LAWFUEL – The former assistant director of accounting at the Orange County Chapter of the American Red Cross was indicted today on federal charges of embezzling Red Cross funds over the course of more than 17 years she worked at the non-profit organization.
Karen Shuerger, 58, who resided in Santa Ana until she resigned from the organization in October 2005, was named in a five-count indictment returned this morning by a federal grand jury in Santa Ana. The indictment specifically alleges that Shuerger defrauded the Orange County Chapter of the American Red Cross during her final five years of employment.
Shuerger, who now lives in Henderson, Nevada, will be summoned to appear for an arraignment in federal court in Santa Ana on February 5.
The American Red Cross is a 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 respond to disaster situations throughout the United States, as well as provide assistance to members of the United States military. The American Red Cross relies on donations to fund its activities.
As assistant director of accounting, Shuerger was responsible for monitoring money received by the Orange County Chapter and assuring that the financial records were prepared accurately. As alleged in the indictment, Shuerger owed a duty to the American Red Cross and to the Orange County Chapter to conduct her duties in an honest manner. Shuerger allegedly embezzled funds from the American Red Cross and the Orange County Chapter, thus violating her duty of honest services to the Red Cross. Shuerger allegedly embezzled funds in two ways.
Shuerger used American Express traveler’s checks, which were purchased with funds from the Orange County Chapter’s bank account, to make purchases for her and her family members, according to the indictment. 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 making personal credit card payments and purchases during visits to Sam’s Town Hotel and Gambling Hall in Nevada and the Hilton Hawaiian Village.
In the second part of Shuerger’s embezzlement scheme, she allegedly 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, a San Diego Zoo membership and a waterproof digital camera.
To conceal her embezzlement, Shuerger allegedly altered Orange County Chapter documents and made false entries in financial records.
The ongoing investigation has revealed losses of more than $100,000.
“The American Red Cross takes a very aggressive stance against fraud and works closely with law enforcement when criminal activity is discovered,” said Stanley V. Perdue, Chief Executive Officer, American Red Cross, Orange County Chapter. “In this case, the Orange County Chapter of the Red Cross uncovered the fraudulent activity and contacted the FBI. This incident is extremely unfortunate and we will continue to work closely with the FBI and the United States Attorney’s Office to ensure this case is prosecuted to the fullest extent of the law.”
Shuerger is charged with five counts of honest services mail and wire fraud. Each count carries a maximum statutory sentence of 20 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is a result of an investigation by Federal Bureau of Investigation.
The American Red Cross referred the matter to the FBI and fully cooperated in the investigation.
CONTACT: Assistant United States Attorney Robb Adkins
Release No. 07-006