Kansas City diocesan employee accused of stealing $155,000 from financial aid fund – The Pillar

Report on Financial Misconduct and its Impact on Sustainable Development Goals

Executive Summary

An investigation into the Diocese of Kansas City-St. Joseph has revealed a significant case of alleged financial misconduct, directly undermining key United Nations Sustainable Development Goals (SDGs). A former employee, Jeremy Lillig, has been indicted for wire fraud, accused of misappropriating $155,000 from the Bright Futures Fund. This fund was established to provide educational financial assistance to low-income families, making this incident a direct impediment to achieving SDG 1 (No Poverty), SDG 4 (Quality Education), SDG 10 (Reduced Inequalities), and highlighting critical failures related to SDG 16 (Peace, Justice and Strong Institutions).

Impact on Sustainable Development Goals

Detriment to SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities)

The alleged theft directly contravenes the core principles of SDG 1 and SDG 10. The misappropriated funds were designated for families whose economic vulnerability is a primary barrier to social mobility.

• The Bright Futures Fund was specifically created to serve families with an average annual income of less than $16,000.
• The theft of $155,000 represents a substantial loss of resources intended to alleviate poverty and reduce the educational and economic inequalities faced by urban communities.
• By diverting funds from their intended beneficiaries, the alleged actions exacerbated the financial hardships of vulnerable families, preventing them from accessing opportunities designed to break the cycle of poverty.

Undermining SDG 4 (Quality Education)

The primary mission of the Bright Futures Fund was to ensure access to inclusive and equitable quality education, a cornerstone of SDG 4. The alleged fraud jeopardized this mission.

• The funds were intended to provide financial assistance for students to attend three urban Catholic schools.
• The loss of these funds directly impacts the ability of disadvantaged students to receive a quality education, limiting their future prospects and perpetuating inequality.

Analysis of Institutional Integrity and Justice (SDG 16)

Alleged Breach of Trust and Financial Controls

The case highlights a significant failure in institutional governance, a key target of SDG 16, which calls for effective, accountable, and transparent institutions. The former Director of Stewardship, Jeremy Lillig, is accused of exploiting his position to commit fraud.

• Method: Prosecutors allege Lillig used grant money to purchase over 400 Visa gift cards for personal use, concealing the transactions with falsified expense reports between 2017 and 2021.
• Legal Action: Lillig was indicted on one count of wire fraud and has pleaded not guilty. A trial is scheduled, representing the justice component of SDG 16.

Institutional Response and Corrective Measures

In response to the discovery of potential criminal activity, the Diocese of Kansas City-St. Joseph has taken steps to strengthen its institutional framework, aligning with the principles of SDG 16.

1. The diocese reported the matter to law enforcement and fully cooperated with the FBI investigation.
2. A full third-party audit of the Bright Futures Fund was conducted to ensure transparency.
3. The fund’s management has been brought under standard diocesan policies to improve oversight.
4. New protocols have been implemented, including the integration of accounting into the diocese’s central finance system and mandatory attendance of the Diocesan Finance Officer at board meetings.

Recommendations for Preventing Financial Crime in Charitable Institutions

Expert analysis underscores the need for robust internal controls to safeguard charitable funds and maintain institutional integrity, a critical aspect of SDG 16.

• Treat Gift Cards as Cash Equivalents: Robert Warren, a retired IRS investigator, notes that gift cards are difficult to track and require stringent controls.
• Implement Tracking Systems: Organizations should maintain a detailed log for every gift card, recording its amount, identification number, and recipient.
• Secure Storage and Inventory: Gift cards should be stored securely, with limited access and a regularly audited inventory.
• Ensure Dual Oversight: A “two sets of eyes” policy, requiring two individuals to witness and sign off on the distribution of financial assets like gift cards, is essential to prevent misappropriation.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 16: Peace, Justice and Strong Institutions
   • The article’s central theme is a criminal act of theft and fraud within an institution, directly relating to the need for justice and strong, accountable institutions. The case involves wire fraud, an indictment, a legal trial, and an investigation by the FBI, all of which are elements of the justice system. Furthermore, the article details the institution’s internal failures and subsequent efforts to strengthen its financial controls, which is a core aspect of building strong institutions.
2. SDG 4: Quality Education
   • The stolen funds were specifically earmarked for the “Bright Futures Fund,” which provides financial assistance for students to attend urban Catholic schools. By diverting these funds, the accused employee directly undermined the goal of ensuring inclusive and equitable quality education, as the financial aid was intended to help students from low-income families access schooling they might otherwise not be able to afford.
3. SDG 1: No Poverty
   • The article explicitly states that the beneficiaries of the fund were from families with extremely low incomes, noting that “the average family whom Lillig served through the Bright Futures Fund was a family of four with an annual income of less than $16,000.” The financial assistance was a form of social protection aimed at alleviating the financial barriers to education for the poor. The theft of these funds directly harmed a program designed to support vulnerable and impoverished families.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Under SDG 16: Peace, Justice and Strong Institutions
   • Target 16.4: “By 2030, significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime.” The theft of $155,000 constitutes an illicit financial flow. The legal proceedings against the employee are an attempt to combat this form of financial crime.
   • Target 16.5: “Substantially reduce corruption and bribery in all their forms.” The employee’s alleged actions—stealing funds he was entrusted to manage—is a clear case of corruption within an organization.
   • Target 16.6: “Develop effective, accountable and transparent institutions at all levels.” The article highlights the initial failure of institutional controls that allowed the fraud to occur. The response, which includes conducting a “full third-party audit” and bringing the fund “under standard diocesan policies for fund management,” directly addresses the need to build more effective and accountable systems.
2. Under SDG 4: Quality Education
   • Target 4.5: “By 2030, eliminate gender disparities in education and ensure equal access to all levels of education and vocational training for the vulnerable, including persons with disabilities, indigenous peoples and children in vulnerable situations.” The students from families earning less than $16,000 annually are “children in vulnerable situations.” The fund was created to ensure their access to education, and the theft directly threatened this goal.
3. Under SDG 1: No Poverty
   • Target 1.3: “Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.” The Bright Futures Fund acts as a small-scale social protection measure, providing financial assistance to help poor and vulnerable families cover education costs. The crime disrupted this system of support.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. For SDG 16 Targets:
   • Indicator for Target 16.4: The article provides a precise monetary value for the illicit financial flow, which aligns with Indicator 16.4.1 (Total value of inward and outward illicit financial flows). The specific value mentioned is “$155,000”.
   • Indicators for Target 16.6: The article implies indicators for measuring institutional strength. The implementation of new policies serves as a measure of progress. These include:
     • Conducting “annual financial audits by an outside firm.”
     • Integrating accounting and donor tracking into the main diocesan system.
     • Establishing oversight by the Diocesan Finance Officer.
     • Implementing specific internal controls for cash equivalents like gift cards, such as keeping a log, locking them away, and requiring “two sets of eyes on the money at all times.”
2. For SDG 4 and SDG 1 Targets:
   • Indicator for Target 4.5 and 1.3: The article provides data that can be used as an indicator of the vulnerability of the target population. The statement that the fund serves a “family of four with an annual income of less than $16,000” is a specific measure of the poverty level of the beneficiaries. The amount of financial assistance stolen ($155,000) is an indicator of the scale of the support program that was compromised.

4. Summary Table of SDGs, Targets, and Indicators

Source: pillarcatholic.com