Mound woman charged with theft from North Hennepin Community College Foundation

Editor’s note: An earlier version of this story said the majority of the thefts occurred in a two-month period in 2016, but the thefts actually occurred during a longer period of time this year. 

A 37-year-old Mound woman has been arrested and charged with six felony counts of theft by swindle in connection with the theft of $180,000 from the North Hennepin Community College Foundation.

Alison Craft Klug, now being held in Hennepin County Jail in lieu of $70,000 bail, faces a possible maximum sentence of five years and a fine of $10,000 on two of the counts, 20 years and a $100,000 fine on two counts and 10 years and a fine of $20,000 on two counts. She was working at the college under an alias, Alison Craft Reily.

According to a complaint filed in Hennepin County District Court, the president of the North Hennepin Community College Foundation told police on Oct. 14 that Klug embezzled more than $180,000 from the foundation while she was working as an independent contractor.

Her job at the college, according to the complaint, was to keep track of the foundation’s accounts, give reports to the board, issue checks and basically run the finances. Klug did no work outside of her normal hours, did not receive bonuses and did not have a foundation credit card.

During the annual audit in September 2016, Klug was asked numerous questions about issues with findings in the audit. She answered the auditor’s questions, then left at her normal time, according to the complaint.

“Since that date, they have been unable to reach the defendant,” the complaint said.
The president of the foundation provided police with documentation and financial records that showed Klug was issuing duplicate paychecks to herself, cashing them, and creating fraudulent payees in Quick Books to make it look like it was being paid to another payee, not Klug.

Klug’s supervisor was asked to examine the checks issued to Klug, and she verified that she had not signed or authorized the checks, the complaint said.
Police obtained records of Klug’s bank account and observed deposits made from the victim’s account.

Police also noted deposits that were checks from the Tonka Alano Society, occurring between Sept. 12 and Nov. 3, 2016. Police spoke with a representative of Tonka Alano Society and learned that Klug was the lead treasurer of the organization, a volunteer position.

“She would not have been authorized to receive any funds from the organization, and was not paid for her work,” the complaint said.

“Tonka representatives checked their account at Wells Fargo and learned that it had a balance of only about $5,” the complaint said.

Klug was arrested and “initially denied the allegations and made many excuses, but finally confessed, stating she was willing to pay back the money,” the complaint said.

Klug admitted to police that she forged her supervisor’s signature on the checks from North Hennepin, and said she deposited the checks in her U.S. Bank account. She told the police she thought the amount she stole “was more like $50,000,” the complaint said.

Klug also admitted that she did not have permission to write the checks out to herself, the complaint said. “Defendant said she put a different code in Quick Books so no one would know that she was writing the checks to herself,” the complaint said. “Defendant said that she needed the money to pay bills.”

After she was fired from North Hennepin, Klug admitted she started writing checks to herself from the Tonka Alano Society. “She said she did not have permission to do so and that the checks were to pay off bills such as student loans and credit card debt,” the complaint said.

“Defendant said that she was sorry and would pay back some of this money over time.”

The total loss to North Hennepin Community College Foundation is $181,556 between Sept. 12 and Nov. 3, 2016.

The total loss to Tonka Alano Society is $19,000.

The combined loss for both victims is $200,556.

Valerie Martin, a spokesperson for the North Hennepin Community College Foundation, issued the following statement on Tuesday, Nov. 15:
“We are pleased to hear of the arrest and charging of Alison Craft Klug a/k/a Alison Craft Reily. Ms. Klug was an independent contractor who performed bookkeeping services for the North Hennepin Community College Foundation.

“We will continue to cooperate with authorities as the legal process unfolds. In the meantime, we are turning our attention to rebuilding the Foundation’s finances so we can continue to provide scholarship opportunities for our students. We are deeply grateful for the support our donor community has demonstrated in the wake of the theft, with continued, and in some cases, increased donations to support access to quality education.

“One donor who today pledged to continue his commitment is Harlan Hewitt. ‘The Foundation has been the victim of a theft,’ Hewitt said. ‘But this isn’t stopping us from giving and supporting the college’s students.’”

The discrepancies turned up during a routine independent audit conducted in September by Smith Schafer and Associates, LTD, a Certified Public Accounting (CPA) firm, according to an earlier letter from Dave Kiser, president of the foundation board. Kiser also is assistant executive director of Northwest Community Television Channel 12.

“Upon learning of the inconsistencies, the foundation’s board terminated the contractor’s agreement, secured all financial accounts and further engaged the services of the CPA firm to investigate the discrepancies,” Kiser’s letter said. Although internal controls and independent audits were in place, the foundation is instituting additional safeguards to ensure the future security of its finances, he said.

The theft of $180,000 represents about 20 percent of the foundation’s overall funds, according to Kiser. The foundation has 34 endowed funds and gave $184,000 in scholarships in 2015.

“Despite the loss, all scholarship commitments made for this fiscal year will be fulfilled,” he said.

Martin said earlier that in addition to reporting the crime to the authorities, the foundation has retained counsel “to consider other options which may be appropriate.”

The foundation is covered by insurance, Martin said earlier. However, she added that some of its major donors already have increased their commitments for the year to ensure the foundation can continue to provide opportunities for North Hennepin Community College students.

“Once the full impact has been ascertained, our next steps will involve prioritizing events for next year given the available resources,” Martin said.

North Hennepin Community College, at 7411 85th Ave. N., Brooklyn Park, opened its doors in 1966. The foundation began operation in 1981. In 2015, 10,705 credit students were enrolled at the college, which employs 450 faculty, staff and administrators.

Sue Webber is a contributing writer for Sun Newspapers.