A retired 80-year-old Los Angeles nun is headed to federal prison for embezzling nearly $826,000 from a Torrance Catholic School over a decade to fund her gambling habit, prosecutors said.
Sister Mary Margaret Kreuper, 80, of the Arlington Heights, pleaded guilty last July to one count of wire fraud and one count of money laundering for an elaborate scheme to skim funds meant for St. James School.
She was sentenced Monday to a year in a day in federal prison, prosecutors said.
When she was the school principal at Torrance Catholic, Sister Mary Margaret diverted school funds “to pay for expenses that the order would not have approved, much less paid for, including large gambling expenses incurred at casinos and certain credit card charges,” according to court documents. The school is part of the St. James church in Redondo Beach.
Details of her plea agreement were filed under seal in the US District Court for Central California.
Prosecutors said the nun illegally took “possession of cash and checks made payable to St. James School from parents of St. James School students, and, without the knowledge and authorization of St. James School and/or the Administration, fraudulently diverted these funds by depositing them into the St. James Convent Account.”
That account, prosecutors said, was set up by Sister Mary Margaret as a personal slush fund.
Despite having taken a vow of poverty, Sister Mary Margaret used the ill-gotten gains to pay off “large gambling debts incurred at certain casinos,” and credit card balances that would not have been approved by her holy order, prosecutors said.
To keep her decade-long scheme going, Sister Mary Margaret told investigators she created bogus monthly and annual reports to the school administration to cover up her fraudulent conduct and “lulled St. James School and the Administration into believing that the school’s finances were being properly accounted for and its financial assets properly safeguarded,’ prosecutors said.
When an audit was ordered in 2018, Sister Mary Margaret retired—after telling school employees to destroy records. The embezzlement was discovered in that audit, but the church initially declined to press charges, prosecutors said.
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