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Old Lady Convicted of $190,000 Fraud and Doesn’t Even Have to Miss Christmas

The ACFE says 7 percent of frauds are detected by accident and only 3 percent are discovered by the external auditor, proving that fraudsters are 4 percentage points dumber than auditors are smart.

That’s pretty much what happened with poor, dumb Alice Riley, the 61-year-old former clerk for the City of Auburn, Kansas, who was convicted earlier this month of embezzling $189,594 from the city. She stole the money by issuing duplicate payroll checks to herself. But she felt she earned the money because of the extra work all those duplicate checks put on her as the city's payroll manager.

According to Kansas State Statute, an audit is required if a municipality has annual receipts of $275,000 or more. Auburn’s 2011 financial statements, which appear to have been prepared on a typewriter from 1987, indicate that the city had over $1.8 million in gross receipts.

But five years of audits didn’t reveal Alice's fraud. The scheme was discovered from a tip the Auburn city council received in early January 2014.

Over the course of the five-year fraud, Ms. Riley stole about 2 percent of the city's revenue per year. That's about $150 per citizen. But I assume materiality thresholds made this fraud too small to detect. Just like the city of Auburn.

Federal judge J. Thomas Marten sentenced the former Auburn clerk to 12 months and one day of imprisonment after pleading guilty to felony embezzlement. … Marten said. “Twelve months and a day might seem like a slap on the hands to some, but it's not.”

No, it’s not like a slap on the hands. It’s more like a time out and a hug; she’ll probably get out after 10 months with good behavior.

Alice Riley was ordered to pay to the city of Auburn full restitution in the amount of $189,594.05. … While incarcerated, Riley will have to make monthly restitution payments to Auburn equal to no less than 10 percent of the funds in her inmate account.

Ten percent of her inmate account? So the city’s going to get like nine cigarettes a month.

When she gets out … 5 percent of her monthly income will go toward paying back the city of Auburn. … Riley intends to pay back all the money.

Alice is 61. Her life expectancy is 25.2 years. She’ll be 62 when she’s released. If they skim off 5 percent of her income to pay back what she stole, she’ll have to earn $3.8 million dollars to pay off her debt. That's $158,000 per year for each of the 24 years she’s expected to live. She should have no problem earning that kind of money as a 62-year-old ex-convict, so long as she spends her time in jail to become a licensed orthodontist.

Chief Judge J. Thomas Marten also issued a special condition to her release [on bail]: a prohibition on gambling.

But why? She could pay back everything she stole if she could just hit her numbers on the PowerBall. And since Lotto tickets sales fund state and local governments in Kansas, every losing Mega Millions ticket she buys should be $1 off her restitution.

But apparently Ms. Riley has a gambling addiction, which is a very serious problem. She could experience withdrawals from just walking past an ATM.

[Judge] Marten ordered Riley to self-surrender after Jan. 1, 2015 — so she can have some time to pull things together and get through the holiday season, the judge said.

Some say that spending the holidays with their family is like a prison sentence. But for Alice Riley, going to prison after spending the holidays with her family will be the real prison sentence.

Christmas is going to be nutballs. If Grandma Alice gives you an XBox One, you need to plug it in and play it now because the FBI could show up any minute to Grinch it back to the city of Auburn. And Thanksgiving for the Rileys should prove to be a great time for backhanded sarcastic insults like, “I think this is the first time in five years Alice didn’t take any extra gravy.”