Business manager

Ex-Exponent chief commercial officer charged with $1.44 million fraud

By Andy Gotlieb and Gabe Kahn

Former Jewish exhibitor business operations manager Cheryl Lutts was arrested and charged on May 21 with 22 counts of wire fraud and two counts of mail fraud, the U.S. Attorney’s Office for the Eastern District of Pennsylvania said.

Lutts, 42, of Philadelphia allegedly embezzled about $1.19 million from the exhibitor between 2016 and 2019, as well as about $255,000 from The Philly Pops, where she worked as a comptroller after being fired from the exhibitor in August 2019. In total, Lutts is accused of stealing $1.44 million.

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“Nonprofits exist for the people and constituencies they serve, not as personal piggy banks for those charged with managing their funds,” acting U.S. attorney Jennifer Arbittier Williams said in a statement. a statement.

Lutts, who was indicted by a grand jury on April 15, faces up to 480 years in prison, up to $6 million in fines, up to three years of supervised release and a special assessment of $2,400. , according to the U.S. Attorney’s Office. His real and personal property is also subject to confiscation.

As of May 24, she was in custody pending a detention hearing, said Jennifer Crandall, a spokeswoman for the U.S. attorney’s office. A public defender has been appointed to represent Lutts.

“The usual reward of nonprofit work is personal fulfillment, not financial enrichment,” Michael J. Driscoll, special agent in charge of the FBI’s Philadelphia Division, said in a statement. “Lutts, however, allegedly treated these organizations as his own ATM machine, short-circuiting their efforts and the community in the process. The FBI will prosecute and hold accountable anyone foolish enough to engage in this type of fraud.

Jewish Federation of Greater Philadelphia chief operating officer Steven Rosenberg said that “although we have learned an unfortunate lesson, this is clearly a case of good triumphing over evil.”

“We not only recovered the majority of the money [through insurance], we chased the person,” Rosenberg said. “The paper is stable now, which is a win considering the print market. We always know that the Jewish exhibitor is the prominent voice of Philadelphia’s Jewish community.

Rosenberg said Lutts, who was an Exponent employee for 18 years, was fired for poor performance before the fraud was uncovered. According to Rosenberg, Mike Costello, Lutts’ replacement, found a fabricated bank statement in Lutts’ desk drawer on his first day on the job.

The exhibitor and the Jewish Federation consulted first with Frank Riehl, the latter’s director of security, and then with the Philadelphia Police Department.

“As we recognized that this was beyond the scope of the police department, we immediately called the FBI,” Rosenberg said, adding that outside counsel and other assistance had been sought, while the company said. insurance had been informed.

According to the 12-page indictment, beginning in 2016, Lutts used his personal and business American Express cards for a wide variety of personal expenses, including ride-sharing services; airline tickets; entertainment, travel and accommodation; health care and exercise services; public services ; education and career services; legal services; funeral and burial services; Clothes; food and alcohol; and other items from retail stores, grocery stores, convenience stores, websites, restaurants, and delivery services.

Lutts also allegedly used his personal credit cards and corporate credit and debit cards to transfer company money to various people, using PayPal and CashApp, among other methods.

Lutts has prepared and submitted financial reports to various individuals, including an external audit firm and a tax preparation firm.

“It was a very sophisticated operation,” Rosenberg said. “No one could have seen that. His level of deception was remarkable.

“We have used all the resources at our disposal to determine the extent of the fraud,” he continued, adding “we will never tolerate this type of behavior, regardless of the amount stolen from us.”

In total, payments from the exhibitor’s checking account to her personal Amex cards totaled $982,781. She also allegedly signed checks for $205,977 to Amex drawn on the exhibitor’s checking account to pay the exhibitor’s credit cards.

The indictment says Lutts took several steps to cover up the fraud.

“For example, she provided the management of the Jewish exhibitor with financial statements that either did not include a balance sheet or included a balance sheet that was later determined not to match account balances and/or the transaction reflected… She also provided the management of the Jewish exhibitor with bank reconciliation statements that did not reflect the true balances”.

The exhibitor and the Jewish Federation have since implemented new programs and procedures, while eliminating corporate credit cards, Rosenberg said.

“Our financial control document is very, very rigid,” he said. “Money doesn’t move without the approval of at least three people.”

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