ABA: We Was Robbed!!! (But Keep It To Yourself)

It takes a certain kind of person to choose to read through a tax form. It takes a certain kind of person to read through a 127 page tax form. Bruce McLeod is that kind of person, when the tax form is from the American Bar Association. But what he found on page 118 of Form 990 was, well, interesting.

In 2017, the ABA became aware of an unauthorized diversion of assets totaling approximately $1.3 million over a period of multiple years, committed by a non-management staff member. The employee was immediately placed on administrative leave when the unauthorized diversion of assets was detected and was terminated the following day. The ABA commenced an investigation and notified both the Executive Committee of its board of directors and law enforcement, with whom the ABA has cooperated fully in the ongoing investigation. Furthermore, forensic experts from the accounting firm of Grant Thornton were engaged to participate in the investigation along with the ABA Internal Audit, Financial Services staff and the General Counsels Office. The ABA reviewed and revised procedures including more stringent controls and monitoring and increased financial oversight. The ABA is in the process of seeking recovery of the funds from its insurance carrier.

For those less inclined to read the small print (or block quotes), it says that somebody working for the ABA stole $1.3 million over a period of years and nobody knew about it. Even more curiously, the ABA, which issues press releases almost daily on all manner of issues, some having a connection to law and some being off in the stratosphere, never said a word about it to the public, to their members, to anyone other than the IRS.

It’s one thing that the ABA drove away its member by straying from a membership association relating to the practice of law to a social justice organization obsessed with progressive politics. That alone would make them financially nonviable. But to have an employee steal $1.3 million on top has got to hurt.

And yet, the ABA swept it under the rug, because it wasn’t bad enough that they no longer represent lawyers, it wasn’t bad enough that they became an organ of social justice, it wasn’t bad enough that they forfeited their role as honest broker in the qualifications of federal judges. No, that wasn’t bad enough. It turns out that they aren’t even competent enough to discover an employee stealing money until there’s $1.3 million missing.

But don’t tell anybody, as it will embarrass the ABA, and they’re doing bad enough already.

15 thoughts on “ABA: We Was Robbed!!! (But Keep It To Yourself)

  1. wilbur

    As a lucky fella who has examined and investigated hundreds of embezzlement cases over the years, the one almost universal factor is that the perp only got caught when he or she got greedy and eventually started taking enough to be noticed.

    That doesn’t seem to be the case here. But what’s 1.3 mill among friends?

    1. SHG Post author

      It’s not like they just couldn’t get more from the members. Lawyers are rich and they don’t care about such banalities as paying exorbitant dues.

  2. Richard Kopf


    One wonders whether there were audited financial statements and if not why not. But, upon reflection, if you can’t trust the ABA, who can you trust. That is trust but don’t verify.

    All the best.


    1. SHG Post author

      One would think the ABA had audited financials, but then, maybe auditors were too expensive and they were $1.3 mill short.

      1. B. McLeod

        The information posted on their website includes audited financials for several years, so it is likely an annual exercise (as it should be). Somehow, by the luck of their random sampling, the auditors just didn’t test or verify whatever data was screening the activity until it had been going on for several years.

  3. Mike

    “The ABA commenced an investigation and notified both the Executive Committee of its board of directors and law enforcement, with whom the ABA has cooperated fully in the ongoing investigation.”

    “never said a word about it to the public, to their members, to anyone other than the IRS.”

    The quote does indicate that they told law enforcement, presumable separate from the IRS.

    1. SHG Post author

      Do you ever seen that asshole who feels the irresistible impulse to pick some irrelevant nit? I have.

  4. B. McLeod

    There was a nice story in Law360 yesterday in which the meager wages paid to ABA’s rank and file employees (in contrast with the huge salaries pocketed by ABA executives) were mentioned by a laid-off former ABA employee. ABA was probably embarrassed that its oppressive capitalist exploitation of those in a lower socioeconomic status drove this particular poor to stealing instead of simply working multiple jobs to keep body and soul together. In any event, this episode indeed speaks poorly of their management’s competence and the adequacy of their accounting controls.

    The Form 990 shows fairly substantial executive salaries, and key staff are doing a lot better on compensation than the elected officers of the association. The numbers also reflect that ABA Journal has pitiable ad revenues and operates at a substantial loss, delivering its own, multi-million-dollar annual beating to the organization’s bottom line. I guess if you’re going to lose that much money, you can’t afford to run stories that embarrass your source of support.

    1. wilbur

      I went through that whole form (briskly, as is my wont), and it was indeed very interesting reading.

      The salaries did seem a little, umm, unbalanced. But it’s not my money, so not my business.

  5. B. McLeod

    Late in the afternoon, ABA Journal did finally run its own story on this, acknowledging in the intro that the Admiral and Law360 had both already spilled the beans. Some supplemental information added in the Journal piece says that the diversions took place over a seven-year period, from 2010-2017, and were covered up by falsified documents. Also (as posited by a commenter above) the conduct was apparently discovered when the employee became more aggressive and tried to take larger amounts.

    It is probably significant that the conduct began following the 2008-2009 recession, in an era of staff and budget reductions. Opportunities for mischief frequently arise from ill-conceived staff cuts that leave remaining finance staff with too many overlapping functions, enabling particular employees to both gain improper control of funds, and to create, alter or destroy records in order to cover their activity.

    1. Kathryn Kase

      If the ABA were some tiny non-profit organization, I might understand that staff cuts would lead to issues involving segregation of finance duties. Indeed, this is a perennial issue with small non-profits and, in those that are well-run, there is annual auditing in which the auditors routinely make note of financial segregation issues and work with staff on alternatives to make it more difficult for embezzling to occur.

      The ABA, however, is no small organization; anyone who has worked there can tell you it’s a labyrinthian bureaucracy. I fail to understand how, even with staff cuts in its finance department, an organization that large was unable to sufficiently segregate financial duties.

  6. Casual Lurker

    It takes a certain kind of person to read through a 127 page tax form.

    The upside of OCD!

    (This was a test of the emergency CAPTCHA system… Had this been an actual emergency…)

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