Folk festival embezzlement inspires restitution bill

Posted: Monday, February 17, 2003

A Juneau lawmaker went before the House Judiciary Committee on Friday to change a law he says prevented the Alaska Folk Festival from collecting full restitution from an accountant who embezzled thousands of dollars from the organization in the 1990s.

Republican Rep. Bruce Weyhrauch authored House Bill 23, which would allow nonprofit groups to collect restitution for time and resources spent to uncover criminal activity within an organization.

Weyhrauch told the committee that when the Juneau-based Alaska Folk Festival, which hosts an annual free music festival and other events, discovered money missing in 1999, its members were burdened with reconstructing the crime before law enforcement authorities would prosecute.

Folk festival accountant Jim Demers was charged in 2000 with stealing at least $13,000 from the organization and sentenced to two years in prison with 18 months suspended and ordered to pay restitution up to $24,000. But a Court of Appeals decision in 2002 cut $5,000 that would have gone to the group for the 200 hours festival board members spent uncovering the thefts.

In that decision the court noted: "The festival did not expend any money nor receive an invoice for this volunteer effort. Although the festival was injured as a result by Demers' crimes, it did not incur any monetary damage or loss when the festival's board members volunteered their time and effort to audit and reconstruct the festival's business records."

Weyhrauch told the committee his bill intends to adopt the Court of Appeal's dissenting opinion, which would have allowed for full restitution.

Former festival President Riley Woodford, who testified at Friday's committee hearing, said the organization's board went to the Juneau Police Department after discovering the money was missing. But the board was told police did not have the time or resources to investigate such a crime. Festival officials would have to document each individual crime and how the crimes were covered up before police would get involved, Woodford said.

He said restitution likely would have been paid in full had the nonprofit group hired an accounting firm to reconstruct the crimes.

He noted, however, that even with the aid of an accounting firm the eight-member festival board would have had to spend significant time and resources to help reconstruct the crimes.

Weyhrauch noted white-collar crime is on the rise in Alaska and throughout the nation. As a member of several nonprofit organizations, he said he is particularly sensitive to the issue of restitution for such organizations.

"You go on a song and a prayer a lot of times. You are running on a shoestring, and you can't afford to go out and hire a bunch of professionals to recreate crimes," Weyhrauch said.

Robert Buttcane with the Alaska Division of Juvenile Justice also testified on the bill in an effort to extend the law to victims of juvenile crime. No decision was made on including the language, but Weyhrauch expressed concerns broadening the bill could hinder its chance of passing through other committees.

"I have no objection to broadening it as long as it doesn't become so weighty that it raises a whole bunch of other issues and doesn't go anywhere," Weyhrauch said.

The bill was held by the Judiciary Committee for further consideration following Friday's meeting. The committee will continue discussion of the bill at 1 p.m. Wednesday.

• Timothy Inklebarger can be reached at timothyi@juneauempire.com.



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