Did you have a nice weekend? A few Museum Patrons in Hollis, New Hampshire didn’t. According to Friday’s news, a lawsuit has been filed against in Worcester Superior Court that is likely only the tip of the legal iceberg of their problems.
Fruitlands Museum has filed a lawsuit against former chief operating officer Peggy Kempton and her children for allegedly embezzling more than $1 million during the past eight years. Also named in the legal action is a Leominster accounting firm that allegedly did not notify museum officials about the alleged fraud.
The Complaint, filed Tuesday, accuses Peggy Kempton, Fruitlands’ former chief operating officer, and her children, of obtaining money and property by false pretenses, and converting or misappropriating Fruitlands’ assets. Ms. Kempton, who leased a cottage owned by Fruitlands at 144 Prospect Hill Road, next to the museum since October 1999, for $1,400 a month, is also accused of failing to pay rent. The lawsuit further accuses Solar & Kilcoyne, an accounting firm in Leominster, Massachusetts, of negligence and failing to alert anyone on the nonprofit museum’s board of directors about the alleged financial irregularities.
According to the complaint, Ms. Kempton was hired in July 1997 as the chief operating officer, and was the sole employee who handled check writing, taxes, donors, vendors, events and the museum store, along with communicating with Fruitlands’ bank and accountants. The alleged embezzlement is said to have begun in the early 2000s, when Ms. Kempton opened up credit accounts and obtained credit cards in her name and in the museum’s name. She is said to have charged items unrelated to her job, and then paid the cards off with Fruitlands’ money, diverting other museum funds pay her rent.
In subsequent years, the museum claims that Ms. Kempton made the scheme a family project as her children received credit cards in Fruitlands’ name (used for personal expenses of course) and received various payments to which they were not entitled. For example, in 2007, Mother Kempton diverted $29,121.09 to two of her three kids, claiming it was for work performed. Apparently her third child had taken the year off or was being punished.
Peggy Kempton’s annual salary was $67,000. In 2007, she allegedly withdrew approximately $40,000 in addition to that, and on top of the money allegedly obtained through embezzlement.
The complaint claims that Fruitlands so far has calculated that Ms. Kempton has diverted more than $1 million to cover credit card charges made by her and her children.
Ms. Kempton left the job abruptly in February 2008. Apparently, enough was enough. According to Fruitlands, irregularities in the museum’s financial operations were discovered in the spring. A law firm and a forensic accountant were subsequently hired.
Maud Ayson, Fruitlands’ executive director, said yesterday that she is “proud of our swift action (hiring auditors and the forensic accountant) to assess what we needed to do quickly to rectify procedures and move ahead.” She stressed that the museum is in solid financial shape, and is embarking on several new events and exhibits, including “Branching Out at Fruitlands,” a series of exhibitions and outreach programs with a dozen regional partners.
Fruitlands, a 94-year-old museum off Route 111 that has four distinct themes – transcendentalism, Shakers, American Indians, and fine art – is one of the country’s first outdoor museums. It was founded in 1914 by Clara Endicott Sears, and got its name earlier, when Bronson Alcott, father of author Louisa May Alcott, started a short-lived utopian community there.
The alleged embezzlement has been reported to the state attorney general’s office, which is also investigating, according to a Fruitlands spokesman.
I hope that Kempton family members are either readers of this daily blog or have friends who are. If so, one expects that, having learned of this investigation (one imagines awhile ago), they have retained experienced counsel to prepare for the onslaught of the filed civil complaint as well as the almost-surely upcoming criminal indictments.
The difference between a civil action and a criminal action confuses many people. A civil complaint, such as the one filed last week, is a lawsuit brought by one entity (the plaintiff) against another (the defendant) for damages allegedly caused by that defendant. At issue is usually money. A person does not go to jail or get a criminal record as a result of a civil action. A criminal action is one in which the government (state or federal), as plaintiff, brings a complaint against a defendant claiming a violation of criminal law. While financial restitution might be a part of a particular sentence, it is not usually what is hanging in the balance. At risk is the defendant’s criminal record and very often the defendant’s freedom. In other words, it is for criminal matters that a person faces incarceration.
The same allegations can result in both a civil and criminal action. For example, if you get angry with your neighbor one day and decide that burning his house down would teach him a good lesson, you are likely to be facing a civil action (the neighbor and anyone else burnt down by the fire seeking recompense for their damages) as well as very serious criminal action for arson and a plethora of other charges. Not advisable, by the way.
In this case, Fruitlands has filed a civil suit to get back the money they claim the Kemptons embezzled, or stole, from it. The Attorney General’s Office, having been notified of this matter, is said to already be investigating. I would be extremely surprised if criminal charges are not forthcoming. The rules and prcedures for civil and criminal actions are different in many ways, and it is easy for a defendant to be pulled in various directions when faced with hard decisions in maneuvering both at once; an attorney knowledgeable in both civil litigation and criminal law is critical in best protecting the Kempton’s interests in this matter.
Under our system of law, while the burden of proof is different, a defendant in either a civil or criminal matter is presumed innocent unless and until they are proven guilty (or responsible). Nowhere is this presumption more important than in civil and criminal prosecution for a white collar crime such as that which is alleged here. There are many cases in which simple mistakes or misunderstandings as to what a business official was authorized to do resulted in civil and criminal prosecution. Further, particularly in the case of the Solar & Kilcoyne, the accounting firm in this matter, I have handled many matters in which simple oversight or mistakes are alleged to be part of a criminal prosecution for a criminal conspiracy. In this matter, I would expect that the government, upon bringing forth charges against the Kemptons, will either include charges against the accounting firm, or pressure the accounting firm to give evidence against the Kemptons in order to keep their license intact…and liberty…intact.
The bottom line as we begin this new week in September? The same old lesson. Treat any suspected investigation such as this with the greatest of gravity. Get knowledgeable counsel as soon as possible to guide and protect you.
Yes, a good lawyer is expensive. But liberty is priceless.
Samuel Goldberg is the senior defense attorney at the firm of Altman & Altman, P.C. A former prosecutor in New York, he has worked as a defense attorney in Boston over 18 years. He frequently provides legal analysis on radio and television, appearing on outlets such as the Fox News Channel, Court TV, MSNBC and The BBC Network
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