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Wednesday, 03 August 2016 14:28

Former Sequoyah Fund director pleads guilty to embezzlement

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The former director of an organization charged with spurring community development on the Qualla Boundary has pled guilty to embezzling nearly $1 million from the institution she once led, bringing almost three years of investigation and prosecution to a close.

“We’re just ready for some closure and ready to move on,” said Russ Seagle, who took over as executive director of The Sequoyah Fund after the previous director’s misconduct was discovered. “We have our brightest days ahead of us, I’m sure.” 

Nell Leatherwood, who led the organization from 2006 to 2013, will be sentenced for a total 50 of federal counts related to an embezzlement scheme that began around January 2010, according to a timeline outlined by the prosecution. 

From 2010 until her November 2013 resignation, Leatherwood repeatedly misused the corporate credit card for personal expenses, with the bills later paid using Sequoyah Fund dollars, unbeknownst to Sequoyah Fund board members. Overall, the credit card charges for personal expenses totaled about $900,000, according to court documents, though that number includes “thousands of dollars” in purchases made by “another individual” — that individual is not named, but Leatherwood didn’t charge the entire $900,000 herself, the prosecution said.

She did, however, embezzle money through another means as well, according to court documents. Between December 2012 and November 2013, Leatherwood wrote approximately 47 checks to herself from the Sequoyah Fund account, forging the signatures from board members that were required to cash checks from the account. She cashed or deposited the checks for her own personal use, court documents say, embezzling about $65,000 in this manner. 

The amount taken was substantial, but the Sequoyah Fund has recovered to continue doing its work in the community, Seagle said. 

“While any kind of financial fraud like this can pose a setback, it certainly didn’t threaten us or our existence,” Seagle said. “I guess the biggest issue for us was with a small staff we just wanted to make sure we could still focus on taking care of our clients and serve the community.” 

Established in 1997 and reorganized in 2006, The Sequoyah Fund is a community development financial institution that falls under the Eastern Band of Cherokee Indians. Its goal is to issue loans and financial services on the Qualla Boundary to encourage community development, using both tribal funds and grants from non-tribal sources — the organization has received some sizable grants from the United States government in the past. 

In 2008, for example, the organization received about $1.3 million from the U.S. Department of Agriculture, and between 2007 and 2009 the Sequoyah Fund got $1.8 million from the U.S. Department of the treasury. Two grants totaling about $284,000 came from the U.S. Department of Housing and Urban Development in 2007 and 2010. 

When the embezzlement came to light, Seagle said, top priority became instituting new procedures and practices so that Leatherwood’s scheme couldn’t be repeated in the future. 

“In a lot of cases, when you have a small organization you just do what you do on a daily basis and you don’t really think about some of these controls that have to be in place, but we’re very much more aware of even the smallest things now than we ever were,” Seagle said. “We’re certainly not the same organization we were when all of this took place.” 

For instance, whereas before the executive director had control over the writing and cashing of checks, those duties are now divided up between the organization’s three staff members. One person picks up the mail, another person writes the check and a third signs all the paperwork. Two different people must now verify all bank reconciliations. A CPA has been hired to help with the transition, and an outside accounting firm has been contracted to further split up those duties. 

“There are sure a lot more hands involved in things now than there used to be,” Seagle said. 

With the guilty plea accepted, all that remains is for the sentencing to be delivered, something that won’t likely happen until September or afterward. 

“Now we just wait for the courts to do their work,” Seagle said. 

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