November 2000

CPA Firm Makes Headlines as Auditor to the Catholic Church

When the Brooklyn Diocese began looking into the finances of one of the parish’s favorite pastors, they sought outside help to determine whether fraud was involved. They called Grassi & Co. to investigate the accounts of the diocese. What the financial auditors from Grassi & Co. found led to a full-scale investigation of the diocese’s finances.

Grassi & Co. found that Monsignor Thomas J. Gradilone had allegedly taken up to $1,500 per week from the coffers of Our Lady Queen of Martyrs church in Queens, N.Y., dipping into the collection baskets and adjusting entries on the ledger.

Gradilone, a former pastor, had set up a secret checking account at Sterling National Bank. The monsignor was also reportedly linked to two career criminals, according to the New York Times, one of whom was said to show up at the church demanding money.

By early October, the diocese said that the forensic trail indicated that $100,000 had been taken from a parish mutual fund, according to the Times.

Grassi & Co. was no stranger to the diocese. The firm originally performed audits and operational reviews for several of the church’s parishes and was viewed as reliable by church officials. The firm was also integral in investigating a scandal involving the diocese pension fund in 1996. At that time, Father Thomas Doyle of the diocese discovered a suspicious payment to an outside contractor from the pension office manager. Doyle called Grassi, whose team uncovered a $1.2 million fraud involving the diocese’s pension plan, according to Accounting Today.

In July 1999, the diocese contacted Grassi & Co. founder Louis Grassi, who sent partner Rob Brewer and another CPA to visit the church. They spent two to three days poring over the church’s books, and their findings supported the suspicions of the diocese and led to the launch of a full-scale investigation.

In recounting the events, Grassi, a certified fraud examiner, said that something “didn’t appear right.”

For the remainder of 1999, the church conducted an internal investigation. The church brought Grassi back during the early part of 2000. The audit firm, once referred to as “the financial detectives” by the Times, issued a preliminary report finding fraud and embezzlement on the part of the monsignor.

“Basically, not all the collections were being deposited,” Grassi said. “We were seeing large transactions running through the books that didn’t make sense.”

The diocese’s bishop went public with the news, based on Grassi & Co.’s preliminary findings. What resulted was a highly publicized media event that put Grassi & Co in the public spotlight for the second time in four years.

Today, Grassi’s 85-employee, seven-partner firm handles about 20 investigations per year. Grassi said his firm became involved in fraud examination because it was a “natural adjunct” to its audit work.