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An Introduction to BETRAYAL

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An Introduction to BETRAYAL 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 1 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 2 “The capacity to love is proportionate to the capacity to be betrayed.” -- John Le Carré 3 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. 4 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. 5 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 6 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.
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