A former longtime Boy Scouts of America employee will soon begin serving a two-year federal prison sentence for bilking the Irving-based organization out of more than $350,000. Barbara Nestel of Justin also must repay the money she stole from her ex-employer between August 2003 and May 2008, U. S. District Judge David C. Godbey ordered.

Nestel, a 56-year-old wife and mother of two teenagers, received Godbey's sentence Monday after pleading guilty in October to one count of wire fraud. She admitted that she stole the money through a series of fraudulent refunds to her bank accounts. She was caught after an internal audit revealed discrepancies. "Like many other folks, she just lived beyond her means," said her attorney, federal public defender Douglas A. Morris. "She wasn't living extravagantly, just living beyond her means. She's very remorseful." According to court documents, Nestel was a secretary who began working for the Boy Scouts in April 1985. Part of her duties called for her to process payments for the National Catholic Committee on Scouting, a national church committee that uses the Boy Scouts as a form of youth ministry.

The Boy Scouts provide accounting services for the group, a Boy Scouts spokesman said. In her job, Nestel used a "point-of-sale" terminal to process customer debit and credit card purchases and refunds. Sometime in August 2003, documents show, Nestel began swiping her personal debit card and then setting it up to get a refund from Boy Scout funds. She admitted to making at least 500 such illegal transactions. Morris described his client as a "nice person" who he said was actually relieved once she got caught. He said that even before she was exposed, she was overwhelmed with guilt and had begun to feel that people at her job actually were aware of her scam.

"They confronted her and she 'fessed up," Morris said. "In Ms. Nestel's case, it's almost like a relief to get caught. It's a weird kind of mixed blessings for folks. They get so tired of living this lie." The stolen money was replaced without any impact on the National Catholic Committee, said Deron Smith, national spokesman for the Boy Scouts. The organization also issued a statement about the actions of Nestel, who must surrender to federal prison authorities by March 29.

"We were deeply saddened by the actions of this former employee, which were detected during an internal auditing process," the statement reads. "In everything it does the BSA works to be good stewards of its benefactors' donations of time and money," it states. "The actions of this individual do not represent our employees who work tirelessly to accomplish our mission to prepare young people to make ethical and moral choices over their lifetimes by instilling in them the values of the Scout oath and law."

Questions:

What were the red flags?

How could this fraud have been prevented?

What internal controls should have been in place and working?

Relate the Fraud Triangle to this case.

What form of fraud was committed?

What method was used to conceal the theft? Explain your reasoning.