AP audit leads to embezzlement charges against ex-director

November 14, 2012 The former director of a community redevelopment organization in Cleveland, Ohio, has been charged with embezzlement after an accounts payable audit uncovered an illegal scheme in which he stole more than $500,000 from the entity he was overseeing.

The former director of a community redevelopment organization in Cleveland, Ohio, has been charged with embezzlement after an accounts payable audit uncovered an illegal scheme in which he stole more than $500,000 from the entity he was overseeing.

According to Crain's Cleveland Business, Thomas Newman, who served as the executive director for the Flats Oxbow Association, is facing charges of theft and embezzlement from a federally financed program as well as additional counts of money laundering. In all, the AP audit found that Newman took approximately $583,700 from the organization over a period of five years.

The news source reports that the Flats Oxbow Association was forced to close after the embezzlement scheme was discovered. While it was running, the organization received federal funds from both the U.S. government and the city of Cleveland to help with its efforts of representing the businesses and residents of the Flats region.

Investigators allege that Newman managed to steal the funds from the association by writing checks from Flats Oxbow's accounts and making them to cash, states The Plain Dealer. It is believed that he embezzled around $400,000 through this method. Additionally, Newman is accused of using the organization's credit card to pay for renovations for a building that he and his wife owned. The investigation revealed that Newman covered up his illegal activity by creating false financial statements to make it seem as though the money was still in Flats Oxbow's accounts, the news source reports.

Besides the money the association received from the U.S. Department of Housing and Urban Development and the city of Cleveland, the organization also took in membership fees, corporate contributions and money brought in from fundraising events, The Plain Dealer writes.

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Category: Accounts Payable Analysis

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