Risk Management

How a CFO Stole from Children’s Hospital

R.S. Brodzin pleads guilty to scheme at Shriners in St. Louis. "Sickened" prosecutor tells of creation of dummy companies, and his use of $828,000 ...
Stephen Taub and Roy HarrisAugust 21, 2008

In connection with a scheme that the prosecutor described as “the lowest of the low,” the former chief financial officer of Shriners Hospital for Children in St. Louis pleaded guilty to defrauding the institution of more than $828,000,

Robert Steven Brodzin’s plea was to one felony count of mail fraud, according to U.S. Attorney Catherine L. Hanaway, who said of the case that it “absolutely sickens me,” according to the St. Louis Post-Dispatch. “While children were fighting for their lives…he was stealing money.”

Brodzin faces a maximum penalty of 20 years in prison and fines of up to $250,000 when sentenced on Nov. 7. In addition, Brodzin agreed to make restitution of $828,973 to the Shriners.

According to the U.S. attorney, Brodzin used the stolen money to buy luxury automobiles; a condominium in St. Petersburg, Fla.; and for vacation travel and related expenses in Las Vegas and other locations. He also paid for golf and health club memberships; season tickets for the games of assorted professional sports teams in St. Louis; and to fund his personal small business opportunities.

“Stealing money that was meant for special needs children to fund an excessive luxury life style is one of the most egregious type of fraud schemes,” Hanaway said. “Shriners is a great organization that Brodzin took advantage of using his position of trust as CFO.” She added that the Shriners cooperated with the investigation, and strengthened its financial controls after learning of Brodzin’s crimes.

According to prosecutors, Brodzin, a certified public accountant, was director of fiscal services for the hospital from Oct. 30, 2000, through May 2, 2008. When the thefts occurred from 2004 to 2008, his duties included processing invoices that Shriners received from assorted legitimate vendors. Generally, as part of his job duties, Brodzin prepared checks and presented them to his supervisors at Shriners for approval, signature and ultimately payment to Shriners’ vendors.

The scheme involved Brodzin’s creation of three dummy companies, which he portrayed as qualified vendors of Shriners: West County Orthopedic Supply, West County Surgical and BEI Systems Inc. However, none ever actually provided any goods or services to Shriners, Hanaway said. Brodzin obtained unauthorized payments from Shriners by presenting checks for approval and payment in these three companies’ names.

With his plea, Brodzin admitted that he lied to Shriners’ management and directors by telling them that certain checks and payments for the companies were for legitimate hospital expenses, according to prosecutors. Brodzin also admitted to secretly obtaining and using an unauthorized Shriners’ credit card for his personal expenses.