Audit Report Claims that Former Episcopal Church Treasurer Stole $2.2 Million
Episcopal News Service. May 4, 1995 [95073]
(ENS) In a detailed, five-page message (text in Newsfeatures) released to the public May 1, Presiding Bishop Edmond L. Browning said that former treasurer Ellen Cooke stole approximately $2.2 million by diverting church funds to her personal use over the course of five years.
In his statement, based on an extensive audit of the national church accounts for the eight years of Cooke's tenure, Browning said that "beginning in February, 1990, Mrs. Cooke systematically diverted certain funds, consisting of unrestricted trust fund income and other unrestricted cash receipts, for her personal benefit and other unauthorized purposes."
Other funds, earmarked for specific purposes like the Presiding Bishop's Fund for World Relief and the United Thank Offering, "were not involved in the misappropriation," he said.
Citing the "sensitivity" of the process to recover other assets, the presiding bishop said he could not comment on what recommendation he would make to the June meeting of the church's Executive Council "regarding prosecution of Mrs. Cooke," but said he would "cooperate with the appropriate authorities in any investigation that may ensue." He added that, in the meantime, the church will implement recommendations "to strengthen internal controls and to improve reporting."
There was no mention in the statement of any role Cooke's husband, the Rev. Nicholas Cooke III, rector of St. John's Episcopal Church in McLean, Virginia, may have played in the embezzlement.
In her own statement (text in Newsfeatures), released by her attorney April 29, Cooke pledged to make full restitution, though she challenged the total figure presented by the auditors and said that she had experienced a work-related mental breakdown that caused her actions.
According to a psychiatrist's evaluation, Cooke said that she is "one of the small percentage of the population who by reason of personality are simply unable to stop in the face of enormous pressure and stress." The psychiatrist believes "that my subsequent actions, blocked from memory during this time, were a cry for help which I fully expected to be discovered and questioned, and which escalated as I tried to escape from a situation which had become intolerable," she said.
While Cooke said that she has confronted "the truth of my inappropriate and wrong response," she also has come to acknowledge "the pain, abuse and powerlessness I have felt during the years I worked as a lay woman on a senior level at the church headquarters." She added that she is "experiencing deep remorse and regret for the pain and grief my actions have caused my family, friends, co-workers and the general church," as well as sorrow for "any pain I may have caused the presiding bishop."
According to Browning's statement, the audit by the firm of Coopers and Lybrand revealed that Cooke diverted funds in three ways -- by depositing $1.5 million of the church's money into personal accounts at a commercial bank in Washington, D.C., and a brokerage firm in New York, where the national church also had accounts; by writing checks on church accounts to third parties "for her personal benefit or for other unauthorized purposes"; and by "the misuse of her corporate credit card and other corporate accounts for personal expenses."
The diversion of church funds went undetected for several reasons, Browning said. By opening "multiple church accounts" at a bank where she also maintained various personal accounts, she moved money into her own accounts, he said. "Since it was normal and appropriate practice to transfer funds between the various church accounts, there was no reason on the face of the records to question the propriety of these transactions at the time."
Since Mrs. Cooke "maintained absolute control of the auditing and reconciliation functions of the treasurer's office," preventing access to ledgers of some accounts, no one else on the staff "was aware of the activity in these accounts," the statement said. "Given this operating methodology, Mrs. Cooke ensured that her conduct would not be uncovered by the church's external audit firm or anyone else, as long as she remained in office."
In violation of the church's own fiscal policies, Cooke "filled out check request forms herself, signed them herself (though policies require two signatures) and then signed the check as well, thereby avoiding the usual control procedures," according to Browning. The improper checks were written in small enough amounts "so as not to attract the attention of the external auditors or staff members," he said. She also "maintained control of the American Express corporate account authorization and payment process."
While it is still not clear how the misappropriated funds were used, "a significant portion of the funds went for the purchase and considerable improvement by Mrs. Cooke and her husband" of properties in New Jersey and Virginia, as well as "day-to-day expenses of the Cookes in maintaining themselves and their household, for the education of their children, and for parish purposes, including the rector's discretionary fund at St. Luke's Church in Montclair, New Jersey," the statement said.
The church has secured title to the two properties and they have been put on the market. "We have engaged a highly regarded asset search firm to conduct a further investigation into Mrs. Cooke's assets to determine if there are additional resources available for restitution," Browning added.
Browning revealed in his statement that, contrary to what was reported at the time, he asked for Cooke's resignation in December because "I had concluded that her working style did not well serve our common mission." As Nicholas Cooke was relocating to Virginia, "it appeared that she was resigning to relocate," Browning said. "I believed that because of her years of service to the church she should be allowed to leave with dignity."
Browning told the Executive Council meeting in Rhode Island in February that irregularities were first reported as Cooke was negotiating her severance package. Contrary to personnel policies, she had requested a check for more than $86,000 "for what she represented to be back pay and/or vacation pay," he said. The request triggered an examination that identified other questionable transactions.
The presiding bishop said that he retained legal counsel and met with the Cookes in Virginia. "At the meeting, Mrs. Cooke pledged to cooperate with us in conducting an investigation and making restitution," Browning said.
Reactions to the news both within and beyond the church included a common thread of incredulity at the scope of the theft.
"It would be difficult for me to describe the sense of betrayal that I have felt over these last few months," Browning concluded in his statement. "Funds taken from us were meant to serve the least of us. I have had many painful thoughts about how these funds would have been used had they been available and who would have been ministered to, in the name of Christ."
Laurel Forest of St. Stephen's Church in Belvedere, California, a former parishioner of Nicholas Cooke's, said the theft threatens to "destroy people's faith in giving." The former treasurer "should be held to the utmost responsibility, not only to God, but to her millions of fellow members," she said. "People feel the Episcopal Church is like their family, and they have a right to feel they can trust the people who are entrusted with keeping the family whole and healthy."
In an editorial, May 3, the Washington Post newspaper called the theft "a sacrilege as well as embezzlement," and added that "Mrs. Cooke's statement of 'explanation' sounds as if she still doesn't understand that it was either." Noting that Cooke was one of the church's most powerful lay officials who "by accounts of church insiders" was "more autocrat than pushover," the Post said that her claim to have suffered "pain, abuse and powerlessness as a lay woman on a senior level at the church headquarters" rivaled the crime "in audacity."
The conservative group Episcopalians United (EU) called for an independent investigation by three bishops and three General Convention deputies, claiming that "the presiding bishop is in no position to direct the necessary investigation of alleged malfeasance so high in his own administration." EU Executive Director Todd Wetzel said that "we credit Bishop Browning for going public with this tragic episode soon after he learned about it, and for summarizing the subsequent investigation" in his statement, but called on Browning to "share the complete findings of this investigation."
The organization also chided Browning for defending Cooke throughout her tenure, despite "innumerable complaints from key leaders in the church, such as members of Executive Council, about her working style being too domineering."
In a letter to the congregation of St. John's Church in McLean, the parish wardens Dick Edge and Don Hutchins contended, "Most importantly for us here at St. John's, there is no evidence whatsoever that Nicholas Cooke was involved at any time or that he was aware of the actions of his wife." Bishop Peter James Lee of the Diocese of Virginia has consulted with the parish vestry and will meet with the congregation in May, they said.