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St. James Catholic School, Torrance, Calif.

Two nuns accused of stealing as much as $500,000 from Catholic school in Torrance, Calif.

The principal and a teacher at St. James Catholic School allegedly spent some of the funds gambling at casinos.

Two longtime nuns at a Catholic school in Torrance, Calif., allegedly embezzled as much as $500,000 in tuition, fees and donations and purportedly spent some of the money on trips and gambling at casinos while telling parents the school was operating on a shoestring budget.

The Long Beach Press-Telegram reports the apparent theft came to light  when the church’s St. James Catholic School announced that it had notified police that Sister Mary Margaret Kreuper, and Sister Lana Chang, who both had retired earlier this year, were “involved in the personal use of a substantial amount of school funds.” Kreuper was the principal, and Chang was a teacher.

School officials say the nuns had expressed remorse, and the archdiocese and the church did not want to pursue criminal charges.

The $500,000 figure represents only what auditors have been able to trace in six years’ of bank records and might not include other cash transactions, officials from the Archdiocese of Los Angeles told parents and alumni at a meeting.

Michael Meyers, the church’s monsignor, says the archdiocese launched an internal investigation six months ago after the organization performed a standard audit of procedures ahead of Kreuper’s retirement after 28 years at the school.

Kreuper became “very nervous and very anxious” about the upcoming financial review and requested that the staff alter records, the monsignor says. He alerted an archdiocese internal auditor performing the review that “something was off” and that the auditor confirmed his suspicions.

The improper use of the funds had been going on for at least 10 years, Meyers says.

A retired FBI agent hired by the archdiocese interviewed school staffers and the nuns.

“When he was talking to Sister Mary Margaret, she did acknowledge that she had been taking all the money, so that’s not a question,” Meyers says.

Audtiors described a system in which Kreuper handled all checks made out to the school for tuition and fees before handing them over to bookkeeping staff for processing. The principal allegedly withheld some of the checks and deposited them into a different account, endorsing the back with a stamp that read, “St. James Convent” instead of “St. James School.”

The sisters used a majority of the money for “personal gain,” officials say.

The archdiocese is cooperating with Torrance police, but is unwilling to be a “complaining party,” archdiocese lawyer Marge Graf says. The nuns’ order, the Sisters of St. Joseph of Carondelet, has agreed to pay the school full restitution and impose “severe sanctions” on Kreuper and Chang.

Many parents are outraged with the decision not to press charges. Some assert that if the nuns were lay people, they would certainly be in jail. Others want the restitution to be used to give teachers pay raises and for expenses they said Kreuper claimed the school could not afford, such as awnings for an outdoor eating area.

Some parents say it was well-known that Kreuper and Chang traveled often and went gambling, but that they claimed they were gifted the trips by a rich relative.

“These nuns took a vow of poverty and said, ‘Oh no, we’ve got a rich uncle,’ ” parent Jack Alexander said. “The rich uncle was the parents of the St. James students.”

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