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Thom Mrozek (213) 894-6947 |
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Release No. 07-069
May 23, 2007
FORMER RED CROSS OFFICIAL IN ORANGE COUNTY
PLEADS GUILTY TO EMBEZZLING MORE THAN $100,000
The former assistant director of accounting at the Orange County Chapter of the American Red Cross pleaded guilty this afternoon to federal charges of embezzling Red Cross funds over the course of the more than 17 years she worked at the non-profit organization.
Karen Shuerger, 58, who resided in Santa Ana until she resigned from the Red Cross in October 2005, pleaded guilty late today before United States District Judge James V. Selna in Santa Ana. Shuerger, who now lives in Henderson, Nevada, was indicted earlier this year by a federal grand jury in Santa Ana on five counts of mail and wire fraud related to her embezzlement during the final five years she worked at the Red Cross. Shuerger pleaded guilty to four of the five counts in the indictment.
The American Red Cross is a non-profit charitable organization with approximately 35,000 employees and more than 800 local chapters. The Orange County Chapter is located in Santa Ana and has approximately 60 employees. American Red Cross employees and volunteers provide aid in time of war to the sick and wounded of the armed forces and respond to disaster situations throughout the United States and abroad. The American Red Cross relies heavily on voluntary donations to fund its activities.
As assistant director of accounting, Shuerger was responsible for monitoring money and donations received by the Orange County Chapter and ensuring that the financial records were prepared accurately. In that position, Shuerger owed a duty to the American Red Cross and to the Orange County Chapter to conduct her duties in an honest manner, free from self-dealing, and not to use the property of the American Red Cross for her personal benefit. Shuerger admitted that she violated these duties and that, over many years, she embezzled at least $110,000 in funds from the American Red Cross and the Orange County Chapter.
Shuerger admitted that she bilked the American Red Cross in two ways. First, she used her supervisory position to order American Express traveler’s checks, which were purchased with funds from the Orange County Chapter’s bank account, and then used them to make purchases for herself and her family members. Local chapters maintain an inventory of traveler’s checks to provide funds or travel advances to employees responding to disaster situations. Instead of causing the traveler’s checks to be used for American Red Cross travel, disaster relief, and other authorized expenses, Shuerger used the traveler’s checks to make payments for personal and unauthorized items, including personal credit card payments, purchases at Home Depot, insurance payments, payments directly to her family members, purchases during visits to Sam’s Town Hotel and Gambling Hall in Nevada and while on vacation at the Hilton Hawaiian Village.
The second part of Shuerger’s embezzlement scheme involved credit cards. Shuerger admitted that she used an American Red Cross credit card issued to her to make unauthorized purchases of goods and services for her and her family members. The purchases included, among other things, Gateway computers, jewelry, personal clothing and shoes, pool products, cooking items, Major League Baseball tickets and merchandise, a San Diego Zoo membership, and a waterproof digital camera.
To conceal her extensive embezzlement, Shuerger altered Orange County Chapter documents and made false entries in the financial records that she was responsible for maintaining.
“The American Red Cross has a zero tolerance policy toward fraud,” said Stanley Perdue, chief executive officer of the Orange County Chapter of the American Red Cross. “We are grateful for the diligent work of the FBI and the Assistant U.S. Attorney in bringing this matter to justice.”
As a result of today’s guilty pleas, Shuerger faces a maximum statutory sentence of 80 years in federal prison. The plea agreement contemplates a prison term of approximately 18 months to two years, but this is not binding on Judge Selna. Shuerger will be required to pay full restitution to the American Red Cross.
Judge Selna is scheduled to sentence Shuerger on August 20.
This case is a result of an investigation by the Federal Bureau of Investigation. The American Red Cross conducted its own internal investigation which uncovered some of Shuerger’s suspicious activities. The American Red Cross then referred the matter to the FBI and fully cooperated in the investigation.
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Release No. 07-069
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