By Andy Gotlieb and Gabe Kahn
Former Jewish Exponent Director of Business Operations Cheryl Lutts was arrested and charged May 21 with 22 counts of wire fraud and two counts of mail fraud, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced.
Lutts, 42, of Philadelphia allegedly siphoned about $1.19 million from the Exponent between 2016 and 2019, as well as about $255,000 from The Philly Pops, where she worked as controller after being fired from the Exponent in August 2019. In all, Lutts is accused of stealing $1.44 million.
“Nonprofit organizations exist for the people and constituencies they serve, not as personal piggy banks for those entrusted with managing their funds,” Acting U.S. Attorney Jennifer Arbittier Williams said in a statement.
Lutts, who was indicted by a grand jury on April 15, faces up to 480 years in jail, up to $6 million in fines, up to three years of supervised release and a $2,400 special assessment, according to the U.S. Attorney’s Office. Her real and personal property also is subject to forfeiture.
As of May 24, she was in custody awaiting a detention hearing, said Jennifer Crandall, a spokesperson for the U.S. Attorney’s Office. A public defender was appointed to represent Lutts.
“The usual reward of nonprofit work is personal fulfillment, not financial enrichment,” Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division, said in a statement. “Lutts, however, allegedly treated these organizations like her very own ATM, shortchanging their efforts and the community in the process. The FBI will pursue and hold accountable anyone foolish enough to engage in this kind of fraud.”
Jewish Federation of Greater Philadelphia Chief Operating Officer Steven Rosenberg said “while we learned an unfortunate lesson, it’s clearly a case of good triumphing over evil.”
“We not only got the majority of the money back [through insurance], we chased the person down,” Rosenberg said. “The paper is stable now, which is a win considering the print-journalism market. We still know the Jewish Exponent is the prominent voice of the Jewish community in Philadelphia.”
Rosenberg said Lutts, who was an Exponent employee for 18 years, was fired for poor performance before the fraud was discovered. According to Rosenberg, Mike Costello, Lutts’ replacement, found a fabricated bank statement in Lutts’ desk drawer on his first day on the job.
The Exponent and Jewish Federation consulted first with Frank Riehl, the latter’s director of security, and then the Philadelphia Police Department.
“As we recognized this was beyond the police department’s scope, we immediately called in the FBI,” Rosenberg said, adding that outside counsel and other assistance was brought in, while the insurance carrier was notified.
According to the 12-page indictment, starting in 2016 Lutts used both her personal and corporate American Express cards for a wide variety of personal expenses, including rideshare services; airline tickets; entertainment, travel and lodging; health care and exercise services; utilities; education and career services; legal services; funeral and burial services; clothing; food and alcohol; and other items from retail stores, grocery stores, convenience stores, websites, restaurants and delivery services.
Lutts also allegedly used her personal credit cards and her corporate credit and debit cards to transfer company money to various individuals, using PayPal and CashApp, among other methods.
Lutts prepared and submitted financial reports to a variety of people including both an outside audit and tax preparation firm.
“It was a very sophisticated operation,” Rosenberg said. “Nobody could have seen this. Her level of deceit was remarkable.”
“We used every resource we had to determine the depth of the fraud,” he continued, adding “we will not tolerate this type of behavior ever, regardless of the amount stolen from us.”
In all, the payments from the Exponent’s checking account to her personal Amex cards were $982,781. She also allegedly signed checks for $205,977 to Amex drawn on the Exponent’s checking account to pay the Exponent’s credit cards.
The indictment said that Lutts took several actions to conceal the fraud.
“For example, she provided the Jewish Exponent’s management with financial statements that did not include a balance sheet or included a balance sheet that was later determined not to match the account balances and/or the transaction reflected … She also provided the Jewish Exponent’s management with bank reconciliation statements that did not reflect the true balances.”
The Exponent and Jewish Federation have since installed new programs and procedures, while eliminating company credit cards, Rosenberg said.
“Our financial control document is very, very rigid,” he said. “Money does not get moved without at least three people’s approval.”
[email protected]; 215-832-0797 |
[email protected]; 215-832-0747
