Unwilling or unable? The problems with paying restitution

By Hendley Badcock

If you catch a person stealing from you, you probably expect her to pay you back, whether or not you take the theft to the police.

But in embezzlement cases, trying to ensure that offenders pay back what they stole is a big issue.

“It takes years and years,” Buena Vista Commonwealth’s Attorney Chris Russell said.

And that’s probably the best a victim can hope for. In many cases, victims never see a cent of what they lost.

Restitution – paying back what the embezzler took – is almost always part of an embezzler’s sentence. Typically, an offender will get a prison sentence, but some of that commonly is suspended.

Once the offender is released, she enters probation, during which she is expected to pay restitution to the victim, often in monthly increments. If the offender does not pay, she risks going back to prison and serving the remainder of her sentence.

“They’ve made this promise to make their victim whole,” Staunton Commonwealth’s Attorney Ray Robertson said. “If they don’t live up to that promise, they go back in.”

Prosecutors and legal experts cite a number of reasons why offenders often fail to pay restitution, despite the threat of never-ending probation and imprisonment.

For one, the courts realize that some offenders cannot pay back what they took.

“If you’re unable to pay, you really can’t do anything about it,” Dean of Washington and Lee University’s School of Law Nora Demleitner said.

When it comes down to sending those embezzlers back to prison, most judges drag their feet.

Judges want to get the offender back on track. They want the restitution paid, and they understand that keeping the offender in prison won’t solve the problem.

But it’s hard for anyone to find a job after a felony conviction, particularly after serving time in prison.

The offender might have the ability and experience to make a good wage, Demleitner said.

“But are you going to hire her as a bookkeeper?” she asked. “No, and neither will I . . . . It’s going to be hard to get a job even as a stocking assistant at Kroger for this person. So how is she going to be paying anything back?”

Prosecutors know the difficulties involved with restitution. They often negotiate with offenders and with the court.

“A lot of times if the amount of embezzlement . . . isn’t so great, we’ll work them, especially if they did it out of need to feed their family and clothe their family and things like that,” Robertson said.

For example, Robertson said he does not mind reducing the charge to a misdemeanor if the amount stolen isn’t that much over $200.

“[That] makes it a lot easier to get and maintain a job in the future if they pay that restitution,” he said.

In other instances, judges might even arrange a work-release program from prison for offenders who are not paying.

“This is more typical with men, for some reason,” Russell said. “The jail takes them out to the truck stop and they do maintenance or whatever out there and then the money that they earn goes directly into the court’s account.”

Women might not get the same opportunity, though, because work-release programs often require hard physical work.

“You think of storage facilities, warehouse facilities, and much more likely they’ll hire men for these types of jobs,” Demleitner said. “That would be my suspicion — for relatively not-so-educated people with a criminal record, there are still more jobs for men in that area.”

Most embezzlers have to work to make restitution because they have nothing left of the money they took by the time they are caught. They seldom buy houses or other expensive items that can be confiscated or resold.

When the embezzler makes no effort at all, it is not unheard of for her to be taken to prison again.

“[For] the ones that do go back, it’s not for very long,” Russell said. “It might be for 60 days just to send a message like, ‘You haven’t done nearly enough, made nearly enough effort, so you’re going to have to go back for a short time and then get going.’”

So, who is keeping track of what is and isn’t paid?

Oversight of restitution falls outside the law, Demleitner says.

“The law just says you have to pay restitution and if you don’t pay restitution, it can be a violation of your probation or parole condition,” Demleitner said. “Everything else is an administrative structure.”

An offender makes payments to the clerk of the court, not the victim. Her probation officer checks in with the offender to make sure she is making payments.

Either the probation officer or the victim can report a violation in restitution. But it is unclear how many of these reports are made and if anyone responds to them.

“I’m not surprised that some offices are really on top of it and others probably don’t quite know what they’re doing,” Demleitner said.

Unpaid restitution is a problem acknowledged nationwide. Demleitner said one attempt to mitigate the problem was known as day fines. Tried by four states in the 1980s, it mimicked programs begun in Sweden and Germany.

Demleitner said that a person’s day fine is tied to his or her income level.

“It actually becomes feasible for people to pay the fines and the restitution,” she said. But Americans’ notion of equality makes them leery of sliding-scale paybacks.

“I mean, I’m charging someone who makes a million dollars a much higher fine, for example, than I’m asking from someone . . . who makes $10,000 a year,” Demleitner said. “On some level, the paying would be on the same, but the perception clearly is very different.”

And the victim might still see only a small fraction of what was taken if the embezzled amount was large and the offender’s income is small.

Demleitner says a better solution might be a national victims fund.

“You have people pay fines in part to [the fund],” she said. “Then you can equalize between people who can’t get anything and people who can get something.”

For now, the court and the victims will have to accept how much or how little offenders are able to pay.

Need, after all, is what drives many of these women to embezzle in the first place.

“I see a lot of people who are up against it financially and think that somehow they’ll be able to repay,” Robertson said.

Betsy Cribb and Krysta Huber contributed to this story.

More than the money: What determines an embezzler’s sentence

By Hendley Badcock

When Patricia Truslow embezzled $468,000 from North Fork Lumber & Log Homes in Goshen over the course of two and a half years, she was sentenced to 28 years in prison. She served 12 of those years and was released in the summer of 2014. To date, she has not paid back a penny of what she stole.

When Michelle Lawhorn embezzled about $170,000 over five years from the same lumber company, she got 20 years. She served a little over a year and spent another year under house arrest. Lawhorn has paid owner Will Harris around $1,400, a small fraction of what she still owes.

Prosecutors, judges, defense attorneys and experts agree that, even with state and federal sentencing guidelines, the terms recommended and those imposed for embezzlers, including female embezzlers, can look arbitrary.

The goal of implementing sentencing guidelines in Virginia in 1991 was to decrease disparities in felony punishments. But, in looking at Truslow’s and Lawhorn’s cases, those discrepancies still exist.

“You cannot tell what a sentence means,” Nora Demleitner, Dean of Washington and Lee University’s School of Law, said about the North Fork embezzlers’ punishments.

How did 28 years turn into 12 and 20 years turn into one, Demleitner asked.

Lawyers say that, among other things, sentences are a function of:

  • State guidelines that give relatively heavier weight to an offender’s prior criminal record than the amount of money embezzled.

  • A scoring system that penalizes women based on their sex. Judges and prosecutors don’t have a solid explanation for that. But they suspect it’s because women are more likely statistically to repeat economic crimes.

  • The expectation that a shorter sentence will help ensure that the embezzler will pay restitution. They seldom do, court officials acknowledge.

  • The prosecutor’s ability to “bundle” the charges against a defendant. A prosecutor may combine a series of small thefts over a six-month period to make one more serious charge, for example.

  • The attitude of the victim toward his or her embezzler. Often, when a church or small business is involved, the victim knows the criminal well, and might feel a mix of betrayal and sympathy.

The American Bar Association is urging the federal courts to adopt a new set of sentencing guidelines for embezzlers. The organization argues that the guidelines should consider the offender’s motive, effort to mitigate harm and monetary gain compared to the victim’s loss. The Bar Association also suggests looking at victim impact, including noneconomic suffering like emotional trauma.

Demleitner has no doubt that those changes would make a substantial difference in the way Americans think about and handle economic crimes.

“We’ve gotten used to very high sentences for white-collar offenders, and in part people really wanted that,” Demleitner said. “But now people go to prison for 25 years for not even personally enriching themselves . . . . We’ve reached a point where there’s a lot of unhappiness by the people in the system who are really seeing what’s happening.”

The Virginia Criminal Sentencing Commission’s guidelines for embezzlement do not consider the criteria being pushed by the ABA. Rather, they focus on the amount stolen and, even more, on the offender’s criminal record.

The goal of the guidelines is to make sentencing consistent for people who commit similar crimes and who have similar backgrounds. There are guidelines for everything from traffic violations to drug offenses to murder and rape.

Does money matter?

Buena Vista Commonwealth’s Attorney Chris Russell says one of the unique things about the embezzlement guidelines, compared to the burglary or robbery guidelines, is that they consider how much money was stolen.

But other attorneys are quick to point out that the amount of money isn’t nearly as big a factor in embezzlement sentences as people might think.

Here’s why:

For embezzled amounts over $10,000, penalty points are added in figuring the recommended sentence. For cases involving sums below that, the offender often spends very little if any time at all behind bars, Augusta County Commonwealth’s Attorney Lee Ervin says.

The higher the embezzled amount goes, the more penalty points the guidelines add.

But the piling on of points stops at $75,000, Russell said.

“There are no more categories higher than that.”

Russell said one of his recent cases involved a woman who stole $400,000.

“Her guidelines were about the same as someone with her record that only embezzled $75,000,” Russell said. “[Seventy-five thousand dollars] is a lot of money, but she was someone that stole multiple times that.”

What seems to be considered more heavily is the offender’s criminal record.

Judging by the past

A criminal record, especially a violent one, is a big factor in a recommended sentence.

Augusta County Commonwealth's Attorney Lee Ervin

Augusta County Commonwealth’s Attorney Lee Ervin. Courtesy of Lee Ervin

“If a person has no criminal history, and only embezzles a few hundred or a thousand dollars, usually [she is] looking at straight probation,” Ervin said.

But an offender can expect to serve some time if she has a criminal history or embezzles tens of thousands of dollars or more, he said.

An embezzler’s criminal record is often used to predict recidivism – the likelihood that he or she will commit a crime again. According to the National Center for State Courts and the Virginia Criminal Sentencing Commission, people convicted of larceny are the most likely of all nonviolent offenders to backslide.

“It doesn’t surprise me that women would recidivate more, especially with property crimes,” Demleitner said. “Once you’re out, you have more financial problems than you do beforehand, to some extent.”

Demleitner said that in some circumstances having a record doesn’t necessarily mean that person is a greater risk to society. A record can reflect things beyond recidivism, including growing up in a high-risk environment.

“If you have a record or not depends on where you live; it depends on how you grow up,” she said. “Record can reflect real culpability, but it can also just reflect kind of bad luck in birth.”

The female penalty  

The Virginia sentencing guidelines use a tool called the Nonviolent Risk Assessment that is supposed to help the judge determine whether an embezzler qualifies for a sentence that will keep her out of prison.

Like the rest of the guidelines, the assessment is scored by a point system. This time, age and gender, plus criminal history, come into play.

Women are penalized just for being female – 13 points compared to nine for men. That’s important, because once an offender racks up 32 total points or more, he or she is no longer recommended for a nonprison sentence.

Lawyers and legal experts aren’t sure what makes gender a factor. But they did say the guidelines are driven by data and statistics collected by the sentencing commission.

“I’m guessing that statistics have shown men are more likely to re-offend, relapse on drug cases when they’re ordered to be clean after a drug conviction,” Russell said. “Women are maybe more likely to re-offend on stealing cases.”

Russell said he’s seen a pattern in which women who get into trouble with the law often have trouble controlling their spending. Men tend to not have control over other things, like drugs, alcohol or violence.

In 2002, when Truslow was convicted, the guidelines penalized the offender only for being male. There was no check box for being female.

Weighing the range

Once the offense, criminal history and nonviolent risk are calculated, the guidelines offer a range of sentences for each offender.

Judges can still decide not to follow the guidelines if they file a statement of their reasons. But data from the Virginia Criminal Sentencing Commission show the larceny guidelines had the highest rate of compliance by judges, at 82 percent. 

“On property crimes . . . the guidelines usually come up with a pretty reasonable recommendation,” Ervin said.

But even with the range of sentences and the discretion judges can employ, Demleitner sees problems with the system.

“Some judges may feel that they should always be on the low side; some may always be on the high side,” Demleitner said. “The broader your range, the more inequality you’re even hiding just by saying, ‘Well, they’re sentencing within the range.’”

Beyond the guidelines

Truslow and Lawhorn both stole from the same business. And, in both cases, the judges went outside the guidelines.

Truslow spent 12 years in prison, two years over her maximum recommended sentence. Lawhorn spent a little over a year, nearly a year and a half less than her minimum.

While the sentences themselves for the two women did not differ drastically from the recommendations, the time each served did.

Lawyers say those two cases show the most frequent reasons judges go outside the guidelines.

The judge’s reasons for lowering Lawhorn’s sentence are not in her case file, but the judge’s statement for increasing Truslow’s sentence cited her previous embezzlement and larceny conviction.

In 1991, the Waynesboro Circuit Court convicted Truslow of one count of larceny after bailment, which means that her stealing did not have to be proven as trespassing.


“I’ll take a very different look at a person who’s done it out of necessity than I will at a person who’s done it solely out of greed.”– Staunton Commonwealth’s Attorney Ray Robertson


Her six-month sentence was entirely suspended, and she went straight into three-years’ probation.

In 2002, the day before Harris went to the police about Truslow, a small Fishersville company that had filed bankruptcy pressed charges against her.

Five months before Rockbridge County Circuit Court convicted Truslow of embezzlement in the Harris case, the Augusta County Circuit Court convicted her of embezzlement, forgery, credit card fraud and obtaining money by false pretense in the Fishersville case.

According to the August County Circuit Court online database, Truslow’s five-year sentence was suspended.

By comparison, Lawhorn had no prior record.

Shortly after her conviction, Truslow filed an appeal of her sentence.

Truslow argued that her sentence surpassed those for violent criminals and drug offenders, even though she was well within the range for a nonprison sanction according to the guidelines.

Truslow’s criminal record and the judge’s referencing her as the “coolest manipulator of the truth” he had ever seen did not paint her as a compelling appellant.

Truslow’s request was denied and her sentence remained.

Although the Virginia guidelines fall short of considering the embezzler’s motive and the crime’s impact on the victim, those factors often make it into courtroom conversation.

“I’ll take a very different look at a person who’s done it out of necessity than I will at a person who’s done it solely out of greed,” Staunton Commonwealth’s Attorney Ray Robertson said.

Often, need or greed tells the judge a lot about culpability.

“You can have someone who takes $500 just because they’re greedy versus somebody who takes $5,000 because they have a sick child,” Demleitner said. “We don’t really care about the loss that they’ve made that much in assessing moral guilt.”

The judge and prosecution might also pay attention to the emotions of the offenders and the victims.

“I see a lot of remorse in embezzlement cases,” Robertson said. “I see a lot of people that are up against it financially and thought that somehow they’d be able to repay.”

Because it involves trust and betrayal, embezzlement can be a very personal crime for its victims.

I’ve seen different emotions from different employers,” Ervin said. “They feel sorry for the victim because they got in such a financial bind. A lot of the victims though have expressed anger at the employees for betraying the trust that they put in them.”

Harris, the owner of North Fork Lumber, said he felt much more sympathy for Lawhorn.

In Lawhorn’s case, he said, he told the prosecutor that Lawhorn had a teenage daughter and being put in jail for a long time wasn’t going to help anyone.

But he felt much more angry toward Truslow, who used Harris’ money to lease cars and homes for herself and her family.

“She had an opportunity to speak [in court] and she just lied continually,” Harris said. “And the judge could see it.”

Although Truslow lost years in prison, Harris and his wife lost years recapturing what had been stolen from their business.

“My business could have easily fallen apart,” he said.

Krysta Huber and Betsy Cribb contributed to this story.

Pink-collar prosecution: How to handle female embezzlers

Image

By Happy Carlock

They’re slow, surreptitious and deceptive. Instead of using violence, they gradually gain the trust of their employers, only to commit some of the most expensive crimes in Virginia.

Female embezzlers are draining small businesses, churches and other organizations that entrust these women with their finances. Lawyers say women are increasingly becoming the perpetrators of financial crimes because they tend to hold bookkeeping and money-handling jobs.

“Embezzlement is one of those lines of cases where you see a lot of female defendants,” Rockbridge County Chief Deputy Commonwealth’s Attorney Chris Billias said. “I would say . . . of the cases [we see], embezzlements probably are heavily weighted toward female offenders.”

Last year Marilyn Dudley was sentenced to three years and eight months in prison for embezzling $157,000 from Collierstown Presbyterian Church.

Patricia Truslow was convicted in 2002 of 28 counts of embezzlement. As bookkeeper for North Fork Lumber & Log Homes, she stole more than $468,000 from her employer from 1999 to 2001. Michelle Lawhorn was convicted in 2009 of embezzling $170,000 from the same business.

Alison Mutispaugh was also convicted in 2009 of nine counts of embezzlement after she stole more than $553,000 from nine Lexington businesses.

Lexington Attorney David Natkin. Photo courtesy of David Natkin.

Lexington Attorney David Natkin. Courtesy of David Natkin

Billias says that in the last 10 years, he has had 62 defendants convicted of felony embezzlement. About two thirds of those – 42 – were women. Lexington attorney David Natkin says that every embezzlement case he has handled in the past five years has involved women.

Buena Vista has also seen its fair share of pink-collar crime. Women are frequently the defendants in the three to five embezzlement cases Commonwealth’s Attorney Chris Russell sees each year.

And the Rockbridge area isn’t the only hotbed of recent pink-collar crime. Staunton Commonwealth’s Attorney Ray Robertson, who handles about a dozen embezzlement cases each year involving both men and women, says the amount of money stolen by embezzlers has gone up. Many of the embezzlers get behind on their finances, he said, and have relatively easy access to a lot of money in their jobs.

In Augusta County, Commonwealth’s Attorney Lee Ervin handles half a dozen cases each year. He has also noticed an increase in the amount of money taken. And he said women tend to be behind the big numbers.

“In most of our bigger embezzlement cases when you get into the tens of thousands of dollars, those seem to have been women within the past few years,” Ervin said.

Checks and imbalances

Embezzlement is committed in a number of ways, but it often involves female bookkeepers and other women in money-handling positions, prosecutors say. Many women will write checks using their business’s money to pay their personal bills. They list the payments in the company’s financial records as business expenses.

Some embezzlers forge the signatures of their employers on checks and cash them, which can result in forgery charges and uttering charges. Forgery involves signing someone else’s name on the check. Uttering is telling the bank that the signature is legitimate.

Often, the embezzler will take a credit card belonging to the business she works for and use it for her own purchases. In Dudley’s case, she opened a personal bank account using Collierstown Presbyterian Church funds. She used that money mostly to pay her mortgage, but also to buy herself clothing and jewelry, according to the Rockbridge County Sheriff’s Department.

“When you do that, you can also be charged with things like credit card fraud, credit card forgery, things like that,” Ervin said.

Sometimes in a cash business, however, a woman will embezzle money that comes in before it makes it to the cash register.

Laying down the laws

While most jurisdictions consolidate theft charges into a single statute, Virginia treats embezzlement and larceny as separate charges.

Embezzlement cases can be tougher to prove than simple theft, prosecutors say. In a theft, it’s clear that the thief takes what he or she should not have had access to. But because a bookkeeper or other employee may be entrusted by a business owner with accounts, checkbooks and even cash, things get complicated, Russell said.

Buena Vista Commonwealth's Attorney Chris Russell. Photo courtesy of Peter Jetton

Buena Vista Commonwealth’s Attorney Chris Russell. Courtesy Washington and Lee University Communications

“It’s not like a homicide or a sexual assault or a DUI where it’s all done right away and an arrest is made,” Russell said. “These cases take time to build up and a lot of interviews and looking at documents, and then  typically we will present the indictment to the grand jury after that.”

When a business or organization reports an embezzlement case, the Virginia State Police are ready to call in forensic accountants. But sometimes, business owners choose not to report embezzlement in order to avoid publicity.

Even when a business cooperates, investigators face challenges when multiple people have access to a business or organization’s money.

“Under Virginia law you have to eliminate everybody but the guilty party,” Ervin said. “Sometimes that’s really tough figuring out who actually took the money.”

Guilty as charged

The key to embezzlement is that the defendant had legal access to the money or property stolen, but not legal ownership of it. For an act of embezzlement to be considered a felony, the value of the property stolen must be $200 or more. If less than $200 is stolen, then the defendant can be convicted of embezzlement as a misdemeanor.


“You often times have full confessions. So a lot of times it gets to be more of a sentencing case than on guilt or innocence once you’ve figured out what’s going on.”  Lexington Attorney David Natkin


“Usually the ones who are embezzling from department stores, let’s say like JCPenney, they don’t usually embezzle large sums of money,” Ervin said. “You’re talking maybe a thousand or two. Whereas you get a bookkeeper or an accountant with a doctor’s office or with some other type of professional business, we’ve had cases where they’ve embezzled, 20, 30 40, 50 thousand [dollars].”

The amount an embezzler takes determines whether she gets a lighter sentence for a misdemeanor or a heavier one for a felony. A misdemeanor is punishable by a maximum of 12 months in jail and a fine of up to $2,500. An embezzlement of $200 or more is considered a felony. The accused faces one to 20 years in prison and must pay restitution.

Prosecuting pink-collar criminals might not look all that different on paper from the process that violent criminals go through. But female embezzlers often experience more regret, which affects how the trial plays out.

Most female embezzlers express remorse and even relief when their crimes come to light, defense attorney Natkin said. So when the cases go to court, the emphasis is different than in some criminal cases.

“You often times have full confessions,” Natkin said. “So a lot of times it gets to be more of a sentencing case than on guilt or innocence once you’ve figured out what’s going on.”

Unlike violent career criminals, most pink-collar embezzlers have clean records.

“They have financial pressures on them and just have a lot going on in their lives,” Natkin said. “But the courts sure do look dimly on this.”

Natkin said embezzlement is repeatedly referred to as a ‘breach of trust.’

“It’s not just some stranger robbing you, but someone who you deal with, talk to, and work with on a daily basis.”

Hendley Badcock, Betsy Cribb and Krysta Huber contributed to this story.

Embezzlement costly for victims and taxpayers, investigators say

By Betsy Cribb

When a Virginia woman embezzled from a government agency, she got away with $4,000. But investigators with the state police spent $6,300 unwinding her paper trail.

When a man stole $250,000 from a nonprofit organization, it cost more than $50,000 to make the case.

And neither of those prosecutions took into consideration the cost of court time.

Catching and successfully prosecuting people who commit fraud and embezzlement is time consuming and costly, law enforcement officials say – for taxpayers as well as victims.

“We’re very thorough … we want to make sure we don’t miss anything. That’s why we go all the extra miles … we don’t like surprises,” Special Agent Accountant Susan Jones said. “We know financials sometimes better than the victims.”

Jones, who works for the Virginia State Police, said because embezzlers earn the trust of their employers, they quite often can sign checks and make deposits and withdrawals without oversight.

“There’s a lot of trust put into individuals. With that level of trust, there’s not a lot of oversight, if any, going on,” Jones said. “One person is handling the payroll and the financial records. It’s when that person leaves or the accounting systems change — pen and paper to computer — that’s when people get caught.”

That’s what happened in the case of Marilyn Dudley, who embezzled almost $160,000 from Collierstown Presbyterian Church, before she was caught.

Dudley’s case is typical, said Rockbridge County Sheriff’s Deputy Tony McFaddin. McFaddin spent six months investigating her crime.

McFaddin

Deputy Tony McFaddin, right, talks shop with Deputy Stanley Tomlin at the Rockbridge County Sheriff’s Office. Photo by Betsy Cribb

“One of the first things we did was basically try to collect all the records of all the bank accounts and all the budget reports over the past 10 years, so it requires a lot of search warrants and a lot of effort to get all those documents in, and then a lot of effort to go through the documents and find those discrepancies,” McFaddin said.

The cost of that work staggered him.

“I don’t make that much a year,” he said.

And the sheriff’s office likely would have had no idea a crime had occurred if church members hadn’t initially gotten suspicious, he said.

When Dudley got sick and could no longer balance the books herself, church members discovered that money was missing, said The Rev. Skip Hastings.

“We were going ‘uh oh.’ The money we thought we had had wasn’t in there,” Hastings said. “And we began to investigate and realized the funds just weren’t there.”

Church member Linda Wilder said it took her nearly 600 hours to go through every single bank statement from the 12 years that Dudley served as treasurer.

“I didn’t want to make a mistake,” Wilder said. “A mistake could be deadly.”

Despite the lengthy and expensive investigations that embezzlements require, Jones said, there is still a public perception that white-collar crime is victimless.

But that’s just not the case.

“There are people who spend years, if not decades, trying to build a business,” Jones said, “and one person stealing money, one person committing embezzlement, can take down their business.”

Hendley Badcock and Krysta Huber contributed to this story.