, including Craanen’s counsel that there were sufficient reasons and a strong case to terminate Carol Braun’s employment. While going over the specifics of the audit, Galarowicz answered questions about procedures, the scope of his firm’s work, and why the fraud was not discovered during earlier audits. By virtue of her position, Braun was able to override Goodwill’s accounting processes and procedures. “Carol knew how to work the system, and she worked under the radar – the material thresholds of the audits,” Galarowicz said. Goodwill was fortunate to have caught her. “She should have been able to fix her own mistake, and nobody would have found out about it. I don’t know why she wasn’t able to. Maybe she wore herself down trying to fix things. Maybe she couldn’t do it anymore. Maybe she wanted to get caught,” Galarowicz added. “When Goodwill became aware of the problem, they followed through on missing checks, established a pattern, took an appropriate course of action, and got the police involved,” Galarowicz said. Waterman reported that an Employee Assistance Program team would be on-site the next day and available to all employees. Employees particularly close to Braun would be targeted for assistance. After hearing all of the reports, the board excused Pedersen and the management team and went into an executive session. “That was somewhat disarming,” Laws recalled. “You couldn’t help but wonder what was going on.” Without any employees present, the directors discussed the events, issues, and reactions further. More questions were asked of Galarowicz. “Everyone felt comfortable with how things were being handled – the communications, prompt disclosure, and action plans,” Lichtenberg said.

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Robert Turner, a director and chief operating officer of the northern region for Affinity Health System, made a motion for a resolution to support Pedersen and his team. “If he wouldn’t have made the motion, somebody else would have. At least, I know I would have,” Lichtenberg said. During the ensuing discussion, Curry pointed out, “Our preparation and the way we’re responding started long before this event. It goes back to our core values and the credibility and relationships established along the way. The ground has not been shifting under our feet because we’ve lived our values and stayed true to them. We deserve the trust that we’ve earned in the community.” The final resolution, unanimously approved by the directors present, was, “The Board of Directors expressed its appreciation for full information provided and its full support and confidence in Bob Pedersen and his management team as we move ahead to investigate and remedy any problems that are found.” Before adjourning, the board appointed Lichtenberg to continue leading the team investigating the fraud and being the board liaison to the auditors and management. One-half hour after Pedersen and his staff were excused from the meeting, all of the directors stopped by his office to offer their personal support. Each gesture represented another one of those unexpected, uplifting moments that helped Pedersen to withstand the ordeal.

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Chapter 18

The flurry of activity did not let up. As if they knew when the board meeting adjourned, television and radio stations began calling to request on-site interviews at Goodwill. Four television stations serve the market where Goodwill’s corporate office is located. Three of them contacted Goodwill on Monday morning, June 2, 2003. As the person responsible for Goodwill’s communications, Karen Laws welcomed the contacts. “We chose to be very accessible because we wanted people to be informed and know the story,” she said. “If the media wanted to come and do an interview, they could do it.” In fact, when the fourth TV station did not initiate coverage, Laws called its news director. “I knew something was wrong and that they must have missed the story. I much prefer the media know what’s going on so they can get the story from us, rather than scramble, speculate, or get it second- hand,” said Laws, who had worked more than 20 years as a TV producer, 18 of them in New York for NBC network news. She knew all sides of the business, having written, directed and produced TV news. When it came to media relations, she appreciated the needs and time constraints of news outlets. As it turned out, the news director of the fourth TV station was unaware of the embezzlement, having been out of town during the weekend, and was grateful for Laws’ call. While Laws coordinated media requests and interviews, Sara Saxby escorted news crews around the facilities, and Bob Pedersen was the spokesperson in front of the microphones and cameras. “It was difficult because I was so new to this, and the story was still so fresh and painful. It was also embarrassing and intense,” said Pedersen, who was fueled by the directors’ vote of confidence earlier that morning. Not armed with a script or strategic sound bytes, he relied on the values of the organization. “We had to be on our toes, composed and professional, portraying Goodwill in the best possible light. All the media treated us fairly. Some were even sympathetic, asking how we were holding up. But they were also doing their jobs, asking hard, thought-provoking questions.” Pedersen handled the task “perfectly,” according to Laws. “The coverage was very, very responsible. If this had happened to an organization that did not have a trusted place in the community, it would have been a completely different story.” As one observer put it, “When you squeeze something, what comes out is what’s inside.” He likened Goodwill to an orange that produces fresh juice. While some members of the leadership team dealt with the media, others concentrated on different fronts. During the weekend, Scott Copeland came up with an idea to conduct a focus group interview with a diverse group of representative teammates. Copeland, Goodwill’s chief operating officer for retail and logistics, previously was a senior vice president for ShopKo Stores, Inc. of Green Bay, Wisconsin, which often used focus groups to tackle employee communication issues with its workforce of 20,000 people. ShopKo used focus groups to identify employees’ concerns so that management could address them effectively. Copeland proposed the idea to Pedersen when the leadership team was excused from the board meeting. Goodwill would have to communicate developments with its 750 teammates, most of whom were stationed in retail stores or program offices throughout 35 counties in Wisconsin. A focus group could be used to develop a sort of “town hall meeting,” which retail and program leaders could attend at the corporate office. Armed with support materials, information, and the experience

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of such a meeting, the leaders would return to their stores and offices to conduct similar sessions with their staffs. “Of course, we had to do more than send an agency-wide e-mail of The Post-Crescent article to all employees, as we had done already. And for sensitive or complex issues, one big memo is not always appropriate,” Copeland said. “We needed to let all of our people know what everybody else knew. But we also needed to convey and share feelings. Many of these people had relationships with Carol Braun. An alternative might have been a conference call with our remote leaders. But a homespun, personal type of meeting is often more effective for something like this.” Pedersen liked the idea, and Copeland walked up and down the hallways of Goodwill, asking employees, “What concerns do you have?” He put together a group of 10 people, representing a variety of job levels, positions, and departments throughout the organization. “They came from the sales floor, program services, finance, human resources, marketing, you name it. What we wanted to do was frame up a program for a meeting,” Copeland said. “The group came up with 30 questions, some of which probably would never have occurred to management, like, ‘Will I have a job tomorrow?’ or ‘Has this in any way affected our retirement fund?’ We didn’t worry about answers with the focus group. All we wanted were questions.” While the media and focus group interviews were taking place, Keith Wilk, chief operating officer for programs and services, was trying to get in touch with representatives of Goodwill funding agencies. A funding agency is any organization that hires Goodwill to provide programs or services. Examples include the Fox Valley Workforce Development Board, Division of Vocational Rehabilitation, Health and Human Services departments, and Restorative Justice programs. Despite repeated efforts, Wilk spoke to answering machines, except for one of the agencies. “I wish I could have spoken with more human beings,” said Wilk, a 15-year employee who is responsible for 23 separate programs that serve young children, people with disabilities, adult workers, and others. “It would have been a lot easier to talk through the situation with a person than explain it in a recording.” His typical message was: “This is Keith Wilk from Goodwill. In case you didn’t see Sunday’s edition of The Post-Crescent, there was an article about one of our senior employees who has been accused of embezzling from Goodwill. The investigation is ongoing, and a team of auditors is reviewing our books. You will receive a complete report from our auditors, Virchow Krause & Company, and us as soon as the audit is finished. Early indications are that none of your funds have been jeopardized. The money was taken from Goodwill’s pockets, and your contract with us will not be affected. I’m just calling to be up-front, personally inform you of the situation, and let you know that I’m available to talk at your convenience. If you have any questions or concerns, please don’t hesitate to call me. I’d be happy to meet with you if you’d like.” Perhaps because of the completeness of The Post-Crescent story, only one agency returned Wilk’s calls, informing him that its county board requested an official report, stating that all expenses related to its contract with Goodwill were legitimate. The lone administrator whom Wilk was able to contact personally had seen the newspaper article and was very supportive. Of course, while all this was going on, Steve White’s finance team was working with the auditors to uncover Carol Braun’s tracks in the general ledger and other accounting records. At 12:15 p.m., the leadership team met over lunch. The communications plan was refined. Ideas and suggestions that surfaced during the weekend were reviewed. There were updates to report (such as Goodwill Industries International having included The Post-Crescent article in its electronic daily newsletter), reactions to share, discussions to continue, and feelings to vent. Answers were

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formulated to the questions posed by the focus group, and a “town hall meeting” was scheduled for 3 p.m. the next day. Based on his experience with the focus group, Scott Copeland made another suggestion. “It’s very important that we don’t change the culture of the organization. We’ve got to get past the betrayal and continue to trust people,” he said.

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Chapter 19

Tuesday, June 3, 2003, was a day of transition. Subtly, a shift from the discovery to the recovery process began. As the day wore on, Bob Pedersen imperceptibly switched from a mode of crisis management to one of caring for his staff. The day started with the Thrivent Financial for Lutherans Community Breakfast, one of the highlights on the Fox River Valley’s annual business calendar. Not only is Thrivent the largest fraternal benefit society in the United States, it is a major employer and philanthropic force in the area. Business and community leaders are invited to the breakfast to hear Thrivent’s yearly Report to the Community. Many executives in Pedersen’s shoes might have dreaded such a gathering. Others, considering his crises-laden schedule, would have understandably begged off attending. Pedersen, however, “had to go. I couldn’t duck this,” he said. “Actually, I felt fortunate to have an opportunity right away to be out and face the public, check the pulse of the community, and give good, accurate, timely information.” He was “elevated by the people who took risks by coming up, initiating their best wishes, and sharing experiences,” Pedersen said. “Hang in there”…“This too shall pass”…“You’re not alone”…“Been there, done that”…“It happened to us, too.” They were among the tried-and-true phrases of support offered. But on this day, the comments were not tired cliches of little substance. They were kind words of acknowledgment and understanding for which he was grateful. “There were no negative comments. Not one, ‘What the hell were you doing?’ or, ‘Who was minding the store?’ In fact, there was only one negative comment that I can remember all year,” Pedersen recalled. Karen Laws attended the breakfast with Pedersen. “All of a sudden, we realized this wasn’t just about Goodwill,” she said. “This was bigger than just us. It had happened to others. People were very supportive. Someone said, ‘If it can happen to you, it can happen to any of us.’ People made us feel good. We were able to tell them, ‘we’re doing fine,’ and thank them for their wishes.” Laws and Pedersen belong to the same Rotary Club, and this also was the day of the club’s weekly luncheon meeting. They were bolstered by the reception that Rotary members offered. In addition, much appreciated cards, letters, and e-mails of support were streaming into the office from local, regional, and national colleagues who took the time and trouble to support a friend in need. “This was probably the most difficult and crushing period for us. But all of the expressions of understanding made me realize how precious our relationships were,” Pedersen said. At 1:30 p.m., a triage team from the Employee Assistance Program was available to meet with staff. Teammates who were closest to Carol Braun were targeted for assistance. During a general session that 15 to 20 people attended, participants learned they were likely to go through a grieving process, just as if they had experienced the death of a loved one, loss of a limb, divorce, or another kind of intense disappointment. According to Dr. Elisabeth Kubler-Ross, grief is actually a healing process. It can involve five stages that people go through after suffering a trauma: 1) Denial and Isolation; 2) Anger; 3) Bargaining; 4) Depression; 5) Acceptance. “The meeting gave everyone a chance to voice our frustrations,” said Clare Zimmerman who had been a co-worker of Carol Braun’s in the finance department. “It was our first chance to openly talk with employees from other departments about how angry we were. We all felt the same, except one person felt sorry for Carol because of the gambling addiction.”

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“I felt very violated,” said Priscilla Schultz, another member of the finance department. “How could she do this to a nonprofit human services organization that serves the community? How could she do this to me? As a person who serves the nonprofit world, I felt I had a stake in it.” Throughout the afternoon, store and program leaders from remote Goodwill locations began arriving for the 3 p.m. “town hall meeting” that members of the corporate office staff also would attend. As he prepared for the session, Pedersen wanted two themes to dominate the meeting: • This experience has not eroded our capacity to trust. You are trusted, and it’s important that we all trust each other. Trust is violated by people who make stupid decisions. Carol made some stupid decisions. However, this is still Goodwill, you are still you, and I’m still me. • We’re going to be honest. As much as it is legally permissible, you will know everything that I know. An employee focus group prepared a list of questions that we will answer. You also can ask any other questions of your own. Jump right in if you are unsure about any of my responses. People often are mesmerized by Pedersen’s speeches. A sought after public speaker, his custom is to address groups extemporaneously. On this day, his first words to the crowd of about 60 people were, “I want you to know that I trust everyone in this room. The events of the past few days have not shaken my trust in any of you.” The result was a spontaneous, roaring ovation. “It was very emotional. It sent chills down my spine,” Laws said. For the most part, the rest of the presentation blurred past Pedersen as he addressed the prepared questions and answers. Members of the audience asked few questions of their own. One that Pedersen remembered was, “What can we do now to help?” “We need you to go back to work while we clean this thing up,” he responded. By the time he answered the final question, Pedersen was “emotionally drained. I’d been running on pure adrenaline. I was tired. Sad. I turned around and was just going to leave, when out of the corner of my eye, I saw the whole room stand and begin applauding. I was really buoyed and humbled. I understood all over again how valuable our team was.” Recovery had definitely begun.

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Chapter 20

There was little time to bask in any comforts of recovery. Goodwill launched its investigative process the following morning, Wednesday, June 4, 2003, at the Menasha Police Department. CFO Steve White, who had returned from Ohio the previous evening, joined Jackie Draws, Bob Pedersen, and Billie Jo Higgins of Virchow Krause in a meeting with police investigators Dave Jagla and Mark Mauthe, who admitted, “We’re not accountants.” The police would rely heavily on the accounting expertise of Virchow Krause and Goodwill to build a case against Carol Braun. “Basically, we went through what information we had and how we should proceed,” Draws said of the meeting. “We needed to verify ways that money was taken. It looked like some of the methods were going to be easy to document, while others would be difficult.” For instance, if Braun stole from petty cash and used her authority to replenish the fund by writing checks to the Goodwill store on campus, those would be tricky transactions to trace. Fraudulent use of a company credit card would be more straightforward and easier to track. To help reconstruct Braun’s methods, the police would apply for warrants to access records from Oneida Bingo & Casino and the banks of Carol and Wesley Braun, Master Electric, and Goodwill. The power of the police to subpoena records would save Goodwill the $5 per check fee normally charged for copies of checks, sparing the non-profit organization substantial costs. Based on calls Draws had made to Goodwill’s credit card supplier, some Goodwill credit card statements seemed to be missing. She would make a formal request to obtain a complete set of credit card records. In the meantime, in an effort to trace Carol Braun’s schemes from beginning to end, Draws and Higgins would continue adding to and tallying up the list of suspicious transactions. Checks were arriving nonstop from Goodwill’s bank. However, there would be delays in receiving other bank records and information from the casino and credit card company. In the afternoon, following a second “town hall meeting” for staff members who couldn’t attend the previous day’s session, Draws, White, Pedersen, Sara Saxby, and Higgins met with Joe Galarowicz, Virchow Krause’s partner in charge of the audit, and Gary Lichtenberg, the director leading Goodwill’s investigative team. For two and one-half hours, the group reviewed a 14-step work plan developed by Galarowicz. The plan was a key to develop a strategy and organize efforts to complete the necessary Goodwill audits. The regular, annual financial audit, which had been scheduled to conclude on May 30, was now in a state of suspension. Its final results would be dependent on the fraud audit and audits of specific programs and services that Goodwill had been hired to provide. The latter audits would help determine if money had been embezzled from those accounts. The good news was that Braun had been involved with the accounting processes for only one external agency. Since she had only worked on the account during the earliest stages, it was unlikely any money was taken from that organization, which contracted with a separate independent auditing firm that could verify Goodwill’s findings. Because of the additional work, letters would have to be prepared to request 60-day extensions for submitting copies of the audit to funders. “This was when I began to really understand how audits work,” Pedersen said. “There is a general misconception among many people that passing an audit represents some kind of a seal of approval, indicating nothing is financially amiss with an organization. That is not the case. Virtually no company can afford to pay a CPA firm to conduct an audit that would provide such an absolute

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assurance. An audit provides a panoramic snapshot of an organization’s finances at a specific time. It is the duty of management to oversee its company’s accounting procedures on an ongoing basis to prevent wrongdoing.” As they left the meeting, Pedersen reiterated the charge he had issued to Lichtenberg, the leader of the team looking into accounting irregularities: “Remember, Gary, if there are any people in our organization besides Carol who have responsibilities for what happened, we need to deal with that. Trust and verify!” Lichtenberg nodded his understanding. On Thursday, members of the management strategy team met briefly to bring everyone up-to- date, review the communication plan, and discuss developing issues. Firms that conducted previous years’ audits would be notified that their results might be revisited in search of more evidence. Informational letters would be mailed to donors, volunteers, various partner organizations, and past members of the board of directors. By the end of the next day, all team leaders of Goodwill’s 17 stores would have held their own “town hall meetings” with staff using the question-and-answer document provided to them. On Friday, the fraud audit officially began with Billie Jo Higgins leading the effort. During the afternoon, Menasha police investigator David Jagla met again with Pedersen and Draws to review the status of the case. “As more information was uncovered and copies of check after suspicious check kept coming in, my feelings shifted. This wasn’t just a matter of gambling addiction. The tune started changing for other people, too,” Draws said.

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Chapter 21

If being angry was part of grieving and healing, Bob Pedersen was getting much better. Fast. Besides the sense of betrayal he felt on a personal level, Pedersen was amassing resentment as a business leader and professional. The fraud committed by Carol Braun occurred during his watch. Not only was he embarrassed and angry because of it, his confidence was rattled, and he felt threatened and vulnerable. The reputation of the organization that he loved and worked so hard to build was in jeopardy. At times, an inner voice taunted, “This is a career stopper.” Pedersen was the type of person who thrived on being on top of his game. But now, his time was consumed by dealing with the dishonest acts of an irresponsible individual. He realized that there was not one waking hour when he was not physically occupied or mentally preoccupied with the ramifications of Braun’s crimes. The ordeal was making him weary. He doubted himself and felt as if a surprisingly formidable opponent was mauling him in the ring. Many nights were restless. If he awoke at 4 a.m., feeling alone, again it occurred to him, “This happened during my watch. And the buck stops here.” Series of questions pummeled him, not waiting for answers. How are we going to keep the team in order while we fix things? What about the board of directors? They are dedicated, hard-working volunteers. They don’t deserve this kind of exposure and humiliation. What’s this going to do to the larger Goodwill community? Will our donors remain loyal? Then, despite himself, Pedersen would fall victim to an urge to place blame. What were the auditors doing all these years? The embezzlement got past at least three different CPA firms. What did our own staff miss? Who’s responsible? We do accounting for other nonprofits. What are they going to think? That we’re less than competent? Pedersen mustered three decades worth of leadership experience to cope. As a teacher, mentor, leader, and executive who had served in a variety of complex human service environments, he believed, “There was not one kind of human problem that has not come through my door.” He was mistaken. This was different, challenging his steady, mature hand and impressive record of professional development. As a student of change management, he had sought and earned distinction as a Fellow of the Peter F. Drucker Foundation. He was recognized as a member of the 1999-2000 class of Frances Hesselbein Community Innovation Fellows and the 2001 class of Stanford University Community Innovations Fellows. Frances Hesselbein and Peter Drucker had personally mentored him. Pedersen stood by Drucker’s words, “There’s no such thing as business ethics. There’s only ethics.” But this was the hardest test of the beliefs and values that he used to make decisions and guide his life. He had to get away. Rather than devote another Saturday at the office, making sure the rest of his work was under control, Pedersen and his wife Shawn Frances O’Brien packed up their golden retriever Max to romp in the sunny countryside of nearby Waupaca. Pedersen had learned early on that if there was any diversion guaranteed to revive him, it was spending time alone with his wife and Max. They had a great day. On the way home, they stopped at a diner in Fremont. Pedersen overheard a woman in an adjacent booth tell the waitress, “We just cleaned out the cabin and took everything to Goodwill.”

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He couldn’t resist introducing himself. “Excuse me, I’m Bob Pedersen, the president of Goodwill. I couldn’t help overhearing you, and I just wanted to say ‘thank you’ for your donation. We need it and certainly appreciate it.” “You’re Bob Pedersen? I guess I do recognize you after you say it. Oh, I feel so bad for you and your organization. Be assured that the next time we clean out our house, everything will be going to you again.” Recharged once more, Pedersen was able to return to face new challenges ahead. On Sunday morning, June 8, 2003, this editorial appeared in the Oshkosh Northwestern newspaper.

Editorial: Goodwill handles bad news deftly

The bad news that accountants uncovered, of potentially hundreds of thousands of dollars embezzled from Goodwill Industries, is offset by the professional way that the charity's president and chief executive officer responded. Robert Pedersen did the admirable. He stood tall and came clean when he told the community that an employee with a personal problem stole money for gambling, and Goodwill was doing something about it. Goodwill Industries of North Central Wisconsin based in Menasha has no small presence in these parts. Its programs cover more than 30 counties, with a budget of almost $27 million. Until now, audit problems had been nonexistent for at least 27 years. Much good must be said about Pedersen. He understands the word "accountability." Exceptional means were used to audit his company, and someone still committed a wrong. Though potentially embarrassing, Pedersen knew that the best thing to do – the right thing – was to come clean with the community. He made a full report of what happened. His actions inspired confidence. There's a lesson here for all businesses, for-profit and non-profit. People forgive mistakes when they aren't done with malice and when those mistakes are correctable. One person didn't fully understand the Goodwill message of hope for communities in a way that injured the organization. The best healing method will include a way for that person to earn and return dollars to Goodwill. Anything else will be insufficient. As for Goodwill stores everywhere, their managers and employees should know that the community fully supports their mission. The Goodwill role promotes human dignity, offers jobs to people and provides ways for the public to do acts of charity. This is a vital mission in this 21st century. These are issues worthy of continued praise. In sum, it is hoped Goodwill will continue to do good work. The Final Thought: Goodwill Industries' president and chief executive officer set an example for the business world by coming clean with the community that a theft occurred within his staff. The right way to correct this wrong will be for a punishment that includes a means to pay back the loss.

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Chapter 22

The quest to uncover information, understand exactly what had happened, and report to the public pressed on. Representatives of St. Paul Insurance Company, the provider of Goodwill’s employee dishonesty coverage, came to Menasha on Monday, June 9, 2003, to meet with Steve White and Jackie Draws. Draws had been in phone contact with the insurer previously to initiate a claim. “They wanted to see how solid our documentation was, make sure the checks Carol had written to herself were not legitimate, and verify that we did not have a relationship with Master Electric. We also discussed methodology, and they seemed very satisfied. The meeting lasted about an hour,” White said. There was a form to complete, and Goodwill provided copies of checks, a spreadsheet report, and other records. More information would be provided to the insurer as it was developed. Because of the employee dishonesty coverage limit on the policy that Goodwill had purchased, the maximum amount that could be recovered from the embezzlement was $250,000, unless a certain set of circumstances would be involved with the checks written to Master Electric to constitute forgery. On June 10, White and Bob Pedersen made a presentation at the board of directors meeting of the Fox Cities Community Clinic. It was the first such meeting with a board representing a nonprofit agency for which Goodwill performed accounting services. “They were very supportive and understanding,” White said. “This was part of our pledge to provide a full and public accounting of what had happened. We also wanted to alleviate their fears by assuring them that no money was taken from their organization. Carol had no responsibility for keeping their books, and separate software was used for their accounting.” Copies of individual and consolidated credit card statements began to arrive from the credit card company on June 11. The consolidated statements showed the transactions of all employees during a given period. “We had never seen consolidated statements before,” Draws said. “We weren’t aware they existed. Up until then, we had seen only individual statements for each employee, and we never found any individual statements for Carol.” One of Carol Braun’s duties as controller had been to receive credit card statements for all employees, reconcile them, and issue payments. Draws speculated that each month Braun would destroy the consolidated statement and her own individual statement, just as she destroyed the Goodwill checks that she had made out to herself and Master Electric. Braun then would concoct the monthly reconciliation from the individual credit card statements of other employees, pay the bill, and make false journal entries to cover her tracks. The first copies of the credit card statements that arrived covered the period from December 5, 2001, to June 3, 2003. Besides receiving nine cash advances during that period from automatic teller machines at Oneida Bingo & Casino, the records revealed that Braun had used her Goodwill credit card to make multiple charges at local toy stores, gift shops, restaurants, and other questionable outlets. “That’s when the tide really changed for me. All of these things didn’t just relate to gambling,” Draws said. “She was using the company credit card for personal purchases like cigarettes, food, toys for her grandkids, airline tickets, hotel rooms, and taking the family out to eat. In my mind she turned from gambling addict to thief.” The next day, Draws met with Menasha police investigator David Jagla and an officer from the Grand Chute Police Department who was qualified to use special software to examine the hard

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drives of personal computers. The police found no incriminating information on the Goodwill computer that had been confiscated from Braun’s home. In addition, nothing was found on Braun’s computer at work. The investigation also pursued the question, “Was Braun putting money away someplace?” There was no evidence to indicate that she did anything but spend it all. As the investigation progressed, both Draws and Jagla worked overtime. Throughout the process, it was not uncommon for Jagla to be able to reach Draws by telephone at work during evenings or Saturdays to ask questions or provide updates. During this time, White received a handwritten note from Braun, requesting money from her pension account. She needed cash to pay the mortgage, income taxes, and attorney fees. “The note also said something like, ‘I really miss you guys,’” White said. “I thought it was strange she had the nerve to write such a note. Did she miss betraying us, or what?” Braun’s pension fund totaled approximately $68,000. Before she could begin withdrawing from the account, White, as a trustee of the plan, would have to sign off on her request. During a conference call, White consulted with Pedersen and Gregg Curry, Goodwill director and an attorney, to explore Goodwill’s options. Could Goodwill garnishee or freeze the funds for possible restitution? Curry looked into the possibilities and reported to the Legal Committee, White, and Pedersen on June 18. Federal regulations prohibited Goodwill from holding the pension funds for any reason. However, Curry contacted Braun’s attorney, Greg Petit, to inquire about her intentions. Besides paying bills, Braun wanted to use some of the money to begin repaying Goodwill. “It was in Goodwill’s interest to get anything we could. We had no legal recourse to her retirement money and, because of her limited assets, it was very possible that we would not get any restitution from Carol,” Curry said. The Legal Committee also discussed concerns about how Braun had misused the credit card system without Goodwill’s knowledge. As a result, Pedersen contacted the credit card company to implement procedures that would prevent employees from making cash withdrawals with their company credit cards. On June 26, Pedersen, White, Draws, Gary Lichtenberg, and Sara Saxby met with Menasha police investigators to share new evidence and developments. During the meeting, the Goodwill contingent expressed its resolve to press forward with the charges against Braun, and another session was scheduled for July 1. As part of the process, White, Draws, and Billie Jo Higgins continually reviewed Goodwill’s accounting records to determine how Braun “cooked the books and washed the dollars” through the expense side of the general ledger. Unable to decipher Braun’s system completely, they prepared a list of questions for her. Curry delivered the questions to her attorney. Because Braun seemed to want to cooperate with Goodwill and make amends, the group hoped her answers would help to unravel the mystery. However, Goodwill never received a response from Braun or her attorney, according to Curry. “Because of the stage of the criminal proceedings, they were not in a position to answer those questions.” As best as Draws and the auditors could determine from the records, which only dated back seven years, Braun began embezzling from Goodwill in June of 1996 by taking cash advances with her company credit card to gamble in Green Bay. However, they suspected Braun began stealing as long as 10 years prior to the investigation by encouraging employees to take large cash advances from Goodwill or the credit card company for business trips. Then, when the employees submitted their expense accounts, Braun insisted that any part of the advances not spent be returned in the form of

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cash. Some employees recalled that Braun would not accept their personal checks for such returns. From 1996 to 2003, records showed Braun had used the company credit card to make $99,000 worth of personal purchases. In 2000, Braun began writing checks to herself and Master Electric, primarily from the manual checkbook. She signed the checks using the facsimile signature stamps of CFO Steve White and CEO Bob Pedersen. Between June 2000 and May 2003, those checks totaled $326,000. As controller, Braun received the monthly bank and credit card statements for reconciliation. Apparently, she destroyed all checks written to herself or Master Electric, as well as her own credit card statement and the consolidated credit card statement, because none of those original records could be found. Braun then falsified the accounting records to conceal her thefts. She reduced the cash on Goodwill’s books and recorded inflated expenses by making fraudulent entries in such accounts as Maintenance Supplies, Store Supplies, Inventory Purchases, and Travel Expense in the general ledger. “We think she spread it through those accounts because they tend to fluctuate a lot from month to month and year to year. They are hard to track, and it’s reasonable for them to go up and down,” White said. “It was difficult to follow because she didn’t use a set system. There was not something that she consistently did,” Draws added. Just as this information was coming together, The Post-Crescent called Pedersen to inquire if Goodwill had an update on the total amount embezzled. On July 11, 2003, this article was published.

Goodwill embezzle tally at $425,000 Former controller admitted in May to taking money

By Michael King and Ed Culhane Post-Crescent staff writers

MENASHA — The amount of money police believe the former financial controller of Goodwill Industries embezzled from the non-profit organization is now estimated at about $425,000, officials said Thursday. Menasha police investigators said 63-year-old Carol Braun admitted embezzlement after she was fired on May 30, saying she stole about $100,000 during the past three years, losing the money gambling at various Wisconsin casinos. Braun had been the controller for Goodwill for 27 years. Discrepancies in accounts she managed were discovered May 16 during an annual audit, according to Robert Pedersen, Goodwill’s president and chief executive officer. Menasha police Lt. Ron Bouchard estimated the amount embezzled was about $425,000. Pedersen said detectives and auditors working for Goodwill have now traced fraudulent credit card use, involving the theft of $96,000, back as far as 1996. The remaining $329,000 believed to be missing came from various expense accounts under Braun’s control. “We know that it’s greater than three years now, and the amount is greater than $100,000,” Pedersen said. “It’s meticulous, but we are getting through it and adding up the numbers,” Bouchard said. Records obtained from Oneida Bingo & Casino and elsewhere indicate Braun lost the money gambling on slot machines. Police have not yet received all the records they need from the financial institutions where Braun kept personal accounts, primarily for the years 1996 through 1999, Pedersen said. “That’s why Goodwill hasn’t come forward with any numbers,” Pedersen said, repeating his earlier pledge for a full public accounting once the review is complete. “The thing that is still perplexing to us is how she covered it,” he said. “It’s been a very complex process trying to unbundle her methodology.” 49

The discrepancies being uncovered involve numerous accounts in an organization with a $24 million annual budget and a set of segregated accounts. Goodwill Industries of North Central Wisconsin administers 24 separate programs to help people with special needs achieve independence and contribute to their communities. The agency employed 9,631 people in its 33-county service area in 2002. Pedersen said Goodwill carries a $250,000 insurance policy against theft. Insurance might also cover up to another $100,000, he said. There is also the possibility of restitution. “We are hoping to recover money in this process, both through insurance and restitution,” he said. In the meantime, the organization is financially strong, Pedersen said. “Our staff is starting to feel like they are whole again,” Pedersen said. “We are a strong family, and we are committed to our mission. We are on the road to recovery.”

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Chapter 23

Analyzing Carol Braun’s practices and motives from credit card, bank, casino, and accounting records was like peeling away layers from an onion. The first layer, credit card activities, was easy to peel. According to Jackie Draws, Braun would simply make unauthorized charges and cover them with phony expense entries in the general ledger. Braun, the grandmother figure, 27-year trusted employee and controller, was the person responsible for reconciling credit card statements and making corresponding journal entries. No one was looking over her shoulder to check her work or the records documenting it. When revealed, however, the transactions on her credit card statements stunned Goodwill. From 1996 to 2003, Braun made 592 unauthorized charges for $98,709. Cash advances, primarily at casinos, accounted for $64,049 of that total. Cash advance fees alone – $1,898 – amounted to what would have been a nice piece of pocket change for any Goodwill employee or client. The woman who “never took a vacation” used her company credit card to travel to Las Vegas, Nev., Atlantic City, N.J., Orlando, Fla., Rapid City, S.D., and other places. Total hotel room charges to her account were $7,177, and car rental fees were $2,011. She put $1,321 on the company credit card during a four-day excursion in November 2001. Besides charging $368 for airline tickets to fly a brother and herself to Philadelphia, where they rented a car for $231 to drive to Atlantic City, the person who hounded employees for business travel receipts and considered eating steak an extravagance dined at Dock’s Oyster House for $113 and charged $244 to the Tropicana Casino and Resort. “What kind of person can continue to do things like that for 10 years to ‘the place that you love?’” asked Steve White. “How did she sleep at night?” There were other interesting credit card charges. During seven consecutive days in 1997, Braun took at least one cash advance daily at Oneida Bingo & Casino near Green Bay for a total of $3,012. She spent Christmas Day of 1997, 1998 and 1999 at the same casino, taking cash advances of $201, $302 and $806, respectively. But playing the slot machines was not her only interest. Through the years, she made charges of $629 to a florist, $3,766 for vehicle repairs or maintenance, $3,407 to various restaurants, and $12,023 for shopping. Toys R Us, where she made 31 charges for $4,921, was one of her favorite stores. Braun also frequented the Iroquois, Leoquois, and Oneida Smoke shops, where her charges totaled $2,085. “Buying her cigarettes really irked me because we had also paid for a smoking cessation program for Carol,” Draws said. Records indicate that the credit card was Braun’s preferred method of choice when the stealing from Goodwill started. 1995 1996 1997 1998 1999 2000 2001 2002 2003 Total All credit cards charges 54 114 162 115 63 69 38 14 629 Credit card cash 30 55 104 63 4 4 4 5 269 advances All Checks 1 5 13 25 27 61 56 66 6 260 Checks to Carol Braun 1 5 13 25 27 49 38 43 1 202 Checks to Master Electric 12 18 23 5 58

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For some reason, her methods began to change in 1999, when her credit card transactions decreased significantly in number and value, while the fraudulent checks increased in value. On June 30, 2000, she first began writing checks to Master Electric, in addition to herself. The result was a much more even balance between credit card transactions and checks written. In 2002 and 2003, checks outnumbered credit card transactions. An even more dramatic change was the decrease of the number of credit card cash advances beginning in 1999. Only Braun knows why her methods changed, and she never divulged the reasons. “She knew the system very well,” said Menasha police investigator David Jagla. “She knew things that nobody else knew. She was as accomplished a thief as any bank robber or burglar. She just shattered the stereotype, if there is such a thing. I really don’t believe there is a stereotype for people who break the law, and we see them all.” Why did Braun write checks to herself and Master Electric? Jagla believes she was spreading the money around to two different accounts that were housed in separate banks. Neither of those banks had an account relationship with Goodwill. That reduced the likelihood of Braun’s bank or Master Electric’s bank noticing an inordinate number of Goodwill checks being regularly deposited in those accounts. “She would write a $2,500 check, for instance, to Master Electric. The check would be deposited in Master Electric’s account at the Associated Bank. Her husband then would write her a check for $2,450, which was deposited in her account at M&I Bank. I don’t know why he didn’t write it for the same amount. Maybe it was a handling charge. The money was just going out of her account as fast as it was coming in,” Jagla said. Usually, the checks were written for irregular amounts, ranging from $150 to $2,864.80. As the years progressed, the typical minimum of the checks that Braun wrote to herself increased to a few hundred dollars, but not one hit the $3,000 mark. The Master Electric checks ranged from $1,399.59 to $3,870.60, never hitting $4,000. Most of the checks were written on Mondays and Fridays, leading the accountants, auditors and police to speculate about a pattern. Was it Braun’s practice to write a check on Friday for a weekend’s worth of gambling? Did she write the checks on Monday to cover her weekend losses? Of the 260 fraudulent checks that Braun wrote over the years, 248 were manual checks. The last 13 were computerized checks. Suddenly, beginning on October 14, 2002, she changed her methods again by issuing checks from her personal computer. She was just as adept at concealing the computerized checks, and no one has been able to figure out why she changed tactics. The last fraudulent check, for $1,160 to Master Electric, was printed by computer and dated May 19, 2003, a Monday. The date meant that Braun issued the check a week after she originally informed Draws on May 12 that it might be necessary to make an adjusting journal entry to correct an error Braun had made. How did Draws feel when she discovered a check was drafted after Braun had come to her? “Actually, we kind of shrieked for joy. Carol was gone before she was able to destroy that check. It was the first one of our own that we could use as evidence. It was an original, not a copy from the bank. I guess the damage had already been done,” Draws said. The total value of checks written to Carol Braun and Master Electric from 1996 to 2003 was $412,198, more than four times the total value of fraudulent credit card charges.

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1996 1997 1998 1999 2000 2001 2002 2003 Total Checks $2,425 $6,611 $11,488 $21,709 $104,788 $118.949 $132,104 $14,123 $412,197 Credit $10,541 $19,422 $29,278 $19,146 $7,305 $7,638 $4,210 $1,170 $98,710 cards Total $12,965 $26,033 $40,766 $40,855 $112,093 $126,587 $136,314 $15,292 $510,905 by year Cumula- $12,965 $38,998 $79,764 $120,619 $232,712 $359,299 $495,613 $510,905 $510,905 tive total

When Bob Pedersen realized that Braun’s stealing accelerated in 1999 and 2000, “That was one of the things I was angriest about. Those were tough years for us. We froze wages throughout the organization. Of course, she was aware of our financial challenges by virtue of her responsibilities as controller. She even sat at the table and was in on our decision to freeze salaries. Yet, besides taking home a very good salary, she stole $150,000 from coworkers and people in need during that time. With that amount of money, we could have helped so many more people in the community and provided raises for our staff.” Pedersen recalled a meeting when Braun “was in my office crying” as Goodwill’s financial problems were being discussed during those challenging years. “It didn’t seem like a normal response,” he said. “It was out of character. Everybody else was in a different mode, resolving to deal with the situation. Maybe she was afraid we’d be drilling deeper into the numbers to right the ship. In retrospect, I think she was either overwhelmed by guilt or sad because the cash cow was sick.”

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Chapter 24

Goodwill controller’s husband may be charged

By Michael King Post-Crescent staff writer

MENASHA — The case against a former Goodwill Industries employee suspected of taking $425,000 from the agency has been sent to the Winnebago County district attorney. Menasha police said Monday they are recommending charges against Carol Braun, 63, the organization’s former financial controller, as well as her husband. Menasha police Lt. Ron Bouchard said the case against Carol Braun and Wesley F. Braun, 64, both of the Town of Menasha, was forwarded to Dist. Atty. Bill Lennon late last week. Lennon said Monday that he expects to make a charging decision later this week after meeting with officials of Goodwill Industries of North Central Wisconsin Inc., Menasha. Police seek to have Carol Braun charged with felony theft and her husband with being a party to felony theft. Bouchard said the investigation of Carol Braun, who police and Goodwill officials say admitted embezzlement after she was fired May 30, led to information that her husband, an electrician, had knowledge of the thefts and accepted the embezzled funds. “We’re convinced that he was actively participating in the laundering of money through his small business,” Bouchard said. Detective Dave Jagla said Wesley Braun, who was booked, fingerprinted and released pending charges, made statements that indicated he “was aware of what was going on.” Police said the thefts involved amounts ranging up to more than $3,000 at a time, going back as far as 1996. Because the investigation is continuing, Lennon asked police to forward the case with only one felony count of theft. “Ultimately, he’ll decide what’s going to be charged and how many counts,” Bouchard said. “We’re still at $425,000 (overall loss),” said Jagla, who added that police are still awaiting additional records from financial institutions. Robert Pedersen, Goodwill president and chief executive officer, said Monday that he knew Braun’s husband might be implicated. He said Goodwill officials continue to cooperate with the investigation and have requested a meeting with Lennon this week to discuss, among other issues, “opportunities or rights we have as a victim in this crime.” Lennon said Goodwill officials asked that the charging decision be held off until after they meet. “I’ll make a decision shortly after that, probably later this week,” he said.

On the day The Post-Crescent published the preceding article, July 22, 2003, police investigator David Jagla received final records from M&I Bank, the institution where Carol Braun did her personal banking. This information, combined with other records, would lead to a final total for the embezzlement. Before all the records were officially tallied, Jagla, Bob Pedersen, Steve White, Jackie Draws, Gary Lichtenberg, and Gregg Curry met with Winnebago County District Attorney Bill Lennon to discuss the case, strategies, and charges. They also were introduced to the Victim Impact Coordinator who would serve as a liaison between Goodwill and the district attorney’s office. The atmosphere was somber and sobering, according to Steve White. “The meeting was a long time coming. We had waited until we gathered everything together. Now, it became more and more real that a crime had been committed and was going to be prosecuted. You could feel the seriousness of the legal system in the environment.” “I thought the district attorney (DA) handled the meeting very well,” said Curry, Goodwill’s lawyer.

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“He wasn’t making too big a case out of it. He gave a practical view and analysis of what the punishment might be. It’s difficult for any DA to balance restitution and punishment. That’s a dilemma because there is no good way to balance them. I had the impression the DA was very concerned that Goodwill was being heard, and he was respectful of what we wanted to be done. The investigator from the Menasha Police Department was also very helpful. You could tell they wanted to do the right thing.” Pedersen agreed. “The district attorney asked us what we wanted. ‘How aggressive do you want to be about sentencing versus restitution?’ My response was, ‘You’re the one who sets the public standard for things like this. What do you think?’” Lennon explained how he would prefer to handle the situation. First, he would charge Carol Braun. He did not think it would be a good strategy to combine her and her husband’s cases. After he prosecuted Carol, he would charge Wesley. Since Braun had confessed to Menasha police that she took $100,000, Lennon believed the best approach would be to charge her with one felony count, in effect combining all the individual thefts. This would expedite the case and probably result in a plea agreement. The maximum sentence in such a scenario would be 10 years in prison and restitution. Another approach would be to file a separate count of theft for each fraudulent check Braun wrote, and the combined potential sentence would exceed 100 years. But that would paint Braun and her attorney into a corner, likely forcing a long, contested trial. The defense could challenge each charge, and the district attorney would have the burden of proving Braun was responsible for each check and that each check was fraudulent. Jagla concurred with Lennon’s recommendation. But, ultimately, the decision was Goodwill’s. How did they want things handled? Did they want to go through a lengthy, drawn-out trial? How long did they want Braun to be behind bars? Did they want to give her an opportunity to make restitution? How much longer did they want the case to be in front of the news media? “Our consensus was, ‘Okay, we got it. We don’t need to have to go to trial. Let’s get it over and done with,’” White said. “When they asked if we wanted to go with the maximum 10-year sentence, full restitution, plus $30,000 to cover our expenses for the additional audit and investigation, we were all nodding our heads in agreement.” The next day, Bob Pedersen contacted The Post-Crescent with the information that final bank records pushed the total embezzlement loss up to $507,550 and Goodwill’s investigation was finished. “This wasn’t a big milestone for me,” Pedersen said. “It was just more numbers and another piece of the total process that meant we were getting closer to the end.” On July 25, 2003, The Post Crescent published this account.

Goodwill: $500,000 had been embezzled

By Michael King Post-Crescent staff writer

MENASHA — Goodwill Industries of North Central Wisconsin has finished its investigation into alleged embezzlement by a former employee and now claims it lost more than $500,000. Charges could be filed today against the agency’s former financial controller who police say is responsible for the losses. “Everything is ready to go,” Winnebago County Dist. Atty. Bill Lennon said Thursday. “We met with the victims and we’re going forward.” Police investigators have recommended charges against Carol Braun, 63, who was fired May 30 after Goodwill officials said she admitted to the embezzlement. They also have recommended charges against her husband, Wesley Braun, 64. Both live in the Town of Menasha. 55

Robert Pedersen, Goodwill president and chief executive officer, said a total of $507,550.05 was embezzled from Goodwill dating back to 1996. Pedersen said the full, public accounting of the missing money was accomplished through an internal audit and financial records obtained by Menasha police investigators from banks used by Carol Braun. Officials said she confessed to taking about $100,000 during the past three years and gambling at casinos. A phone message left at the Braun residence Wednesday was not returned. Menasha police said earlier this week that Braun’s husband, an electrician, made statements concerning the embezzlement that led to a recommendation to prosecutors that he be charged as a party to the crime of felony theft.

Also on July 25, the district attorney’s office called to inform Pedersen that a felony complaint had been filed. Braun’s initial court appearance would be on August 8 before Judge Thomas Gritton, who was known as one of Winnebago County’s more conservative judges. The wheels of the legal system had begun to roll. Already, Pedersen felt as if he and Goodwill were being carried along with it. Another article appeared in The Post Crescent on July 26, 2003.

County files charge in Goodwill embezzlement

OSHKOSH — The former financial controller for Goodwill Industries of North Central Wisconsin was charged Friday with one count of embezzlement, accused of stealing nearly $400,000 from the charity. Goodwill officials, who completed their own internal investigation this week, claim Carol J. Braun, 63, of Town of Menasha, stole more than $500,000 since 1996 to cover gambling debts. The statute of limitations on embezzlement is six years. The criminal complaint alleges that Braun took $399,805.47 by making out checks to herself or her husband’s business. Although Menasha police recommended charges also against Wesley Braun, 64, none were filed Friday. Winnebago County Dist. Atty. Bill Lennon said he expects Carol Braun’s admission of the thefts — Goodwill officials say she confessed to taking $100,000 when she was fired May 30 — will expedite the case. “We understand she will be entering a plea to the charge of no contest when she makes her initial appearance on Aug. 8,” Lennon said. Braun worked at Goodwill for 26 years. She was budget director and financial controller for the past 10 to 15 years, according to the criminal complaint.

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Chapter 25

Once the investigation of Carol Braun was in the hands of the district attorney’s office, Bob Pedersen could begin concentrating on other things. The people of Goodwill’s finance department were among his top priorities. He had been confident that none of them would be found at fault for what had happened, much less implicated in the embezzlement. Now that the fraud audit and police investigation had definitively substantiated those expectations, Pedersen felt completely secure and compelled to attend to the emotional needs of the accounting staff. “For people who go into the accounting profession, this had to be the worst thing that could happen to them,” Pedersen said. The slightest suspicion that they were in any way responsible would be tantamount to a public figure being accused of plagiarism. “I didn’t want them to be casualties in this war and be ground up like sausage. If there were any doubts whatsoever – in their minds or other people’s – my job, at that point, was to preserve their dignity, rebuild their sense of self-worth, and make them feel like fully contributing members of the Goodwill team. They didn’t deserve this. They were victims. They fought through what had to be a very challenging time in their careers and came out on top,” Pedersen said. “I had worked too hard to build an environment where it was safe for people to communicate honestly. I didn’t want anyone to feel threatened or like the Lone Ranger. I went out of my way to try to make them feel good and let them know they had my full confidence,” Pedersen said. His efforts to continue promoting an open and transparent culture, built on integrity, trust and respect, extended to other areas. Whenever he was in front of a group – whether it involved a small staff meeting, public speaking engagement, or one of the monthly “Breakfast With Bob” get-togethers held for members of the community – Pedersen began with, “We’ve got to get the elephant out of the room.” He then would spend five minutes on the Carol Braun case, updating information and answering questions. He also began cultivating an idea with directors Nancy Heykes and Gary Lichtenberg to establish and charter a board Audit and Corporate Compliance Committee. Their vision was for the committee to set policy, enhance the organization’s commitment to accountability, and comply with the regulatory and ethical standards of the Sarbanes-Oxley Act, which had grown out of the Enron, Tyco and other corporate scandals. Part of that process involved considering a relationship with Jefferson Wells International, a firm specializing in internal audits, which was recommend by the Milwaukee chapter of Goodwill and the YMCA of the Fox Cities. Pedersen, Lichtenberg, and Steve White met with Jefferson Wells representatives to learn how they independently analyze risk and vulnerability within a company by examining procedures, segregation of duties, business systems, and other internal controls. In addition, Pedersen reached out to Goodwill Industries International and offered to share the lessons he and his staff were learning from their experience. It occurred to Pedersen that his team had done many things right to manage this crisis. There also were things they could have done better. As a member of a learning organization, Pedersen thought it was important to “capture the teachable moments, take what we learned, and pass it on to others to help them in similar situations. We’re learning, and if you’re interested, we’re willing to share,” he said. Pedersen sought to help others because he realized, “The organization took care of me by stepping up to the plate, facing this challenge, and not allowing one misguided person to take away our value.”

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His wife Shawn, the support of the board, some key directors, and friends in the community also helped him to survive. In the end, however, Pedersen discovered, “I had to take care of me and find the rhythm of my own healing.” At times, he found it strumming the guitar or being with his dog. Ultimately, he understood, “I’m here because I’m hot-wired to this work, and my whole career led up to dealing with this crisis.”

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Chapter 26

On Thursday, July 31, 2003, Carol Braun walked into the Neenah office of The Post-Crescent and delivered the following letter.

For 27 years, I worked for Goodwill Industries of North Central Wisconsin. As you know, Goodwill Industries is an outstanding organization, supporting people in need through its many rehabilitation programs and outlet stores. Goodwill is also a great place to work. I had the opportunity to grow with the organization, work with its outstanding board, and its many competent staff. I dedicated my life at Goodwill to something I thoroughly enjoyed, however, in doing so I destroyed my life, the respect I had from its board of directors, and I tarnished the good image of this fine organization. Six years ago, I found myself with an illness I could not control. Gambling addiction. This illness, overpowering as it is, caused me to do things that I knew were wrong. These actions were inexcusable, and I needed help. I found Gamblers Anonymous to be of great help in reconciling my problems. I am responsible and request, “God grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference.” — GA I admit that I was powerless over this addiction. I have lost my job and destroyed my good friendship with Goodwill. Because of my actions, I’m requesting you please do not strain your friendship with Goodwill. Your contributions to this fine organization that is there for the community are needed. My actions should not make Goodwill suffer, as your contributions will be put to good use in its many programs. Please remember Goodwill didn’t betray the public; I did, and I’m truly sorry for it. I am now attending several meetings a week at Gamblers Anonymous to restore my life. I ask for your forgiveness, faith, hope and wisdom to help me through this addiction, one day at a time. Again, I’m truly sorry for the problems I have caused Goodwill and the community. Carol Braun Town of Menasha

The Post-Crescent published Braun’s letter on August 1, 2003, as a sidebar to the following article.

‘I betrayed them and I hurt them’ Accused Goodwill embezzler apologizes

By Michael King Post-Crescent staff writer

Carol Braun, the fired Goodwill Industries controller who claims a gambling addiction caused her to embezzle more than $500,000 from the nonprofit agency, has issued a public apology. “My actions should not make Goodwill suffer,” Braun wrote in a letter she delivered Thursday to The Post- Crescent. “Please remember that Goodwill didn’t betray the public; I did, and I’m truly sorry for it.” In an interview Thursday, the 63-year-old Braun declined to discuss details of her admitted thefts due to the pending case. But she said she fears going to jail or prison, acknowledged that she intends to make some unspecified restitution and said she will continue to attend Gamblers Anonymous meetings she started recently. “I’ve never been a bad person,” Braun said, her voice cracking. “I’ve never, ever been in trouble.” The Town of Menasha woman is facing an initial appearance Aug. 8 in Winnebago County Circuit Court on a felony charge of theft from a business. She faces a maximum penalty of 10 years in prison and a $25,000 fine. Asked if there were any promises made to her regarding a sentencing recommendation from prosecutors, Braun said, “No, this is on my own doing.” Bob Pedersen, Goodwill president and chief executive officer, had only a brief response to Braun’s public apology Thursday. 59

“I’m glad for Carol and her family that she has found a source of comfort,” he said. Regarding the possibility of making restitution of some of the stolen money, Braun said, “I don’t think I can answer that but yes. Whatever I can do.” Last week, Goodwill officials said a final public accounting from auditors and subpoenaed bank and financial records showed a total of $507,550.05 was stolen dating back to 1996. Upon being confronted with discrepancies on May 30, Braun was fired and confessed to police investigators to having misappropriated more than $100,000 from Goodwill. Asked if she disputed the higher numbers, Braun said, “No. I’m just going to accept it.” Braun and her husband, Wesley, have been married 43 years and have four adult children. Menasha police have recommended charges against Wesley Braun as well, but Winnebago County Dist. Atty. Bill Lennon said Thursday that he will make a decision in the next two weeks. When asked about her husband’s alleged involvement, Carol Braun declined to comment but said: “I hope everything works out. I owe an apology to the community. I owe an apology to Goodwill. That’s all I’m trying to do.” In her interview with The Post-Crescent, Braun, a Kimberly native, spoke fervently about the mission of Goodwill and the positive impact of its programs in the Fox Valley. “I betrayed them and I hurt them,” she said. Asked why she took the money, Braun said, “I don’t know.” But she also admitted to a gambling addiction that led to her going to casinos — mostly Oneida Bingo & Casino near Green Bay — “a couple times a week, usually by myself,” to play slot machines. “It’s a horrible thing,” she said. “I will not walk back into a casino. I never will. You become addicted. It’s one of those things and you need help.” When asked if she expected additional charges to be filed against her, Braun replied, “I hope to God not. I want this nightmare over with.” Braun said her gambling had slowed down this year before she was caught. “I had slowed way down,” she said. “I just couldn’t take this. It was wrong.” Her last trip to a casino was May 24. She said she would like to someday work again, “but I’m probably going to have a very difficult time getting a job. “What will I do?” she said. “I certainly want to volunteer my time, part of it to Gamblers Anonymous to get the word out.” Lennon said Thursday that no sentencing offer has been made to settle the case. He said a decision on possible charges against Wesley Braun, 64, whose small business as an electrician was the recipient of numerous Goodwill checks, will be made after Carol Braun’s case is over. Menasha police have recommended a charge of party to felony theft against him. “I expect to get Carol through court before I charge, if I charge,” Lennon said. Braun said she came forward against legal advice. “I probably shouldn’t even be here today, but I do feel I owe the community this,” Braun said Thursday. “I feel sorry for Goodwill. I hurt them. I betrayed them. Goodwill was very excellent to me. “My attorney doesn’t know that I’m here doing this,” she said. “I have a very big lump in my stomach, but I keep asking God for the strength, the wisdom and the hope to get through this.”

Bob Pedersen’s reaction was wary, at best, of Braun’s motives “I thought it was self-serving, a manipulation for sympathy,” he said. “When she said, ‘Don’t blame them,’ I was offended. We weren’t seeing diminishing support from the public. Nobody was blaming us. The letter was solicitous. “Some people in the community gave her credit for coming clean. I felt wounded and angry that she was trying to take control of the media and put a spin on it. If I had to give her any credit, it would be that she didn’t prolong the agony. We’d still be at it today if she had contested everything.” On August 7, 2003, The Post-Crescent ran this editorial.

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Braun’s right: Don’t blame Goodwill for her actions

“Goodwill didn’t betray the community — I did.” Those are the words that Carol Braun used to begin her public apology for allegedly embezzling more than $500,000 from the Menasha-based non-profit agency. Braun, the fired Goodwill Industries controller, delivered her written apology last week to The News-Record office. Then, she sat down with a reporter and an editor to more fully explain her actions. To Braun’s credit, she is taking full responsibility for her actions. She is not planning to fight a felony theft charge that has been filed against her by Winnebago County prosecutors. In fact, she is planning to plead no contest to the charge when she makes an initial appearance on the charge Friday in Winnebago County Circuit Court. Braun has blamed her actions on a gambling addiction that she says first surfaced six years ago. She praised Gambler’s Anonymous for helping her with her destructive betting habit. While Braun has taken some positive steps, she knows that all may not be forgiven in terms of what she did to Goodwill. “As you know, Goodwill Industries is an outstanding organization, supporting people in need through its many rehabilitation programs and outlet stores,” Braun wrote in her letter of apology. “I dedicated my life at Goodwill to something I thoroughly enjoyed, however, in doing so I destroyed my life, the respect I had from its board of directors, and I tarnished the good image of this fine organization.” Braun also urged the public to refrain from penalizing Goodwill because of her actions. “…I’m requesting you please do not strain your friendship with Goodwill,” she wrote. “Your contributions to this fine organization that is there for the community are needed. My actions should not make Goodwill suffer.” Braun is right. Her actions should not make Goodwill suffer. Goodwill is a terrific organization and it is a valuable asset to our community. And it will continue to be a valuable asset in the future. Keep that in mind when you’re assessing where to send your donations.

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Chapter 27

Wisconsin law gives crime victims the right to officially express themselves as part of the judicial process. Specifically, the state’s Victim Witness Assistance Program allowed Goodwill to: 1) describe the effects Carol Braun’s crime had on the organization physically, financially, psychologically, and emotionally; and 2) indicate what it recommended for the defendant at sentencing (i.e., prison for a felony, fine, probation, restitution, community service, etc.). “Although we didn’t want to flood the court, we thought that anybody who wished to make a Victim Impact Statement should be able to do so,” Bob Pedersen said. As far as sentencing was concerned, the group that had met with the district attorney believed Goodwill should make a unified, single recommendation to the court on behalf of the organization. The consensus of the group was to ask for the maximum 10-year prison sentence and fines, full restitution of $507,550, and $30,000 for expenses incurred to research the theft. Because the next regular directors’ meeting was scheduled after Braun’s initial court appearance, Steve White polled officers of the board via e-mail to seek board approval for the maximum-penalty recommendation. Most of the officers agreed with Rick Detienne, board secretary, who responded to the poll, “I agree with the recommendation that has been made. While the penalties may seem harsh, it seems evident at this point that Carol and her husband were involved in a long-term, complex plan to rob Goodwill of substantial money. I believe it’s appropriate that Carol should be fully accountable for her part in this crime.” The lone dissenter was Rev. John McFadden, vice chair of the board, pastor of the First Congregational Church in Appleton, and “the conscience of Goodwill,” according to Pedersen. “I challenged everyone to slow down,” McFadden said. “For one thing, I’m more cautious than most people. For another, in my beginning place as a pastor, I need to start with mercy and forgiveness. Searching for justice through a court system that is imperfect, I begin on the side of mercy.” A thoughtful e-mail dialogue among the officers of the board and Pedersen ensued. McFadden believed that Goodwill’s priorities should be: 1) fullest financial restitution possible; and 2) a clear message to employees and the public that any matter of theft or fraud would be taken very seriously by uncovering such actions and immediately taking them to the proper authorities for vigorous prosecution. “But is it not also a part of our culture that we do not seek to be vindictive or punitive, and affirm the possibility of rehabilitation in all broken lives?” McFadden asked. “I am not convinced that we should be invested in her receiving the maximum possible sentence. Rather, the sentence should be strong enough to send the clear message that there will be justice and accountability, while not being so long that it both diminishes her ability to make restitution and her hope of finding redemption in her life.” In response, Pedersen wrote, “I am stuck somewhere in the netherworld between an ‘eye for an eye’ and ‘turn the other cheek.’ I doubt that Carol will have a continuing career in accounting and will not hold my breath on restitution. I believe this sort of crime is becoming pandemic and that it also is perceived as a victimless sort of affair. “In a conversation we had with the DA, he pointed out that crimes against person are often reconcilable because people get past the hurt and move on, as opposed to crimes of finance, where

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the pain of betrayal and the need to rebuild trust come much harder and last much longer. “I also am in a position to witness firsthand the devastation caused the good people of Goodwill who feel shame, embarrassment, anger and consternation. Their only opportunity to feel whole will be to see Carol serve time for her misdeeds and make restitution. I do not believe that we are vindictive. I do believe we cannot be Carol’s rehabilitation team. She, by her acts, created an insurmountable divide. In the current environment, my responsibility is to lead a process that will make Goodwill and the community whole financially and emotionally. Restitution will cover the finances, and incarceration will begin to make up for the emotional loss.” Pedersen also addressed the pain of the finance department. “Our accounting staff takes their professional ethics seriously and we would, in my opinion, cheapen and compromise them if we did not seek the proper and legal punishment for this crime. “We are talking about a half-million-dollar opportunity loss. Think of all the good work we could have done in the community with that money. Carol stopped because she was caught and not because of some newfound sense of guilt or remorse. She would still be stealing today if she were not caught.” On behalf of the board, the officers ultimately agreed to the maximum-penalty recommendation for Braun. McFadden said afterwards, “I wanted to get the issues on the table to ensure that we all were clear and certain about the reasoning behind our request. My initial understanding was driven by Carol’s addiction. As her activities were more fully shared, I understood the manipulative and self- serving aspects that were unmindful of the people with whom she worked. We would not have had such an awful year in 1999 if Carol had not stolen. There was a great deal of pain in the organization because of her betrayal of trust. For people to heal, Carol had to be held accountable for her actions, which weren’t all due to compulsion.” Gregg Curry, Jackie Draws, Nancy Heykes, Gary Lichtenberg, Pedersen, White, and Nancy Thiel submitted Victim Impact statements. Each of the statements was heartfelt, personal, emotional and poignant. Diversity was perhaps the most outstanding attribute. Each statement was different, depicting with brutal honesty how the individuals were uniquely affected by Braun’s crimes. “That’s very important,” Curry said. “No one colluded on the statements. That’s why they made a variety of points. From a board perspective, I focused on our mission and Goodwill as a victim, rather than on Carol. It was a therapeutic exercise. Once I started to write, a lot of things came to the surface.” Heykes agreed. “It was cathartic and important to do. That was our way of being involved in the sentencing. I tried to capture the collective sense of board members. It helped me deal with emotional concerns and cement the impact of Goodwill’s role in the community. I was glad that the writing of the statement came when it did. It takes months to work through the stages of something like this and sift and sort things out. The statement would have been much more difficult to write during the first week of the investigation.” For Pedersen, “The Victim Impact statements created an environment where we had to look at our mission and how we react when we’re a victim. On any given day, a Carol Braun walks through these doors in need of help. Part of our system involves taking care of people like Carol. So there was a tug between anger and forgiveness.” Braun was the focal point of White’s and Draws’ statements. “We’re in the rehabilitation business,” White said. “Because of that, we’re pretty liberal and acceptant. We trusted Carol and gave her a lot of latitude. I think that helped foster her scheme. Now, I was done being accommodating and forgiving. It was time to take a stand with her.”

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“If she had gone to Bob at any time, asked for help and come clean, this would have been a completely different story,” said Draws.

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Chapter 28

Appropriately, Bob Pedersen, Steve White and Jackie Draws represented Goodwill at Carol Braun’s initial court appearance on August 8, 2003. For Pedersen, the event did not feel like a milestone in the journey. It was almost “anticlimactic,” one more piece of “workmanship” in the entire process. Braun waived her right to a preliminary hearing, and Winnebago County Judge Thomas Gritton set her arraignment for September 9, when she was expected to plead no contest to one felony count of theft from a business over $10,000. For a conviction, the Class G felony carried a possible maximum penalty of 10 years in prison. In the meantime, Braun would remain free on a $50,000 signature bond. She and her attorney, Greg Petit, left the courtroom without comment. District Attorney Bill Lennon did speak to reporters, however. He indicated that Braun’s husband, Wesley, was not being given any consideration in connection with Carol’s case. Lennon also said he would request that Braun pay back everything she stole. When asked about her potential sentence, Lennon said that if convicted, a judge could order a maximum of five years in prison, followed by five years of extended supervision. Depending on conduct, the defendant’s prison time could be extended up to 10 years. “I don’t think she needs to be exposed to more than five years of confinement,” Lennon was quoted by reporter Michael King of The Post-Crescent. Lennon also told King that Goodwill officials were “satisfied” with the maximum sentencing exposure. On Wednesday afternoon, August 13, King came to Goodwill to conduct an extensive group interview with Pedersen, White, Draws, Gary Lichtenberg, Gregg Curry and Joe Galarowicz. As the whole story was finally unfolding, Pedersen thought it would be easiest and most convenient if all the Goodwill principals could come together and talk with King. Two weeks before King’s article was published in the Sunday, September 7, 2003 issue of The Post-Crescent, Braun’s attorney filed for a substitution for a different judge, most likely seeking a less conservative magistrate than Gritton. The request was approved. Braun’s case was reassigned to Judge Robert Hawley, and her arraignment was rescheduled for September 15. King’s account of the interview with the Goodwill principals, which included a chronology, provided the most complete explanation of what had happened to date.

Paper trail reveals scheme Alleged Goodwill embezzler ran up $525,000 casino, shopping bills

By Michael King Post-Crescent staff writer

MENASHA — In nearly 27 years at Goodwill Industries of North Central Wisconsin, Inc., Carol Braun lorded over the non-profit agency’s finances like a hawk. She was known for working long hours, including weekends, and sometimes pestering employees, even the president, for missing receipts to justify expenses. But for the past seven years, police and prosecutors allege, the meticulous controller was carrying out an elaborate cover-up of an embezzlement of more than $525,000. Braun, 63, who’s awaiting arraignment on a felony charge of embezzlement, has confessed to police and publicly apologized for the crime, claiming she was feeding a gambling addiction.

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She’s indicated she will not contest the charge against her. On Friday, her attorney was granted a request for a new judge. Auditor, police, Goodwill and bank records reviewed by The Post-Crescent since Braun’s first court appearance a month ago show a long trail of deception that included what Goodwill officials claim were 257 fraudulent checks and 636 unauthorized credit card transactions. They reveal spending by the Town of Menasha woman ranging from casino gambling and trips around the country to holiday shopping sprees. “What’s neat about these cases is there’s always a paper trail,” said Dave Jagla, the Menasha police investigator who took Braun’s confession. “The paper trail tells you exactly what was going on and when.” Investigators and auditors have combed through reams of records along that trail. In the end, they say, a rather simple accounting mistake led to Braun’s downfall.

Checks, credit cards Police and Goodwill officials allege Braun stole money in three ways: handwritten checks on the Goodwill account, automated checks and credit card misuse. The criminal complaint filed against her encompasses nearly $400,000 worth of thefts by check dating to 1998. It does not include any of the alleged credit card misuse. When police subpoenaed Braun’s bank records, they were able to match personal checks she had written with dates and amounts corresponding to Goodwill checks written to her that she later destroyed. “She’d write the check out at Oneida (Bingo & Casino near Green Bay) and when she’d lose money, the next day she would end up writing a check from Goodwill to herself which she would deposit in her account to cover the losses,” said Menasha Police Lt. Ron Bouchard. To cover the checks made out to her, Braun allegedly made corresponding journal entries to businesses with which Goodwill regularly deals. The records show Braun made frequent personal use of the agency’s credit card amounting to more than $98,000 dating back to 1996. The credit card spending totaled nearly $66,000 in cash advances, mostly at the Oneida casino, plus air travel, hotel rooms, car rentals and meals at various locations throughout the United States as well as holiday shopping sprees. The shopping included 31 charges totaling $4,921 at Toys R Us in amounts ranging from $28.34 to $590.93 between Dec. 21, 1996, and Dec. 14, 2002. Braun, who was paid $63,000 a year as controller, also allegedly compiled more than $7,000 in unauthorized hotel charges in several Wisconsin cities, including Eau Claire, Wisconsin Rapids, Rhinelander, Minocqua, Milwaukee and Green Bay, in addition to stays in Florida, New Jersey, South Dakota, Nevada, Pennsylvania, Michigan and Illinois. Among them was a trip to Orlando, Fla., from March 23-27, 1999, during which she allegedly charged $1,204 for hotels, $213 for a rental car, nearly $195 for five meals and $102.50 for a cash advance. In an interview with The Post-Crescent in late July, Braun initially denied any misuse of the Goodwill credit card, saying “every one of them were business-related trips.” Later, however, she acknowledged “there could have been some misuse on that,” but declined to discuss details.

Trust betrayed Bob Pedersen, Goodwill president and chief executive officer, said Braun painted herself as a diligent, loyal employee whose responsibilities progressed as the organization grew from about $6 million in revenues in 1991 to $24 million last year. Only a few weeks before problems surfaced, Pedersen recalled having a discussion about how the organization had “grown up around her” and that Goodwill might need to find a way for Braun to retire with grace and dignity. “I really got schnooked,” Pedersen said. “On one hand, I’m trying to make life good and on the other hand, she’s grabbing the pocketbook every other day. That’s the betrayal part.” Goodwill treasurer and former board president Gary Lichtenberg, a retired bank executive, said the betrayal deepened when he saw the number of transactions. “When you’ve got that type of activity, seven plus years, not only alleged gambling but also personal use, in my book it’s theft, period,” he said. When Braun was confronted, Pedersen said, she told Goodwill officials she started taking money after she’d gambled away $175,000 she had inherited upon her father’s death in 1993 or 1994. “She had promised that cash to her grandkids for their college education and gambled it away in two years,” he said. 66

“It makes sense that she started (stealing) in 1995 or 1996 somewhere and escalated,” Pedersen said. The thefts continued in 1999, when the cash flow at Goodwill became tight, leading to a freeze on salaries for two years. “That really made me mad because she was sitting in an environment where people weren’t getting raises and she was jerking $100,000 out of the corporation,” Pedersen said. In a letter of public apology to The Post-Crescent on July 31, Braun, who was fired May 30, said her actions were “inexcusable” and she urged the community not to hold it against Goodwill. “I tarnished the good image of this fine organization,” she said.

Error exposes scheme The scheme began to unravel for Braun this past January when she made an accounting error. She scrambled for four months to cover the mistake and avoid scrutiny that might reveal her secret life. But, when the auditors arrived in mid-May, Braun told her supervisor about the mistake. Steve White, Goodwill’s chief financial officer, said he became suspicious after being notified by the agency’s director of finance, Jacqueline Draws, that Braun came forward with a mistake involving cash on the bank reconciliation. “She took the opening balance of the bank statement instead of the ending balance to try to do the reconciliation,” White said. In choosing the wrong number to start the process, Braun suddenly had an unexplained $70,000 difference she had to account for. Unable to decipher where she went wrong, Braun had made four correcting entries in January to cover the discrepancy. White told Pedersen he would call in a fraud specialist. “If there’s any messing around that involves cash, it’s an automatic red flag,” he said. Joe Galarowicz of Virchow Krause & Co., the partner in charge of the Goodwill audit, said his firm took over the Goodwill account in 2001. None of the previous audit firms or Virchow Krause uncovered irregularities or problems. It was only when the fraud inquiry went deeper to scrutinize transactions under $5,000 that problems were discovered, he said. “She was hiding it incrementally,” Pedersen said. “She wrote them (false checking entries) to look like it was an actual transaction. They’re all different amounts to different people in different organizations.” Jagla, the Menasha police investigator, said Braun admitted taking more than $100,000 via fraudulent checks and never mentioned any misuse of credit cards. But, the bank records showed the greater extent of the fraud, including photocopies of the checks Braun had destroyed.

Plea deal A plea agreement remains in the works for Braun, who told The Post-Crescent in July she did not plan to contest the felony charge nor dispute Goodwill’s loss figures. She also said she would do “whatever I can do” to make restitution and that she started attending Gamblers Anonymous after she was fired. She declined to discuss the case Thursday except to say her attorney suggested she seek a new judge. Pedersen said Goodwill already has received $250,000 in insurance proceeds to cover part of the loss and that Braun also has agreed to turn over $38,000 from her pension account, something the agency had no legal right to recover. He also hopes to get court-ordered restitution, but it’s uncertain how much Braun will be capable of repaying. Winnebago County Dist. Atty. Bill Lennon said he has not made any promises regarding a sentencing recommendation, but will file additional charges if the plea agreement is not accepted. Lennon also said he will wait until Braun’s case is closed before he considers charging her husband, Wesley, 64, who police allege was aware of her thefts and participated in laundering the fraudulent checks through his business as an electrician. “I don’t want one to play off against the other,” Lennon said. For Pedersen, the healing is under way, but the pain remains. “It was a huge, huge betrayal,” he said. “We work really hard to build a good work environment where people are valued and cared about.” While it is impossible to judge the full impact of the embezzlement on Goodwill, Pedersen called it a lost opportunity for the community. “When you look at the things we can do with $500,000, it’s pretty amazing.”

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Chronology

January-April 2003: Controller Carol Braun makes an error while reconciling Goodwill’s checking account at year end. She is unable to find the error to correct it so she makes four journal entries to hide the error. Then she allegedly continues cover-up on the monthly checking account reconciliation. May 12: Braun admits error to her supervisor upon the arrival of the Virchow Krause audit team. Her supervisor, director of finance Jacqueline Draws, advises Steve White, chief financial officer, that Goodwill might have an adjusting entry in the cash account. May 14: Braun and Draws present information to White. Immediately afterward, White requests auditors bring in a fraud investigation expert. May 20: Fraud expert meets with senior management and board of directors to assess circumstances and initiate an investigation. May 26-28: Discrepancies uncovered in cash account. May 30: Confronted with the evidence by Goodwill officials, Braun confesses to embezzlement and police are notified. Braun is arrested and provides statement that loss exceeds $100,000. She is released. July 22: Menasha police allege that Carol’s husband, Wesley Braun, participated in laundering stolen Goodwill funds through his small business, refer him to the Winnebago County district attorney’s office on charge of party to felony theft. July 25: Felony embezzlement charge filed against Carol Braun. July 31: Carol Braun issues public apology. Aug. 8: Braun makes initial court appearance; arraignment is scheduled for Sept. 9. Aug. 24: Braun’s attorney files for substitution of judge; arraignment cancelled. Sept. 5: Case reassigned to Judge Robert Hawley. Sources: Goodwill, police, auditors.

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Chapter 29

In Bob Pedersen’s eyes, Goodwill encountered the first negative publicity associated with the Carol Braun case on September 12, 2003. It took the form of a “letter to the editor” in The Post- Crescent.

Goodwill theft needs scrutiny

Editor, The Post-Crescent:

Coverage of the Goodwill bad-will debacle deals softly with issues that would be wielded like a hammer by a defense attorney: Who was watching the store? What is their culpability? Should they share in the penalties? Having been apprehended, the alleged miscreant is well served by a press that reports her professed remorse and self-blame. Defense attorneys like that, but it is hardly newsworthy. Goodwill is licensed as a not-for-profit corporation and has special responsibilities for openness and discretion in fiscal operations. Management personnel and especially the contracted auditors have exceptional state-required mandates to maintain surveillance over acquisitions and expenditures. The quoted, kindly and forgiving remarks come through as a denial of any responsibility — or like the casting of the first stone. Let there be more to this story. Dan Tomasek, Neenah

“It was just kind of thrown out there,” Pedersen said of the letter. “I thought it was accusatory and looked at it as an opportunity for education. I tried to contact the writer, but there was no listed phone number or address, and I couldn’t track him down. I would have liked to talk to him. Nobody rose to his bait, so it just ended there.” On September 15, Braun pleaded no contest at her arraignment. The Post-Crescent ran this story the next day.

Embezzler may receive 10 years Braun pleads no contest Monday; sentencing Oct. 14

By Michael King Post-Crescent staff writer

OSHKOSH — Winnebago County Dist. Atty. Bill Lennon expects to seek close to the maximum 10 years of confinement at Carol Braun’s Oct. 14 sentencing for embezzling more than $525,000 from Goodwill Industries. While Braun, who pleaded no contest Monday in Winnebago County Circuit Court, has blamed the thefts on a gambling addiction, Lennon questioned her excuse and expressed limited sympathy. “Frankly I think gambling is something she could have or should have controlled,” he said. “It’s something she’s had more than enough time to try and address.” While many of the fraudulent checks issued or credit cards used were for gambling, Braun was also “using these amounts for trips and vacations and just the living of the good life,” Lennon said. In addition to 10 years in prison, Braun can be fined up to $25,000. Asked if he intended to seek the maximum, Lennon said, “I’ll wait for the pre-sentence (investigation recommendation), but I think I expect to ask for something near there.” 69

After accepting Braun’s plea, Judge Robert Hawley found the Town of Menasha woman guilty and ordered a pre-sentence investigation. Lennon told the judge, “We could probably charge dozens and dozens of felonies” relating to the alleged thefts that took place since 1996. But, since she has confessed, he and Goodwill officials were satisfied with the maximum of 10 years for one count of felony theft for the embezzlement from the nonprofit agency over the last seven years. Lennon said Braun’s age of 63 was both a mitigating and aggravating factor. “She certainly was old enough to know better,” he said. While she could have been exposed to “hundreds and hundreds” of years of imprisonment, Lennon said Goodwill officials agreed with his belief that a judge might not consider more than 10 years prison. “I’m just pleased that this isn’t going to go to trial,” said Bob Pedersen, Goodwill president and chief executive officer, on Monday. “We’re anxious to get to sentencing and kind of put it behind us. We’re just ready to see some closure.” So far, Pedersen said Goodwill has recouped $288,100 in losses. Of that, $250,000 was the maximum Goodwill could get from their insurer while Braun also relinquished $38,000 from a Goodwill pension account and recently sent in a $100 check as well. “I would hope that there’s further opportunity for her to make restitution,” Pedersen said. “It would be nice to close the gap.” Lennon said he expects some additional restitution, possibly “in the $60,000 range,” to be paid before sentencing, but he doubts that she will make full restitution. Braun’s attorney, Greg Pettit, declined to comment after the plea hearing and did not return a telephone call to his office Monday. Gregg Curry, a Kaukauna attorney and member of the Goodwill board of directors, said Monday he intends to file a civil claim on Goodwill’s behalf against Braun in hopes of recouping additional funds now that she has been convicted. But Curry said he has “no idea” of her ability to pay or assets. “We’re looking for a judgment civilly as well as (court-ordered) restitution,” he said. Lennon said the case against Braun’s husband, Wesley, 64, who was arrested by Menasha police as party to felony theft but has yet to be charged, will be handled after her sentencing.

Braun’s sentencing did not occur as planned on October 14. It was postponed until November 5 to give the probation and parole agent assigned to the case more time to prepare the pre-sentence investigation.

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Chapter 30

Carol Braun was sentenced on a dreary, damp November afternoon. Blustery winds and intermittent rain made it feel colder than 38 degrees. She and her attorney, Greg Petit, had taken their seats at the defense table before the 2 p.m. scheduled start time. Dressed in a black suit, Braun looked self-conscious, embarrassed, frightened, and resolved to meet her fate. She also seemed lonely, even though Petit, who looked like he could be her son, whispered to her, and family members sat stoically in support on benches directly behind her. Whenever a camera clicked, Braun appeared to notice and stole furtive glances back toward the spectator area. Through a window above her, one could see the wind toss leafless, black tree branches against a gray sky. The small courtroom was full. Except for members of the press, who stationed themselves on the first two benches behind the prosecution table and chatted in low tones, the crowd had grown increasingly quiet by 2:10, waiting for the Honorable Robert A. Hawley. Despite a paleness and slight palsy-like tremor about her head, the longer Braun waited, the more comfortable she grew. By 2:20, she was nearly smiling at her attorney and peeking at his notes. When she turned toward the spectators now, she seemed to scan for recognizable Goodwill faces, positioned in the far back on the prosecution’s side of the aisle. Familiar with courtrooms, members of the press grew more talkative. They chuckled and rehashed memories of past cases and colleagues. “That was classic!” one recalled. Even though she was within 15 yards of Braun, a photographer sported a lens that would have been effective for shooting a Packer game. Braun’s family, Goodwill employees, and others who do not often find themselves in courtrooms remained nervously still. A son whispered to Wesley Braun, who stared straight ahead and responded only by shaking his head. By 2:30, a murmur passed through the crowd that Hawley was finishing up a divorce case in another room. “That’s what we’re waiting for.” Chuckles among the press had turned into laughter. Instead of taking sidelong glances, Carol Braun now craned her neck to look backward. A court reporter carried her machine in at 2:35. When Hawley didn’t immediately follow, the restlessness of the crowd increased. At 2:40, Hawley emerged, and court was called to order. The district attorney, Bill Lennon, began the prosecution’s case. “I don’t think the question is whether prison is appropriate. I really think the question is rather how much incarceration would be appropriate,” he said. Lennon explained that Braun could have been charged with “every single theft, hundreds and hundreds of incidents.” Or, the state could have charged for every felony-level embezzlement or one felony count for each calendar year as an ongoing theft. “But we didn’t. Pursuant to plea agreement, we charged this defendant with one count under the new penalties with the understanding that the court could consider all of the embezzlement behavior.” When he agreed to limit Braun’s exposure, Lennon said he considered her age, positive history, acknowledgment of a gambling problem, cooperation with law enforcement, and willingness to make restitution. “In my way of thinking, the state has already, in reaching its plea agreement, considered the mitigating circumstances.” Lennon also pointed out, “Carol Braun was in a position of power and trust. She was the controller, the budget director for Goodwill.” In that role, he said, she took money from the

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organization’s clients and told employees they couldn’t have raises nor keep up with the cost of living. Her purposeful, intentional and ongoing acts were “an incredible betrayal of trust,” according to Lennon. “One of the factors that really stuck in my craw, if you will, is the ongoing nature of these embezzlements,” Lennon said. “As is pointed out in the pre-sentence investigation, they go back to 1996 because that’s all the further the audit went back. There came a point of diminishing returns for the people at Goodwill, who had to pay for this audit. From 1996 onward, this defendant was stealing on an ongoing basis, on an escalating basis. “I think it’s also relevant to consider that this defendant did not voluntarily stop. She didn’t suddenly get religion,” Lennon said. “It’s important to also note that the defendant not only was stealing to feed her gambling addiction, but she was also stealing to feed her personal wants.” Lennon concluded, “I would argue that anything less than five years confinement would unduly depreciate the seriousness of this offense.” For the defense, two counselors who treat people with gambling addictions spoke in Braun’s behalf. Mary Beth Manning of Manning Counseling Center, Madison, Wis., testified that gambling addiction “is generated by internal endorphins.” Endorphins are chemicals naturally found in the brain that can have the same effects as drugs. “We have endorphins that are more powerful than heroin. You take adrenaline, it’s 10,000 times more powerful than heroin,” Manning said. “So when someone is under the influence of this addiction, it is as powerful or more powerful than what we know from many of the other addictions.” Manning said restitution is a very important part of recovery for gambling addicts, who experience “enormous amounts of shame” when faced with the consequences of their gambling. “Restitution helps to rebuild some of the damage that is done to the person individually and to everyone else who are very much harmed by this.” Manning, who never met with Braun, said, “I believe very firmly that this woman would not have committed these crimes if she had not had the gambling problem.” Cathleen Wille, a counselor from the Fox Valley Pastoral Counseling Center in Appleton who worked with Braun, said Carol “has been compliant with the work that we are doing. There are criminals who gamble, and there are gamblers who do criminal acts. Carol is not a criminal who gambles. She’s a compulsive gambler who got involved in criminal activities.” Wille also urged restitution and continued treatment so that Braun could “lead a productive life again, once she’s through this time in her life.” Petit, Braun’s attorney, questioned why the writer of the pre-sentence investigation did not complete the guideline worksheet for sentencing. “We have a sentencing guideline now for these types of offenses,” Petit said. “I have taken the liberty of filling out the guideline to the best of my ability, trying to be as fair as possible following the steps in the guideline book.” According to Petit’s interpretation, Braun’s sentence should fall between probation and two years in prison, based on aggravating, mitigating and other factors. He also noted that the Wisconsin prison system lacks a Gambler’s Anonymous program. If Braun were to be sent to prison as recommended, “there won’t be any treatment.” In addition, Petit said he didn’t know of anyone with more remorse for her activities than Braun. He cited her public apology and concern for Goodwill in The Post-Crescent, giving Goodwill $38,000 from her retirement account, making five $100 per month payments to Goodwill, putting her house up for sale to make more restitution, and designating Goodwill as the beneficiary of a $200,000 life insurance policy for which she had begun paying premiums.

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Considering the facts and circumstances surrounding the case – including her age, having begun a Gambler’s Anonymous program on June 5, being a good mother, lack of a prior criminal record or threat to the public – Petit asked that Braun be placed on probation for 10 years with various conditions. Among the conditions were six months in county jail, restitution, counseling, and community service. Petit believed a maximum sentence and restitution contradicted each other. “I don’t think those two things go together,” he said. Given the opportunity to make a statement, Braun said in a breaking voice said, “I am very, very, very sorry for what I have done. I have hurt the people I love: Goodwill, my family, and friends. I have done a horrible thing and I am very sorry for it.” Hawley responded, “Thank you. Ms. Braun. I sincerely believe those statements, quite frankly, and I say that with sincerity as well.” He added, however, “I see so many addictions in my courtroom – fourth offense drunk drivers who kill people on the streets, people with drug addictions who set up a cocaine conspiracy and distribute drugs in the community. It kind of belies the responsibility by saying, ‘Gee, if I didn’t have this addiction, I wouldn’t have done this.’ “But it really doesn’t. It really doesn’t help the community, the court system, the victims of the crime. It may go toward the healing process and your rehabilitation to recognize that it is a disease. But at the same time, there comes one heck of a responsibility here – be it drunk driving, be it drug abuse, be it gambling, be it sexual addiction. All of those addictions do carry a very, very severe responsibility.” Hawley said he agreed with the prosecution that Braun did not reach bottom, come forth, and ask for help. “That’s not what happened in this case,” he said. “I understand the addictive personality. I mean I have seen that in front of me many, many times,” Hawley continued. “And I’m not sitting here, Ms. Braun, and in judgment of you as a person or all of your good acts and your sincerity and your heart and your willingness to do things for other people. But your life has been skewed for a long period of time, and as you know and, I am sure, the counsel that spoke, too, you have hit bottom. And bottom evidently wasn’t you in the workplace and seeing what you were doing to the community and to Goodwill Industries. The bottom was, you know, getting caught. And it would absolutely, positively depreciate the seriousness of this offense if I placed you on probation.” With “great regret and sorrow,” Judge Robert A. Hawley said to Carol Braun, “I do have to sentence you to the maximum term.” It was all over within 50 minutes. On November 6, 2003, The Post-Crescent published these accounts of the previous day’s proceedings.

Goodwill thefts bring max penalty Embezzler gets 5 years in prison

By Michael King Post-Crescent staff writer

OSHKOSH — The five-year prison term given Wednesday to Carol Braun for embezzling more than $500,000 from Goodwill Industries of North Central Wisconsin Inc. likely means that full restitution never will be possible.

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A sympathetic prosecutor and judge could not prevent Braun, 64, from getting the maximum prison term plus five years of extended supervision for her thefts from 1996 through last spring while serving as controller for the nonprofit Menasha-based agency. Winnebago County Circuit Judge Robert Hawley acknowledged Braun’s gambling addiction but refused to allow it as an excuse to diminish the magnitude of her actions from a “position of power” and trust that betrayed a quality organization that helps many people. He ordered her to make full restitution but acknowledged that “might not be possible” once she is released from prison at age 69. Upon imposing the maximum sentence with “great regret and sorrow,” Hawley added, “I think you’re a fine person and a good human being but your actions were skewed for a long period of time.” Hawley said Braun had received “tremendous concessions” from prosecutors who could have filed “120 counts with no problem” based on the scope of the embezzlement. “There’s no joy in this for anyone,” said Bob Pedersen, Goodwill president and chief executive officer. “This is just the middle stages of what’s been a very tragic time for both Goodwill Industries and for Carol Braun and her family.” He called the sentence “fair and just” even though it might limit her ability to make restitution. “I believe that Carol will do everything that she can to try to make good the debt, but I can’t imagine given her age and the circumstances of the sentence, how that is ever going to make Goodwill whole,” Pedersen said. “I don’t feel any joy,” said Dist. Atty. Bill Lennon, whose decision to limit charges to one felony was based on Braun’s age, her lack of any prior criminal record, acceptance of the allegations against her, acknowledgment of her addiction and initial efforts to make restitution. “We have one life that is going to prison,” Lennon said. “We have the wonderful Goodwill Industries that suffered a $500,000 loss and I don’t think they’ll see all of it (in restitution).” Lennon asked the court to consider the “staggering amount” of money taken, the “ongoing nature” of the thefts, the deception and cover-up of her crimes. “She was also stealing to feed her personal wants,” Lennon said. “She didn’t suddenly get religion, Your Honor. She was caught.” Full restitution sought by Lennon was $542,090, including about $30,000 to cover Goodwill auditing expenses to aid the police investigation. “I’m very, very sorry for what I’ve done,” Braun told the court prior to sentencing. “I’ve hurt Goodwill and hurt people I love. “I’ve done a horrible thing and I’m very sorry for it,” she said. Defense attorney Greg Petit recommended 10 years’ probation with various conditions, including six months in jail, restitution, counseling, community service and continuing insurance premium payments on a $200,000 life insurance policy Braun recently took out with Goodwill as the beneficiary. Hawley said the insurance policy idea was a good one but he was hesitant to order it since any premium paid is “money that would not be going to Goodwill.” The judge said he would not order community service because “if possible, I’d like to see her be able to have some employment so she would be able to pay some restitution.” Goodwill has recouped $250,000 from an insurance policy to cover some of the loss. Prior to sentencing, Braun gave Goodwill $38,000 from her pension account and three $100 checks. Two more $100 checks were presented in court bringing the total restitution paid by her to $38,500. In an unusual move, Hawley granted a request to allow Braun to remain free on bond until noon Friday when she would turn herself in to begin serving her sentence. “I want to show a little compassion,” Hawley said. “I very rarely do something like that.” Braun, a 27-year Goodwill employee, was fired in late May and police were notified after discrepancies were uncovered and she admitted thefts. Menasha police investigators found that since 1996 Braun allegedly wrote hundreds of checks to herself and also misused the Goodwill credit card for cash advances at casinos and for personal use such as meals, travel, hotel stays along with purchases such as flowers, toys and cigarettes. Her thefts went undetected because she limited the size of individual checks or credit card transactions and assigned the expenses to various legitimate vendors that Goodwill did business with.

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Letters and statements seek sympathy, speak of betrayal

By Michael King Post-Crescent staff writer

OSHKOSH — Written pleas for leniency from family and friends and letters from victims seeking justice are among the factors judges often have to consider before sentencing criminals. Prior to Wednesday’s sentencing of convicted embezzler Carol Braun, 64, of the Town of Menasha, Winnebago County Circuit Judge Robert Hawley read more than a dozen letters of support and six victim impact statements pertaining to the case. Braun was sentenced to five years in prison and five years of extended supervision for embezzling more than $500,000 from Goodwill Industries of North Central Wisconsin, Inc. Here are excerpts from statements Hawley took into consideration before sentencing Braun: • “My mom has sinned,” said Tina Palmer. “She took money that did not belong to her. This was a complete shock to all of us. We knew she went to casinos, not how often or how much she spent. We also knew she worked very hard and thought she used it as entertainment or as an escape. How wrong we were. ... My mom is a wonderful lady who always has love for her children and grandchildren. She has paid and will continue to pay dearly for this sin the rest of her life.” • Jacqueline Draws, Goodwill finance director, said co-workers who trusted Braun were “literally brought to our knees.” “When I look at the gross misuse of funds not just for gambling but for cigarettes, presents, trips, and dinners, it literally makes me ill,” she said. “The other uses of funds lead me to believe that this was a willful crime on her part and not part of an addiction.” • “Being caught off-guard by Carol’s duplicity and her skillful efforts to hide her crime below the audit ‘radar screen’ has shaken us all,” said Nancy Heykes, who chairs the Goodwill board of directors. “We feel embarrassment and shame for having let the community down.” • “The great public exposure, personal sorrow and regret she has had to bear is deep and the humility she wears daily surrounds her like a cloak,” wrote Anita Tittel of Menasha, Braun’s sister-in-law. • “She was an outstanding employee — dedicated, dependable, competent and conscientious,” wrote Lloyd Williams, former Goodwill vice president of business affairs, Braun’s supervisor from 1977 to 1994. Williams said he was “stunned.” • Stephen White, who joined Goodwill as chief financial officer in 1999, addressed his statement to Braun: “When I expressed concerns about the checkbook for handwritten checks, you assured me that it was safe in your hands. I worked with you to develop computer reports that helped make your job a little easier. I helped you modify and fix reports that weren’t working properly. I joined Bob (Pedersen, Goodwill president and CEO) and some of our senior board members in praising your track record of no audit exceptions in 25 years. Now, it is painfully clear that it was all a con.” • “I have seen many people turn their lives around one day at a time,” said Jim Mahan, chairman of Appleton Gamblers Anonymous, in urging rehabilitation, not prison. “Carol has been truly remorseful for her actions and will suffer the consequences.”

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Epilogue

On the night before she went to prison, Carol Braun appeared on a WGBA-TV 26 interview. “I guess I really didn’t expect this type of sentence,” Braun said, referring to the maximum five-year prison term. According to the report by the NBC-TV affiliate in Green Bay, Braun suffered gambling losses as high as $3,000 per day playing slot machines. “I would go to work and I would not even think about gambling or anything else. I was a very devoted employee,” Braun said. “If I wasn’t into the gambling, you could lay a million dollars in front of me, and I wouldn’t take a penny. And until I got into this gambling addiction, you have no idea what it does to a person.” The interview concluded with Braun saying, “If they were watching tonight, I would hope that some day they will be given from God (the ability) to forgive me.” Bob Pedersen felt disappointment. To him, Braun was once again reciting “her gambling mantra” and not taking full responsibility for her actions. It was another ploy for sympathy, much like the life insurance policy, the $100 payments, the $38,000 from her retirement funds, and putting her house up for sale had been manipulative, disingenuous strategies. They were “part of the game, how the defense chose to tell her to behave to get a reduced sentence,” Pedersen said. “For anybody who works with you for six years, stole from you for six years and looked you in the eye for six years, these were shallow gestures. Too little, too late. At any point in time, she could have made this right. She chose to try to make it right after she was caught.” Goodwill has heard not another word about the life insurance policy or any other form of restitution since Braun was sentenced. “The whole thing was a tragedy,” Pedersen said. “There are no victors. There are just consequences of behavior. I can tell you there is no joy in retribution.” After the sentencing, attorney Gregg Curry filed a civil lawsuit against Braun on behalf of Goodwill in an effort to recover as much of the loss as possible. However, neither he nor Pedersen were optimistic about recouping substantial funds. “You don’t want to spend a lot of money if you aren’t going to get a lot,” Curry said of the pending suit. Pedersen termed the civil suit “a fiduciary responsibility to ensure the corporation’s opportunity for maximum recovery.” Pedersen and his staff also continued to honor their commitment to share their experiences and lessons learned with Goodwill Industries International (GII). Steve White made a presentation about the embezzlement at the GII 2003 CFO Conference. “Some people thought I was nuts to talk about such an embarrassing situation,” White said. “There were two camps – those who were very empathetic and thought it was good to be open, and others who thought it was better to keep things under wraps. We look forward to the ongoing opportunities to share and interact with the 180 other Goodwill chapters.” Pedersen shared the story at the 2004 GII Conference of Executives, GII Spring Learning Event, and the state meeting of Rehabilitation For Wisconsin. As part of a learning organization, he sought to develop a team “to take what we’ve learned and pass it on to others.” When all was said and done, despite the potential for catastrophic financial results and lingering negative impacts associated with embezzlement, Goodwill registered perhaps its best revenue year ever while bringing Carol Braun to justice. “I’m a pragmatist. I look at results and what the year looked like when we were all done,” said Pedersen. “The community still liked us and supported us, so we must have done some things right.

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We had our best donation year ever. Best sales year ever. We helped more people than ever. Bottom line, in spite of everything, we had our best year ever.” Overall, donations increased 10 percent from the previous year. The Phantom Ball, the organization’s major autumn fund-raiser, brought in twice as many cash contributions as it ever did. Scott Copeland, Goodwill’s chief operating officer for retail and logistics, explained the phenomenon this way: “One person told me, ‘I make one contribution to one charitable organization each year. This year, I choose to give to Goodwill.’ It was as if members of the community understood what happened to us and realized we needed their help more than any other time.” As bad as a $525,000 theft sounds for a nonprofit organization, the auditors and Goodwill’s accounting team put the loss in another perspective: The amount that Braun took from 1996 through 2003 represented one-half penny for every dollar of revenue raised, or 0.5 percent. The outside auditors also determined that the embezzlement did not affect any of Goodwill’s funding sources, and none of them were overcharged for contracted services rendered. The final audit report from Virchow Krause & Company stated, “…During the course of our audit, we became aware that an apparent misappropriation of funds was committed involving intentional override of internal control and misrepresentation of internal controls by an accounting person in a position of authority that resulted in a reportable condition as defined in the AICPA auditing standards. “…We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.” In other words, the audit concluded that adequate controls were in place, but the controls were overridden. So, what would Goodwill do differently if it could turn back the clock? “I wish I would have looked at the cash reconciliations right away,” said Jackie Draws, director of finance. “Having been an auditor previously, I was aware that cash has the biggest risk for fraud. Of course, no fraud was ever dreamed of here. My advice to others who are coming into an organization is to check the cash. Take over the bank reconciliations. Do them for a few months. And periodically, after you assign the duty to someone else, go back and do them as a double check.” Steve White, Goodwill’s CFO, will not be as patient nor overlook personnel problems or tolerate incompetence again. He said, “I felt frustrated that we didn’t catch Carol sooner. And I felt frustrated because of all the bad work habits and sloppy work that I had to put up with during the three years that I have been with Goodwill. “I trusted her because all of the trust that other senior managers, including board members, had in her. And over time, you convince yourself that she had these personal issues – not a good life at home, being nervous and uptight – so you accept these things after a period of time and just work around them. But once you find out that you have been betrayed, all of the frustration that’s been lingering in the background comes forward. “My very first thought when I learned that she was embezzling was we’re going to be so much better off without her, and our accounting department will be better organized, more consistent, more responsive to people inside the organization, and change will come easier.” The experience left Pedersen with a “deep and more profound awareness of Goodwill’s assets,” both human and financial. “Besides taking money, I now understand how people can rob your spiritual assets with emotional turmoil. They also can steal your time, pencils, telephone and Internet. I’ve become more sensitive and critically aware of our all assets,” he said. “I believe we must maintain a level of corporate trust, but we also have to balance that with a program of verification. Carol Braun hardly ever left the office for more than two or three days at a

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time. Now, people are going to take vacations and leave. When they leave, someone else will be doing their jobs,” Pedersen added. “We will establish an Audit Committee that will monitor ethics and how we behave. Even though, as a nonprofit, we’re not mandated to follow the Sarbanes-Oxley Act, we will behave as if we were. We’ll also develop our own internal audit function or contract with a firm like Jefferson Wells to conduct independent internal audits to make sure we practice proper segregation of duties and other procedures. Our regular annual external audits also will be more in-depth and include surprise checks in unannounced areas.” From an outside perspective, Menasha police investigator David Jagla said, “Nonprofits have a tendency to put all their trust in one individual” when it comes to accounting. Jagla recommended Goodwill destroy all of its signature stamps. Nancy Thiel, one of Braun’s closest friends and a peer in the finance department, said, “I would have liked to ask her, ‘What the hell were you thinking? What happened to my friend Carol? How could you do this to your family? Why didn’t you ask for help? I thought we were good friends, so how could you use me as a sounding board against the new finance structure while you were stealing from all of us?’ “I was too emotionally involved to ask those questions when Carol was caught but, in hindsight, I wish I could have heard her answers. I know the time for those questions has passed because the ‘Carol’ who was arrested was not the same person that I had spent 18 years with as a friend and business associate. And I mourn the loss of that friendship.” Like Thiel, other Goodwill friends, and members of the Braun family, Pedersen felt the personal pain. “We’re never going to be done with it,” he said. “But I truly believe those words of wisdom that my grandmother told me, ‘What doesn’t kill you will make you stronger.’” During the Christmas season after the sentencing, as Pedersen and his wife Shawn returned from visiting family in Madison, they drove past the city of Waupun and noticed lights shining in the night from the prison. Braun was incarcerated there, awaiting transfer. Pedersen couldn’t help but think how gut wrenching this time of the year must be for Braun and her family. “I contrasted how much I was enjoying life at that moment to how dark the Braun family must have felt. I thought of Carol’s sons and daughters packing up their children to visit Grandma in prison.” Karen Laws, Goodwill chief operating officer for development, communications and marketing, recalled Pedersen telling that anecdote at the next staff meeting. “The whole thing hit him once again. He said, ‘Just think. We’re all with our families, but Carol is not. What a tragedy. The difference is, we’ll go on as families and as an organization. Carol won’t.’” One day, Pedersen expects his grief will take him to visit Braun in prison. But he has not arrived at that stage in the process yet. Members of the accounting team have struggled in a unique way to proceed on their journey. Since Carol Braun was fired on May 30, 2003, her office stood vacant, a daily reminder of what had transpired. As the audits were completed, marking the end of the investigation and the beginning of recovery, the finance department was reorganized. Clare Zimmerman was promoted to senior accountant. In her new position, she would occupy Braun’s office. But Braun’s furniture carried too many bad memories. So members of the finance department went down the long hall at Goodwill, searching for someone willing to swap. They found a new employee joining the marketing department, and a deal was struck just before Braun’s original sentencing date on October 14. However, Zimmerman was still reluctant to move.

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Jackie Draws approached Angel Farrier, the director of Goodwill’s Helping Hands in the Home program who had been close to Braun and also was experiencing deep feelings of betrayal. “As a favor, could you help get us past the anger and pain with a Native American cleansing and forgiving ceremony?” Draws asked Farrier, an aspiring medicine woman with the “gift of healing.” Farrier had learned Lakota ways from her mother, a descendant of the Winnebago people, and was active in intertribal functions and the Intertribal Community Center, a Goodwill program for Native Americans. Draws hoped that Farrier’s performing the ceremony in Braun’s old office in conjunction with her sentencing, would bring closure on the nightmare that started five months earlier and set the stage for Zimmerman to move in. With Goodwill’s finance staff standing in a circle, Farrier explained the ceremony that would bring in good spirits and chase away the evil. In a smudge pot, she lighted sweet grass for healing, white sage to release anger, and cedar for cleansing. Using a fan made of eagle feathers and one peacock feather, the eye of which represented the Creator, Farrier fanned smoke from the pot to the front and back of each participant, wishing them good thoughts. She then smudged the walls, floor, ceiling and entire room. Zimmerman moved into the office with different furniture as planned. But Braun’s October 14, 2003, sentencing was postponed until November 5 to provide more time for the pre-sentence investigation. “We didn’t feel closure,” said Farrier. The day’s events “didn’t have the effect everyone thought they would have.” Things in the finance department still didn’t feel right, so Draws asked Farrier to come back and conduct a healing ceremony. It was performed on Friday, November 7, the day that Braun reported for prison. This time, everyone brought a dish of food to share for a feast of celebration. First, though, they each fanned themselves with smoke from the smudge pot. Native American music played, and Farrier drummed to the beat of each person’s heart. As the smudge pot was passed around the circle, each person said something about her new feelings or something to drive out the old…“I wish everyone good thoughts and the abilities to do their jobs”…“I hope the hurt will be released from everyone present.” Farrier then smudged the offices. Each person took a turn drumming her heartbeat while Farrier asked the Creator to release bad energy and feelings from the individual work areas and bring in new positive ones. During the feast, a plate was prepared for the Creator. Untouched, it symbolized the Creator’s presence and guidance. Farrier hung a drum and feather on the wall so that whenever anyone was troubled, the person could go to the wall and recall the ceremony. “We closed Carol out and gave her forgiveness,” said Farrier. “It brought peace. Tears were shed that day. They let the emotion out. The tears are gone, and we moved forward.” “To me, it meant a fresh, clean start,” Zimmerman said. “We’ll have at least one more celebration, sometime after the next audit,” Draws said. “It will be called, ‘The Books Are Ours Party.’ There will be no more smoke and mirrors. All the entries will be ours, and we’ll know all the answers.”

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Postscript

On February 26, 2004, Wesley Braun was charged with being party to embezzlement. The felony charge carried a maximum of up to five years in prison and five years of extended supervision, the same sentence that his wife Carol received. On June 10, Wesley Braun was sentenced to one year in the Winnebago County Jail and 10 years probation for felony theft. Terms of his probation include restitution of $168,756. Judge Thomas Gritton also ordered absolute sobriety because any money that would be spent on alcohol should go to Goodwill. Probation agents will have the authority to decide whether the Brauns can live together after Carol Braun’s release from prison.

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Appendix

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Mission, Vision, and Core Organizational Values of Goodwill Industries of North Central Wisconsin

Mission Goodwill Industries of North Central Wisconsin, Inc. will improve the community by improving the lives of its people through services, partnerships, collaborations and the responsible use of community resources.

Vision for the Future Our vision is to be recognized in all the communities we serve as the premier provider of services to individuals facing barriers to independence.

Core Organizational Values

We… …put people first.

…will conduct ourselves with honesty and integrity.

…hold ourselves and our people accountable.

…are loyal.

…seek opportunities to incorporate our mission into our business operations. …constantly seek out opportunities to collaborate. …encourage innovation and risk taking to achieve our mission. …provide opportunities for the growth and development of people.

…strive for excellence.

…believe in the power of work.

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Who’s Who (people involved, listed in alphabetical order)

Bonneville, Larry: lieutenant, Menasha Police Department Bouchard, Ronald: lieutenant, Menasha Police Department Braun, Carol: former controller of Goodwill Braun, Wesley: husband of Carol Braun Burns, George: Goodwill’s director of environmental services

Coonen, Nancy: Goodwill’s chief information officer Copeland, Scott: Goodwill’s chief operating officer of retail and logistics Craanen, Robert: consultant and legal counsel for Goodwill Culhane, Ed: reporter, The Post-Crescent Curry, I. Gregg: member of Goodwill’s board of directors and Legal Committee, attorney

Detienne, Richard: secretary of Goodwill’s board of directors Draws, Jackie: Goodwill’s director of finance

Eldred, Kathy: Goodwill’s program assistant

Farrier, Angel: Goodwill’s director of Helping Hands in the Home program

Galarowicz, Joe: partner, Virchow Krause & Company Gritton, Thomas: circuit court judge, Winnebago County Gustafson, Brad: Goodwill’s director of loss prevention.

Hawley, Robert: circuit court judge, Winnebago County Heykes, Nancy: chair of Goodwill’s board of directors and member of Legal Committee, attorney Higgins, Billie Jo: senior accountant, Virchow Krause & Company

Jagla, David: investigator, Menasha Police Department

King, Michael; reporter, The Post-Crescent Kessinger, George: president and chief executive officer of Goodwill Industries International

Laws, Karen: Goodwill’s chief operating officer for development, communications and marketing Lennon, Bill: district attorney, Winnebago County Lichtenberg, Gary: treasurer of Goodwill’s board of directors

Mahan, Jim: chairman, Appleton Gamblers Anonymous Manning, Mary Beth: Manning Counseling Center, Madison, Wis. Marklein, Howard: fraud investigator, Virchow Krause & Company Mauthe, Mark; investigator, Menasha Police Department McFadden, John: vice chair of Goodwill’s board of directors

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Oppmann, Andrew: executive editor, The Post-Crescent

Palmer, Tina: one of Carol and Wesley Braun’s daughters Pedersen, Bob: Goodwill’s president and chief executive officer Petit, Gregory: attorney representing Carol Braun

Saxby, Sara: Goodwill’s executive coordinator Schultz, Priscilla: Goodwill’s accounts payable specialist

Thiel, Nancy: Goodwill’s payroll coordinator Thompson, Rebecca: executive director, Fox Cities Community Clinic Tittel, Anita: sister-in-law of Carol Braun Turner, Robert: member of Goodwill’s board of directors

Waterman, Renee: Goodwill’s director of human resources at time of embezzlement Wilk, Keith: Goodwill’s chief operating officer of programs and services Williams, Lloyd: former vice president of business affairs for Goodwill Wille, Cathleen: counselor, Fox Valley Pastoral Counseling Center White, Steve: Goodwill’s chief financial officer

Zimmerman, Clare: Goodwill accountant

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Chronology of Events

May 12, 2003 Virchow Krause begins 2002 audit.

May 16 Steve White reports to Bob Pedersen that accounting irregularities have been found.

Bob Pedersen asks Gary Lichtenberg to lead a team to examine the issues related to the accounting irregularities.

May 20 Leadership of Goodwill meets with Virchow Krause Audit Team to discuss possibility of fraud. A decision is made to complete a more refined audit, changing materiality from $30,000 to $5,000.

May 27 Legal Committee of Goodwill, including Gregg Curry, Nancy Heykes and Gary Lichtenberg, determines further course of action.

May 29 Canceled checks (June/July) requested from the manual checkbook arrive from Wells Fargo Bank. Planned a strategy meeting for the next morning.

May 30 9 a.m. Strategy Team meets to discuss next steps of action. George Burns, Nancy Coonen, Scott Copeland, Bob Craanen, Jackie Draws, Brad Gustafson, Karen Laws, Gary Lichtenberg, Bob Pedersen, Sara Saxby, Renee Waterman, and Keith Wilk.

Mid-morning Carol Braun’s computer access at home and at the office is eliminated. Her security access is deleted.

11 a.m. More canceled checks arrive from Wells Fargo Bank.

1 p.m. Carol Braun attends a meeting with Bob Pedersen, Gary Lichtenberg, Renee Waterman, and Sara Saxby. She provides written confession. Bob terminates Carol’s employment.

2 p.m. Officers from the City of Menasha Police Department (MPD) arrive at Goodwill, interrogate Carol, and take her into custody.

4:30 p.m. Special Board meeting is called for Monday, June 2.

4:30 p.m. Notice sent to Goodwill staff that Carol Braun is no longer an employee.

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Evening MPD picks up Goodwill computer at Carol Braun’s home.

Carol Braun is released from custody.

May 31 Morning Bob Pedersen calls Andrew Oppmann, executive editor of The Post-Crescent newspaper.

Afternoon Bob Pedersen talks with Post-Crescent Reporter Ed Culhane.

Bob Pedersen talks with Goodwill Board members.

Bob Pedersen contacts George Kessinger, President of Goodwill Industries International (GII).

10 p.m. Channel 5, the CBS affiliate in Green Bay, airs brief story about the arrest.

June 1 The Post-Crescent runs front-page story on Goodwill. “Goodwill stung by embezzlement.”

Four area television stations run stories on Goodwill.

Bob Pedersen talks with the Fox Cities Community Clinic.

June 2 8 a.m. Goodwill Board of Directors meeting. Board passes resolution in support of Bob Pedersen and the Leadership Team.

Bob Pedersen talks with Habitat for Humanity.

The Post-Crescent article is e-mailed to Goodwill staff.

Keith Wilk calls major funders.

11 a.m. Focus group conducted to identify employee questions.

12:15 p.m. Leadership Team discusses notifying stakeholders. Discusses employee questions.

Four area television stations interview Bob Pedersen for newscasts.

June 3 GII includes Post-Crescent article in daily newsletter.

7:30 a.m. Karen Laws and Bob Pedersen attend Thrivent Financial for Lutherans Community Breakfast.

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Noon Bob Pedersen and Karen Laws attend Rotary Club meeting.

1:30 p.m. Employee Assistance Program staff meet with employees close to Carol.

3 p.m. Staff meeting, including Store Team Leaders, at which Bob Pedersen answers focus group questions and questions from floor.

June 4 10 am Meeting with MPD investigators, Virchow Krause.

1 p.m. Meeting for staff who could not attend June 3rd staff meeting.

Bob Pedersen sends notes, thanking GII colleagues for support.

2 p.m. Meeting with Virchow Krause to discuss work plan to complete both audits.

4 p.m. Question & Answer document e-mailed to all Goodwill staff. Document will help Store Team Leaders in Thursday and Friday staff meetings.

June 5 Follow-up meeting of Strategy Team to discuss status, stakeholder notification, work plan.

June 6 Bob Pedersen tells Mark Koehl from Wipfli Ullrich that their audits of Goodwill might be opened to collect evidence.

Letters mailed to donors, volunteers, Assisted Donation Center (ADC) partners, campus partners, and past Directors of the Board.

Supplemental audit begins with Billy Jo Higgins, Virchow Krause, leading the effort.

1:30 p.m. MPD investigator David Jagla meets with Bob Pedersen and Jackie Draws.

June 8 Oshkosh Northwestern editorial: “Goodwill handles bad news deftly.”

June 9 Jackie Draws and Steve White talk to St. Paul Insurance about process.

June 10 Bob Pedersen and Steve White meet with Fox Cities Community Clinic Board of Directors.

GII publishes Oshkosh Northwestern editorial in its newsletter.

June 11 Bob Pedersen and Steve White talk with Joanne Cotter of Wipfli Ullrich regarding investigation. The local partner was also on the conference call. Goodwill promised to keep Wipfli updated.

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June 12 Jackie Draws meets with Investigator Jagla and Grand Chute police to review information on confiscated computer.

Letters mailed to mayors of cities with Goodwill stores.

Letters mailed to mayors of cities with whom we have financing bonds.

Letters sent to funders requesting 60-day extension on audit.

Meeting of the ad hoc Legal Committee of Goodwill. Gregg Curry and Bob Pedersen discussed upcoming legal process for case.

June 16 Bob Pedersen begins to respond to people who emailed him in response to GII list serve message.

June 17 Letters mailed to Financial Information & Service Center (FISC) donors.

June 18 Meeting of the ad hoc Legal Committee of Goodwill: Gregg Curry, Bob Pedersen, and Steve White discussed Carol Braun’s request for her retirement money.

June 19 Letters to Fox Valley Symphony, LEAVEN, and Paper Industry International. Lexington (KY) Herald Leader reports that an employee of Goodwill Industries of Kentucky has been indicted on charges of stealing more than $14,500 from the Kentucky Goodwill. Bob Pedersen contacts GII to correct the $800,000 figure linked to Menasha that GII has put into their background material. Bob Pedersen answers Nancy Heykes’ concerns about how Carol was able to misuse Goodwill’s credit card system without detection. June 20 Bob Pedersen notifies Elan that Goodwill corporate charge card holders can no longer make cash withdrawals with the cards. June 26 Bob Pedersen, Jackie Draws, Gary Lichtenberg, David Jagla, Mark Mauthe, Steve White, and Sara Saxby meet to discuss case. GW lets the police know they are comfortable with moving forward on charges.

July 1 Progress meeting with Gregg Curry, Jackie Draws, Billie Joe Higgins, David Jagla, Gary Lichtenberg, Bob Pedersen, Sara Saxby, and Steve White.

Early July Steve White, Jackie Draws, and Billie Joe Higgins review the books to determine how Carol “cooked the books and washed the dollars” through the expense side of the general ledger but are unable to break the code. They prepare a list of questions, which are given to Gregg Curry for Carol’s attorney. Answers to the questions will help unravel the system. 88

July 10 Bob Pedersen is called by Post-Crescent reporters regarding total amount embezzled.

July 11 Post-Crescent runs front page story “Goodwill embezzle tally at $425,000.” Article shared with Board of Directors, internal and external Goodwill contacts.

GII asks Bob Pedersen to help other Goodwills by sharing experience.

July 21 Bob Pedersen receives call from Post-Crescent indicating there will be a story the next day regarding Wes Braun and possible charges.

July 22 Post-Crescent runs article, “Goodwill Controller’s Husband may be Charged.”

Article is shared with Board of Directors, Goodwill internal and external contacts, and campus partners.

The final bank records from M&I Bank are delivered to Goodwill by MPD investigator David Jagla. This provides Goodwill with a final total of $507,550.05

July 23 Bob Pedersen, Steve White, Jackie Draws, Gary Lichtenberg, and Gregg Curry meet with District Attorney Bill Lennon and David Jagla in Oshkosh to discuss charges, etc.

July 24 Bob Pedersen contacts reporter Ed Culhane at the Post-Crescent to inform him of the $507,550 total.

July 25 Post-Crescent runs article, “Goodwill: $500,000 had been embezzled.”

Article is shared with Board of Directors, Goodwill internal and external contacts, and campus partners.

The Winnebago County District Attorney’s Office calls to say the felony complaint in the embezzlement case has been filed today. Carol Braun’s initial court appearance will be Friday, August 8, at 9:45 am. She will appear in Branch I in front of Judge Thomas Gritton.

July 26 Post-Crescent runs the article, “County files charge in Goodwill embezzlement.”

July 29 Goodwill TODAY runs article, “Former Wisconsin Goodwill Controller Charged.” The link is to the July 26 Post-Crescent article.

July 31 Steve White polls the Executive Committee. Under state statute, Goodwill has the right to 1) describe the effects Braun’s crime has had on us physically, financially, psychologically and emotionally, and 2) indicate what we would recommend for the defendant at sentencing.

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August 1 Post-Crescent runs the article, “I betrayed them and I hurt them.” Article is shared with Board of Directors and Goodwill internal and external Contacts.

August 4 Meeting with Jefferson Wells to learn about its services: Bob Pedersen, Gary Lichtenberg and Steve White.

The Chronicle of Philanthropy publishes the article, “Fighting Charity Fraud,” in its August edition. Goodwill is noted in the article.

August 7 Post-Crescent runs the editorial, “Braun’s right: Don’t blame Goodwill for her actions.”

August 8 Victim Impact Statements from Bob Pedersen, Steve White, Gary Lichtenberg, Gregg Curry, Nancy Heykes, Nancy Thiel, and Jackie Draws are delivered to the Winnebago County District Attorney Office.

Carol Braun’s initial court appearance in Branch I before Judge Thomas Gritton. Bob Pedersen, Steve White and Jackie Draws attend. Arraignment is scheduled for September 9. Post-Crescent runs the article, “Goodwill plea deal ‘still in place.’ DA says husband’s case will be handled separately.” August 10 Post-Crescent runs the editorial, “Braun’s crimes common to compulsive gamblers.” August 13 Reporter Mike King of The Post-Crescent interviews Bob Pedersen, Gregg Curry, Steve White, Gary Lichtenberg, Jackie Draws and Joe Galarowicz for an upcoming article. August 24 Carol Braun’s attorney files for substitution of judge; arraignment on September 9 is canceled. September 5 Carol Braun’s case is reassigned to Judge Robert Hawley. Arraignment rescheduled to September 15. September 7 Post-Crescent runs the article, “Paper trail reveals scheme.” Green Bay Press-Gazette runs abbreviated article.

September 8 Article is shared with Board of Directors, Goodwill internal and external contacts, and GII.

September 9 Post-Crescent runs the article, “Ex-Goodwill worker to be in court on Monday.” The Victims Witness Program also called to indicate the hearing is September 15 in Branch IV.

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September 12 Post-Crescent runs a letter to the editor, “Goodwill theft needs scrutiny.” September 15 Carol Braun pleads no contest at the hearing. Two television stations interview Bob Pedersen following the hearing. September 16 Post-Crescent runs the article, “Embezzler may receive 10 years: Braun pleads no contest Monday; sentencing Oct. 14.” Article is shared with Board of Directors, Goodwill internal and external contacts.

September 17 USA Today Across the USA section mentions Braun case.

September 18 Goodwill TODAY runs article, “Former Menasha Goodwill Controller Pleads No Contest.” The link is to the September 17 USA Today Across the USA section. October 12 Post-Crescent runs the article, “Braun Faces Sentencing Tuesday: Gambling Addiction a Wild Card in Goodwill Case.” October 14 Post-Crescent runs the article, “Sentencing for Braun Rescheduled.” November 5 Carol Braun is sentenced by Judge Hawley to five years in prison and five years of extended supervision. Bob Pedersen, Karen Laws, Steve White, Jackie Draws, Brad Gustafson, Priscilla Schultz and Clare Zimmerman attend the sentencing. November 6 Post-Crescent runs the article, “ Goodwill thefts bring max penalty: Embezzler gets 5 years in prison” and “Letters and statements seek sympathy, speak of betrayal.” November 7 GII sends out advisory to other Goodwills and suggested responses to possible questions from the press. November 13 Post-Crescent News Record runs editorial, “Braun case serves as wake-up call for gamblers” November 18 Post-Crescent News Record runs article, “No decision yet on charging embezzler’s spouse.” November 19 Post-Crescent News Record runs letter to editor, “Valley needs educating about problem gambling.”

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Communications Plan

STAKEHOLDER DEADLINE WHO WHAT DONE Staff May 30 Jackie Draws E-mail announcing Carol Braun’s Yes departure Audrey Schedgick May 30 Bob Pedersen Call about Carol’s departure Yes Ralph Shiner May 30 Bob Pedersen Call about Carol’s departure Yes Nancy Thiel May 30 Bob Pedersen Call about Carol’s departure Yes George Kessinger May 30 Bob Pedersen Heads up on newspaper story Yes Bonnie DeBraal May 30 Bob Pedersen Call about Carol’s departure Yes Board of Directors May 31 Bob Pedersen Calls to individual Directors at home Yes and June 1

June 2 Bob Pedersen, Shared details of investigation Yes Special Staff and Meeting Consultants

June 12 Update Board on investigation Yes Regular Meeting Fox Cities June 1 Bob Pedersen Called Rebecca Thompson Yes Community Clinic June 10 Bob Pedersen, Attend Board Meeting Yes Steve White LEAVEN June 19 Bob Pedersen Letter to Jennifer Wanke Yes Fox Valley June 19 Bob Pedersen Letter to Carley Miller Yes Symphony Paper Hall of Fame June 19 Bob Pedersen Letter to Dan Waselchuk Yes Habitat for June 6 Bob Pedersen Talked to John Weyenberg Yes Humanity June 16 Bob Pedersen Attend Board Meeting Yes Restorative Justice June 2 Keith Wilk Contacted Staff Yes Programs of Taylor County Barron County June 2 Keith Wilk Contacted Staff Yes Restorative Justice Program

Eau Claire County June 2 Keith Wilk Contacted Staff Yes Restorative Justice Program Community June 2 Keith Wilk Contacted Staff Yes Restorative Justice Program—local Stevens Point June 4 Keith Wilk Contacted Staff Yes Restorative Justice Program Store Team June 3 Bob Pedersen Store Team Leaders, Program Yes Leaders, Program Meeting Leaders, Selected Staff Leaders, Selected Staff

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GII Colleagues June 3 Joanne Simon to Note from Bob Pedersen on List Yes draft letter Serve FISC June 17 Dave Aardappel Letters from Aardappel and Yes Pedersen with newspaper article enclosed Fox Valley June 2 Keith Wilk Contacted Staff Yes Workforce Development Board (WIA/WAA/Senior June 12 Bob Pedersen Letter requesting audit extension Yes Community Services Employment Program) Fox Valley June 2 Keith Wilk Contacted Staff Yes Workforce Development Center Management Team DVR—Fox Cities June 2 Keith Wilk Contacted Staff Yes (Voc. Eval., WAT, Employers Resource, ACTION, OTTP, VSS) DVR—Oshkosh June 2 Keith Wilk Contacted Staff Yes (Voc. Eval., WAT, Employers Resource, ACTION, OTTP, VSS) Calumet County June 2 Keith Wilk Contacted Staff Yes Human Services (VSS, W-2) June 12 Bob Pedersen Letter requesting audit extension Yes Outagamie County June 2 Keith Wilk Contacted Staff Yes Health and Human Services (VSS, W- 2 Work Services) June 12 Bob Pedersen Letter requesting audit extension Yes Winnebago County June 2 Keith Wilk Contacted Staff Yes Human Services (VSS, Work Services, Fiscal Intermediary June 12 Bob Pedersen Letter requesting audit extension Yes Services, EIS) Waupaca County June 2 Keith Wilk Contacted Staff Yes Human Services (Work Services) June 12 Bob Pedersen Letter requesting audit extension Yes Brown County June 2 Keith Wilk Contacted Staff Yes Human Services (Work Services) June 12 Bob Pedersen Letter requesting audit extension Yes Waupaca Area Job June 2 Keith Wilk Contacted Staff Yes Center Management Team June 12 Bob Pedersen Letter requesting audit extension Yes GW Staff June Joanne Simon Q & A Yes

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Donors June Joanne Simon to Bob Pedersen will sign letters Yes draft letter Campus Partners June 6 Joanne Simon to Bob Pedersen will sign letters Yes draft letter Past Board June 6 Joanne Simon to Nancy Heykes will sign the letters. Yes Members draft letter Volunteers June 6 Joanne Simon to Bob Pedersen will sign letters Yes draft letter ADC’s June 6 Joanne Simon to Bob Pedersen will sign letters Yes draft letter; Bonnie DeBraal to provide list. Communities who June 12 Joanne Simon to Bob Pedersen will sign letters Yes supported tax- draft letter, Steve exempt status White to provide names Mayors of June 12 Joanne Simon to Bob Pedersen will sign letters Yes Communities with a draft letter. GW Store

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Memorandum

To: All Goodwill Teammates and Board Members

From: Goodwill Leadership Team: Bob Pedersen, Scott Copeland, Karen Laws, Sara Saxby, Steve White, Keith Wilk Date: 2/8/2007 Re: Embezzlement Incident – Questions and Answers

By now most of you are aware that on Friday, May 30, Carol Braun was fired and charged with embezzling large amounts of money from our Goodwill. During the last few days, this was covered in many Wisconsin newspapers and on Green Bay television stations.

Carol was a trusted 27-year employee, and a friend to many of us. Many Goodwill teammates and board members are feeling shocked, angry, betrayed, worried, or sad. These are normal feelings of grief that we need to work through. If you need help dealing with your feelings, we encourage you to call our Employee Assistance Program (EAP) at 1-800-894-9327.

The most important thing we’d like you to know is that we will get through this together. Goodwill is a highly respected non-profit organization, and we have every reason to believe that the community will be supportive and understanding. We trust you, and it’s important to continue trusting in each other. To the community, we are the face of Goodwill, so we need to keep on doing the good work we have always done.

We recognize that many of you have questions, and we want to be as open and honest as we can. We held a focus group of teammates from each area of Goodwill, and they came up with a comprehensive list of questions. Those questions and answers follow. If you have other concerns or questions, please talk to a member of the leadership team or a trusted teammate who will bring the question to us so we can provide the answer.

Questions and Answers:

1. Were there other Goodwill employees involved? To our knowledge only one employee was involved. However, the investigation is just beginning so we will find out for sure in the days to come.

2. How does this affect our stability? It does not affect our stability. The theft occurred off of our balance sheet and off budget, so this is cash we did not know we had. However, we certainly lost opportunities to use this cash to support our mission because we weren’t able to include it in our budget.

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3. How will the losses be covered? We do not know the total of the losses yet. Goodwill is insured against a portion of the loss—up to $250,000. There is a chance to recover additional monies through a civil suit.

4. What are the timelines of communication? We will communicate to the Board, staff and other stakeholders as we discover facts. We have promised the community, and we promise you, that as the investigation continues we will share the facts.

5. What safeguards are in place for the future? As part of the review and investigation we will look at control, as well as segregation of duties. We will also look at an internal audit review. We will communicate the plan as soon as we have one.

6. Why did it take so long to find the problem? This crime was skillfully committed. It was not apparent to anyone because it was done outside of the general ledger. The fraud went undetected until a discrepancy was found in the books by our audit firm, which made the audit firm dig deeper. History has shown us that a clever, capable person with the intent and will to carry out a crime like this can do it. However, we also know that it is only a matter of time before it is discovered.

7. What is an audit supposed to find? An audit is a general test of a company’s financial position. It reviews your accounting practices, makes sure your balance sheet is correct at the end of the year, and then tells the public you accurately handled business. They also test for separation of responsibility.

8. How does an audit work? It is different from balancing your checkbook. Standard audit procedures are to check transactions starting with a certain amount and higher. In a corporation the size of Goodwill ($24 million last year), the materiality used to check transactions was $30,000.

Our audit firm discovered that a number was entered incorrectly into the books, and started lowering the materiality. When the materiality was dropped to $2,000, discrepancies were evident and led to the discovery of the crime.

9. How often do we change audit firms? Typically we change firms every 3 years. Many companies use a firm for three years then change to get new eyes to look at the numbers and to ensure staff does not befriend the auditors. Other companies use one audit company, but it is a “pit bull” firm that watches a firm very closely.

This is the third year we have had Virchow Krause audit our books. The year prior Schenck did our audit and the two years before Schenck we had Wipfli. Prior to Wipfli, Grant Thornton was our auditor. We put the audit out for bid each year. These are the top four auditing firms in Wisconsin.

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10. Will I have a job tomorrow? Yes. This incident will not affect our ability to employ people. Life will continue to go on at Goodwill. We have tremendous support from the community and a powerfully capable Board. In 2002 we became one of the top 15 most important Goodwill agencies in the nation, out of 181 Goodwills.

11. Why were we not told about this before it appeared in the news? We did not know until Friday, May 30 at 1 p.m. We needed to protect the employee until she was charged with fraud. On Saturday it would have appeared in the police records, and we made the decision to contact the Post-Crescent so we could make the public aware of the facts as soon as possible. We regret that because it happened over the weekend, most of you had to hear about it on the news or from family and friends before we had the chance to tell you the details.

12. What do we do if we have information or other concerns related to this issue? Bring the information or concern to a member of the Leadership Team. Or, if it makes you more comfortable, bring it to your Supervisor or a trusted Teammate who will share with a Leadership Team Member. We are responsible to each other, and it is vitally important that we be open and honest if we have information or concerns.

13. What do we do if we have difficulty dealing with this problem? Our Employee Assistance Program (EAP) offers counseling sessions, and is included in our employee benefit package. This program is available to you with just one telephone call. 1-800-894-9327.

14. How do I respond to the media? Bob Pedersen is handling all contact with the media. If you are contacted, you need to refer the media to Bob.

15. Who do I contact in Finance? Any items you handled with Carol should be sent to Jackie Draws.

16. How do I tell the difference between rumor and fact? Ask Bob, your Team Leader, or a member of the Leadership Team.

17. What can I expect about the scope of the investigation process? It will be thorough and deep.

18. Who will be involved in the investigation? The City of Menasha Police Department, St. Paul Insurance Company, Virchow Krause, Goodwill Board of Directors, Goodwill Teammates and the IRS.

19. What can I do to help Goodwill regain or maintain credibility? Please continue to do the good work you have always done. If you have the opportunity to educate people about our mission, do so. Our Goodwill enjoys a high level of respect

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in the communities we serve, and we have every reason to believe that will continue. Most people who hear the facts and think it through will be positive and supportive.

20. Does this have anything to do with the turnover in Finance staff? No. Other teammates left Finance to pursue alternative career paths.

21. Are our contracts with funders valid? This will have no impact on contracts with counties, DVR, etc. However, if any financial discrepancies are found, Goodwill will make them whole. In addition, Goodwill conducts single audits on these contracts.

22. How does this affect the stability of the campus? There will be no impact; business will continue as usual.

23. Does this affect the bookkeeping of our partners? Our belief is that our partners were not affected. Staff other than Carol does bookkeeping for partners. Bob will meet with the Board of Directors of all these entities to apologize for the inconvenience and to explain the situation. In addition, Goodwill will make whole any discrepancies found.

24. Does the federal government need to be involved in evaluating our contracts? No. Yearly we send a copy of our audit to the federal government to comply with their need to know.

25. How does this affect our CARF accreditation? It will not affect our accreditation. CARF requires an annual independent audit of our finances with which we comply.

26. Has this in any way affected our retirement fund? No.

27. Did this decrease compensation to Goodwill employees? This is difficult to say. Compensation, along with mission opportunities, is determined by a number of factors including cash availability, economic factors, and where we are in the business cycle. If we knew we had this cash, we may have made different decisions. One thing we know for certain is that our organization was damaged and we probably missed many opportunities because we did not have this cash available to us.

28. How was the cash accessed? We do not yet have a complete handle on how this occurred, but we will figure it out.

29. How did you discover it was Carol? The money she took never hit the general ledger. That’s why it was so difficult to find. But the evidentiary proof led back to her once we did find it. It is a legal issue now and we can’t discuss details.

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30. Will Goodwill go back through previous years? Most of 2002 has been reviewed with the exception of one month. We will be looking back through several years. At some point looking backward does not produce any more gain for Goodwill, so we are not sure yet how far back we will look.

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Letter to Accounting Clients

Dear :

As you already know on Friday, May 30th, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired under the suspicion of embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is currently under investigation.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

Goodwill does provide bookkeeping and payroll services to several non-profit partners such as your organization. After several weeks of investigation, it is highly unlikely that your accounts were affected by this theft. However, Goodwill will compensate for discrepancies if any are found.

If you have any questions or concerns, please feel free to contact me directly at 731-6601, Ext. 230. In addition I would be happy to meet with your Board of Directors at any time to discuss this matter. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Letter to Donors

Dear Friend of Goodwill:

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired and charged with embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. In 2002, our Goodwill doubled the number of people it served to 9,631. We are consistently ranked among the top 15 Goodwill organizations in the country, and we are committed to maintaining and improving the high standards of our services to people.

Our Board of Directors has expressed its full support and confidence in our leadership team and me as we move forward to investigate the theft and conduct an internal review to improve our financial procedures. I know this experience will make our Goodwill stronger and even more secure in the future.

The community entrusts Goodwill with donations of money, clothing, and goods. In turn, we vow to put those resources to work in the community. Public trust is our most significant asset, and we work hard every day to earn it. If you have any questions or concerns, please feel free to contact me directly. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Letter to Campus Partners

Dear Campus Partner:

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired and charged with embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

Goodwill provides bookkeeping and payroll services to several of our non-profit partners. It is highly unlikely that these accounts were affected by this theft. However, Goodwill will compensate for discrepancies if any are found.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. In 2002, our Goodwill doubled the number of people it served to 9,631. More than 100,000 people visited the Goodwill Community Center campus. We are consistently ranked among the top 15 Goodwill organizations in the country, and we are committed to maintaining and improving the high standards of our services to people.

Our Board of Directors has expressed its full support and confidence in our leadership team and me as we move forward to investigate the theft and conduct an internal review to improve our financial procedures. I know this experience will make our Goodwill stronger and even more secure in the future.

The community entrusts Goodwill with donations of money, clothing, goods, talent and time. In turn, we vow to put those resources to work in the community. Public trust is our most significant asset, and we work hard every day to earn it. If you have any questions or concerns, please feel free to contact me directly. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Letter to Past Board Members

Dear (Board Member Name):

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired and charged with embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. Goodwill has zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. In 2002, our Goodwill doubled the number of people it served to 9,631. We are consistently ranked among the top 15 Goodwill organizations in the country, and we are committed to maintaining and improving the high standards of our services to people.

During an emergency meeting, our Board of Directors voted to place its full support and confidence in Bob Pedersen and his leadership team as they move forward to investigate the theft and conduct an internal review to improve Goodwill’s financial procedures. I know this experience will make our Goodwill stronger and even more secure in the future.

The community entrusts Goodwill with donations of money, clothing, goods, talent and time. In turn, we vow to put those resources to work in the community. Public trust is our most significant asset, and we work hard every day to earn it. If you have any questions or concerns, please feel free to contact me directly at 920-490-4848. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Nancy Heykes Meyer Heykes Nonprofit Partnership Chair, Goodwill Board of Directors

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Letter to Volunteers

Dear (Volunteer Name):

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired and charged with embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. In 2002, our Goodwill doubled the number of people it served to 9,631. We are consistently ranked among the top 15 Goodwill organizations in the country, and we are committed to maintaining and improving the high standards of our services to people.

Our Board of Directors has expressed its full support and confidence in our leadership team and me as we move forward to investigate the theft and conduct an internal review to improve our financial procedures. I know this experience will make our Goodwill stronger and even more secure in the future.

The community entrusts Goodwill with donations of money, clothing, goods, talent and time. In turn, we vow to put those resources to work in the community. Public trust is our most significant asset, and we work hard every day to earn it. If you have any questions or concerns, please feel free to contact me directly. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Letter to Attended Donation Center Partners

Dear «Manager»:

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired and charged with embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. In 2002, our Goodwill doubled the number of people it served to 9,631. We are consistently ranked among the top 15 Goodwill organizations in the country, and we are committed to maintaining and improving the high standards of our services to people.

Our Board of Directors has expressed its full support and confidence in our leadership team and me as we move forward to investigate the theft and conduct an internal review to improve our financial procedures. I know this experience will make our Goodwill stronger and even more secure in the future.

The community entrusts Goodwill with donations of money, clothing, goods, talent and time. In turn, we vow to put those resources to work in the community. Public trust is our most significant asset, and we work hard every day to earn it. As a recycling partner, if you have any questions or concerns, please feel free to contact me directly. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Letter to Mayors Without Financing Bonds

«NameSalutation»

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired for suspicion of embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. Our Board of Directors has expressed its full support and confidence in our leadership team and me as we move forward to investigate the theft and conduct an internal review to improve our financial procedures. I know this experience will make our Goodwill stronger and even more secure in the future.

Your community entrusts Goodwill with donations of money, clothing, and goods. In turn, we vow to put those resources to work in your community. Public trust is our most significant asset, and we work hard every day to earn it. If you have any questions or concerns, please feel free to contact me directly at 920-731-6602, ext 230. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Letter to Mayors With Financing Bonds

«NameSalutation»

As you may already be aware, on Friday, May 30, an employee of Goodwill Industries of North Central Wisconsin, Inc. was fired for suspicion of embezzlement. The theft was discovered during our annual independent audit with Virchow Krause & Company. The crime is now under investigation, and we will present all of the facts to the public as soon as the investigation is concluded.

All of us in the Goodwill family are saddened and angry that this occurred in spite of the stringent security measures we have in place to protect the assets given to Goodwill by the community. We have zero tolerance for any degree of theft, and proven loss prevention controls that significantly reduce opportunities for stealing or diversion. We are satisfied with the effectiveness of the auditing process for detecting this theft, and we pledge to refine and tighten our internal control even further.

We can assure you that this has not interfered with the quality or dedication of our programs to help people get jobs, achieve independence and lead better lives. In addition, I want you and your community leaders to know that Goodwill will continue to make its scheduled bond payments in a timely fashion.

Your community entrusts Goodwill with donations of money, clothing, and goods. In turn, we vow to put those resources to work in your community. Public trust is our most significant asset, and we work hard every day to earn it. If you have any questions or concerns, please feel free to contact me directly at 920-731-6602, ext. 230. Thank you for your continued support of Goodwill during this challenging time.

Sincerely,

Robert A. Pedersen President & CEO Goodwill Industries of North Central Wisconsin, Inc.

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Victim Impact Statement of Gregg Curry

I write this impact statement as a board member of Goodwill of North Central Wisconsin, as a member of the Ad Hoc Legal and Program and Services committees, and as pro bono counsel for the civil aspects resulting from Ms. Braun’s embezzlement. There are so many victims as a result of Ms. Braun’s actions. Many people have stepped forward to assist the Court in its sentencing considerations. Please accept mine from the perspective of board member and concerned community volunteer.

The victim in this embezzlement is not just Goodwill. Goodwill is a nonprofit organization. The victims are all of those who Goodwill serves. The victims are the needy people who went unserved or underserved. More than one-half million dollars was taken from people who needed job assistance, children who need support from noncustodial parents, people who need work experience opportunities, one- to three-year-old children with disabilities who need early intervention services, and people with disabilities who need employment assistance. The list could go on and on. It is just a list. This money could have served hundreds, if not thousands, of people who truly need help to be productively engaged in our communities.

The victims are donors. People give money, clothing and time, among other things, to assist with Goodwill’s programs and services. They expect service. They received over $500,000 less service than they expected and deserved.

The victims are the taxpayers. Not only does Goodwill service governmental programs, it keeps people out of governmental programs. Goodwill has a very vital role, for instance, in W-2 programs. Last year, Goodwill’s W-2 programs placed 73 people in jobs at an average beginning wage of $8.25.

The victims are the employees of Goodwill. First, as is the situation with many embezzlements, Ms. Braun was a trusted employee. The emotional hurt and sense of distrust created by her actions is incalculable. She was viewed as a cornerstone of the organization. Once distrust is created at that level, the entire organization is affected. Second, the staff is forced to engage in nonproductive jobs, such as resolving accounts while dealing with the sense of betrayal. People work at Goodwill out of a sense of mission and desire to make our neighbors and neighborhoods better places to live and work. Distrust frustrates mission. This major distraction wounded productivity. Third, during some of the years in which Ms. Braun embezzled funds, Goodwill was struggling financially. Goodwill employees voluntarily froze their salaries, rather than see programs suffer.

Goodwill was also victimized as an organization. Goodwill has been a model for the nonprofit community. For instance, its collaborative efforts have been nationally recognized. To see “embezzlement” and “Goodwill” in the same headline, used in the same discussion, has been very difficult. I was unaware of any public criticism of Goodwill. While I hope that those who have followed this publicity closely understand that this crime was committed against Goodwill, I am not so naïve as to believe that it has not hurt Goodwill in a very meaningful way.

I am very concerned that this matter is sentenced appropriately. This is over $500,000 in a very public venue. This theft was done methodically over several years. This is not stealing from an 108

individual corporation, but is a violation of the entire community. We are all stakeholders in Goodwill. This crime should be punished as allowed by law. I ask that the maximum prison term be imposed and full restitution be ordered.

Thank you for an opportunity to express my concerns.

Gregg Curry Member, Board of Directors Goodwill Industries of North Central Wisconsin

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Victim Impact Statement of Jacqueline Draws

When the possibility of embezzlement first came to the surface, I was the last one to think this could be possible, even with my prior training. After we confirmed our suspicions, and the evidence rolled in, day after day we were literally brought to our knees as a department. We had to continue our normal work, participate in the investigation and deal with our emotions. It was very difficult on all of us in the department emotionally. There isn’t one of us who didn’t put in extra hours to get the work done and complete the investigation. In addition, we all had sleepless nights questioning ourselves. Our department went through all the classic stages of grief, and we still are working through our sense of betrayal and anger.

I understand that gambling is an addiction. However, addicts don’t need to become criminals. There is always an avenue to seek help. In addition, when I look at the gross misuse of funds not just for gambling, but for cigarettes, presents, trips and dinners, it literally makes me ill. The other uses of funds leads me to believe that this was a willful crime on her part and not part of an addiction. Goodwill is a nonprofit agency that uses its resources to better the lives of people within our community. When Carol stole from Goodwill, she stole from all of us.

My sentencing recommendation is for the maximum prison time and full restitution.

Jacqueline K. Draws, CPA Director of Finance Goodwill Industries of North Central Wisconsin

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Victim Impact Statement of Nancy Heykes

My perspective on the impact of Carol’s crime comes from many years’ experience as a board and committee volunteer with Goodwill Industries of North Central Wisconsin and my current role as chair of the Goodwill board of directors.

This theft not only robbed Goodwill of a significant amount of money that could have been used to help the community through Goodwill programs. It has robbed Goodwill people of time and focus – months’ of work to unravel her web of deception, months’ of worry about which Goodwill programs and clients she tainted – all this work a sad detour off of the organization’s mission. Carol has also robbed the organization of its solid reputation for good stewardship of the community’s dollars. Her manipulation of other innocent employees in her schemes to defraud the organization and her great act to appear a dedicated and self-sacrificing employee has stunned me and other volunteers -- causing us to wonder who you can trust.

As board members of this nonprofit organization, we stand as fiduciaries for the community’s interest in Goodwill. Most of the board members are senior and experienced executives or business owners in major operations across the Valley, and certainly not naïve about financial management and risk. Being caught off guard by Carol’s duplicity and her skillful efforts to hide her crime below the audit “radar screen” has shaken us all. We feel embarrassment and shame for having let the community down. We feel anger that Carol’s crime has tainted the fine work of other financial professionals in her department. I am especially angry with that, since Carol’s supervisor and other employees were working very hard to assure that Carol felt valued and appreciated during the recent period of staff and work changes, all the while she was betraying them and Goodwill. I am amazed that their concern for her didn’t pique Carol’s conscience.

Goodwill needs to receive financial restitution for all that Carol stole and the extra expenses incurred to unravel the mess she left. But I am even more concerned about the “robbery” that cannot be so easily repaired. It’s obvious that Goodwill can no longer trust Carol Braun – but her crime and methods of cover-up leave ripple effects of broken trust that affect other employees and volunteers. How many future community volunteers are going to have doubts about getting involved with the Goodwill board or committees given Carol’s crime? Will board members regain the level of trust in Goodwill management and employees that they once had, or will there always be a level of holding back, doubt or suspicion?

I cannot even yet trust Carol’s expressed remorse, as well-timed and eloquent as it seems. I have known other addicted people who have sought help for their addictions before committing crimes and I respect them for that. Carol apparently did not have the conscience or moral fiber to seek help for her problem at any time over the past eight years, and even implicated a family member in her schemes. At this point, I can only hear that she was sorry she got caught, or perhaps some relief at not needing to work so many hours to keep up the complicated deception. I believe it will be a long time before she can truly understand what she has done. For that reason, and because I believe it is important that we hold “white collar” criminals as accountable for their actions as we would any other theft of this planned nature and magnitude, I support the recommendation that full prison time and statutory fines be imposed. As I noted above, it is also critical that full restitution be made to

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Goodwill of both the stolen funds ($507,550) and the expense incurred in documenting this theft.

Thank you for the opportunity to make this statement.

Nancy Heykes Chair, Board of Directors Goodwill Industries of North Central Wisconsin

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Victim Impact Statement of Gary Lichtenberg

In my opinion, the most severe negative impact of this embezzlement was felt by those children, adults, family units, and community organizations that could have benefited from an additional $507,000 of Goodwill support during the period 1996-2003.

Working with another half million dollars, Goodwill could have added to the number of children, adults and families receiving services under our existing programs, funded new start-up programs (where Goodwill initiates a program with its own seed money), provided support at an earlier date for existing start-up programs, initiated and supported additional collaborations with community organizations, and initiated and supported existing collaborations at an earlier date.

All these Goodwill efforts are integral to our missions of “improving the community by improving the lives of its people through services, partnerships, collaborations and the responsible use of community resources.” We can’t quantify how many more lives we could have directly or indirectly helped, but we know from our track record that we have a positive impact when we are involved. The embezzlement short-changed a significant number of lives in our 33-county service area.

Carol understood what Goodwill was about. She understood Goodwill’s mission and she understood the effort it took to generate cash to support programs and services. Carol took our cash and used our credit card for seven-plus years to gamble because of a claimed “gambling addiction.” She also took our cash and used our credit card for seven-plus years of daily living – to buy toys, smokes, flowers, candy, food, merchandise from local department, discount and home improvement stores, car gas, car lubes and repairs, computer software, plane tickets, hotel rooms, restaurant meals, and more.

Bottom line, over seven-plus years, Carol deliberately took our cash and used our credit card for her personal use. She deliberately worked hard and long at covering her theft. It is appropriate that Carol be held fully accountable for her actions.

I recommend full prison time and fines indicated by state statute be imposed and that full restitution be made to Goodwill in the amount of $507,550.05 misappropriated funds, plus $30,000 in expenses incurred to research and document the theft.

Gary Lichtenberg Member, Board of Directors Goodwill Industries of North Central Wisconsin

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Victim Impact Statement of Bob Pedersen

I would like to express my feelings about the Carol Braun embezzlement in two dimensions: personally, as a human being betrayed by a peer professional and friend, and professionally in my role as the President and CEO of Goodwill Industries of North Central Wisconsin.

This crime took place on my watch. I felt shame, embarrassment and anger. I also experienced a profound sense of loss of innocence and a challenge to my fundamental capacity to trust. I work hard to build a staff and business culture that begins with trust and professional respect. I was a raving Carol Braun fan and often brought people to her office and bragged on about her professionalism and her dedication. I went out of my way to help her through difficult times in her personal life and was always there for her. I often excused her shortcomings and always recognized her contributions. She was after all a 27-year employee who had made significant contributions to Goodwill’s success. Even after it was clear that Carol Braun had embezzled a substantial amount of money, I found myself not wanting to believe that she was guilty.

I am the President and CEO. I must maintain my composure in the face of adversity and place Goodwill’s future ahead of my personal feelings. Dealing with the press was difficult, frustrating and embarrassing. I continue to have difficulty with anger and resentment related to the incident. I work very hard to position Goodwill Industries of North Central Wisconsin as a community leader and innovator, and initiated a new business line designed to provide accounting services to other nonprofits. It is absolutely imperative that we are beyond reproach. In the wake of the Carol Braun discovery and news, I had to appear before the boards of those other nonprofit corporations and deal with their concerns about potential loss of funds related to Carol Braun’s crime. Selling this accounting service is made all the more difficult by the embezzlement. In all, this has been the most trying time in my 32-year career as a human services professional. We contract with several governmental agencies to provide essential services and are now required to prove beyond a reasonable doubt that their contracts were not violated by the crime. There is not a waking hour where I am not occupied with some aspect of this crime.

As a Goodwill leader it has required me to take my eye off the ball. This crime and the management of the discovery and recovery process have eaten up the majority of my time. This is the first year in my leadership history with Goodwill when I have not been able to develop some new opportunity to serve. I would suggest that the following list is representative of the negative impact Carol Braun’s crime has had on Goodwill Industries of North Central Wisconsin.

1. $500,000! One half a million dollars of opportunity loss. 2. With $500,000, we could have served over 250 infants and toddlers with disabilities providing physical therapy, speech therapy and educational services to the children and their families. With $500,000, we could have found jobs for over 125 adults with disabilities and provide them with full time job coaches for a year. With $500,000 we could have trained over 300 people to use computers and help them get careers with family sustainable wages. With $500,000 we could have opened stores in two more communities, providing 60 jobs and opportunities for training for several hundred people.

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3. We would have to harvest and process over 7 million pounds of clothing and move them into the salvage market to generate $500,000 in sales. Our stores would have to sell over $2,000,000 of merchandise to generate $500,000 at the margin. 4. In 1999 Goodwill had a very difficult year. We had an after depreciation loss of $8,500. That year Carol stole $40,000. In 1999 we made the difficult decision to withhold raises for over 500 Goodwill employees. Employees went for two years without a raise. In 2000 when employees were denied raises Carol stole another $112,000 and took two trips out of state to gamble and used Goodwill credit cards to fund her junkets. In her position as controller, Carol was well aware that we were struggling, and in spite of that knowledge she decided to accelerate her stealing. 5. Goodwill has had to face the toughest test of public opinion and scrutiny in its history as a result of Carol Braun’s crime. 6. We depend on the goodwill of the public to sustain the services we provide to people with disabilities and disadvantages. This crime has been a true test of that public goodwill. 7. Many people who were close to Carol Braun were devastated and required EAP, Employee Assistance Services, to overcome their grief, sense of betrayal and anger. 8. Our accounting staff had to pull double duty, not only accounting for Goodwill business but also having to manage the accounting requirements of the discovery process. It is hard complex work to clean up after this sort of mess. The additional accounting costs associated with the crime will exceed $30,000. 9. During Carol Braun’s crime spree in 1999-2000 we were required to utilize our credit line in order to make expenses and had to borrow $120,000. 10. The community owns Goodwill Industries of North Central Wisconsin. Good community folks are Goodwill stakeholders. They make a special effort to bring useable clothing and other household items to Goodwill secure in the knowledge that Goodwill will put their contributions to good use. When Carol Braun stole from Goodwill she robbed the community of valuable service opportunity. This was a crime not only against Goodwill but most certainly a crime against the community.

I believe that for the aforementioned reasons Carol Braun should be held fully accountable. She must make full monetary restitution to Goodwill and the community and additionally must serve an appropriate amount of time in prison for her crime. It will be a long time before Goodwill fully recovers from the emotional and financial losses created by this crime of embezzlement. Please send a message to the community that these crimes are serious and will not go unpunished.

Thank you for the opportunity to be heard on this matter.

Bob Pedersen President and CEO Goodwill Industries of North Central Wisconsin

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Victim Impact Statement of Nancy Thiel

I do not know how to begin to describe the pain and suffering that this has caused me personally and professionally.

First of all, the shock and disbelief when I was first told was very much like what you experience when someone close to you dies suddenly -- that time when you can't eat or sleep, and you cry at the drop of a hat.

When you work with a person closely for 18 years and discover that you have been lied to and stolen from on a long-term basis, you lose a basic trust that will be very hard to regain. Never again will you be able to give trust as easily.

I am sure that people wondered if I knew or was involved because we had worked together so long, and that caused me additional stress. I now realize that it probably caused me, as well as other employees, a loss of income. But that is certainly secondary to the emotional stress that we have all endured because of her total disregard for how her selfish actions were going to affect her fellow employees.

I know her family and I feel such sorrow for her children and grandchildren. If she only went twice a week, like her letter of apology stated, that hardly seems like an addiction. Is that what the evidence shows – just a gambler without enough personal resources to go twice a week and play the slots?

I know that there are many addictions in this world but I find it hard to believe that this was not just a greedy, premeditated crime against her employer, her co-workers, her community and her family. This was an action of one against many on more occasions that I want to think about, and I feel that saying you are sorry is just not good enough.

Nancy Thiel Payroll Coordinator Goodwill Industries of North Central Wisconsin

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Victim Impact Statement of Stephen White

I trusted you because of all the positive things that the leadership team members and board members said about you when I joined Goodwill in September 1999. We had lunch together and talked about making the finance department and Goodwill better. We took some breaks together and talked about the same things.

You seemed to work very hard, including weekends, and I was convinced that you truly cared about Goodwill, your job, and your co-workers. There were times that I felt sorry for you because I didn’t think you had a happy home life. You seemed committed to Goodwill. You even took another job once, but came back to Goodwill.

When I expressed concerns about the checkbook for handwritten checks, you assured me that it was safe in your hands. I worked with you to develop computer reports that helped make your job a little easier. I helped you modify and fix reports that weren’t working properly. I joined Bob (Pedersen) and some of our senior board members in praising your track record of no audit exceptions in 25 years.

Now, it is painfully clear that it was all a con. It is one of the saddest results of this terrible situation. From May 30, 2003, onward, I will always question everything I remember about working with you and knowing you. I will wonder to myself, was she sincere or just conning me?

Your actions harmed Goodwill financially and tarnished its wonderful reputation in the community. I feel that your actions have also harmed my reputation in the organization and in the community.

You have expressed remorse for what you did and the impact it had on Goodwill. Although I don’t know what is in your heart, I do know this, most people are sorry after they are caught.

Are you sorry, or is this just another con?

Stephen White Chief Financial Officer Goodwill Industries of North Central Wisconsin

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