With each new school year, fresh checks for tuition and fees streamed into the principal’s office at St. James Catholic School in Torrance, Calif.
But for 10 years, those checks, along with donations, scarcely made it to the school’s bank account.
Instead, the school’s principal, Sister Mary Margaret Kreuper, 79, was stealing the money and using it to bankroll her gambling habit, federal prosecutors said, violating her vow of poverty.
On Tuesday, prosecutors charged the now-retired nun with wire fraud and money laundering for embezzling more than $835,000 from the school. Kreuper pleaded guilty and is due in court for arraignment on July 1.
In a statement to The Washington Post early Wednesday, Kreuper’s lawyers, Mark A. Byrne and Daniel V. Nixon, said she is “very remorseful” and “sorry for any harm she has caused.”
“As soon as she was confronted she accepted full responsibility for what she had done and she has cooperated completely with law enforcement and the Archdiocese,” the statement said, noting that “later in her life she has been suffering from a mental illness that clouded her judgment and caused her to do something that she otherwise would not have done.”
Kreuper was 18 years old when she took vows of poverty, chastity and obedience, according to her lawyers, and spent the next 59 years of her life dedicated to the church. In 1990, she became principal at St. James Catholic School, a tenure that lasted 28 years.
It was only once Kreuper retired in 2018 that the school, which is about 20 miles southwest of downtown Los Angeles, said it learned of her schemes. As the Archdiocese conducted a financial review for the new principal, it noticed something was off in the documents.
As principal, Kreuper was in charge of the school’s credit union account, where she was meant to deposit cash and checks from tuition, fees and donations. Kreuper also oversaw the St. James Covenant Account, a savings account that funded the living expenses of the nuns who worked at the school, according to the indictment.
In 2008, Kreuper began depositing tuition checks and donations into the school’s account, and then diverting the money into the covenant account, she admitted in her plea agreement. Then she used that some of the money herself.
“Without the knowledge and authorization of St. James School or the Administration, defendant Kreuper then used diverted funds … to pay for expenses that the order would not have approved, much less paid for, including large gambling expenses incurred at casinos and certain credit card charges,” the indictment said.
To cover her tracks, Kreuper falsified the school’s monthly and annual financial reports, she admitted in the plea agreement. She also failed to produce receipts from moving the money into the covenant account or from withdrawing money for her own use.
“By falsifying these reports in this way, defendant Kreuper lulled St. James School and the Administration into believing the school’s finances were being properly accounted for and its financial assets properly safeguarded, which, in turn, allowed defendant Kreuper to maintain her access and control of the school’s finances and accounts and thus, to continue operating the fraudulent scheme,” the indictment said.
Prosecutors added that during a school audit, Kreuper instructed school employees to “alter and destroy financial records.” Her scheme lasted until around September 2018, when she retired.
Archdiocese officials notified police about the embezzlement in November 2018 after finishing the audit.
After admitting that she stole at least $835,339 over the course of ten years, Kreuper now faces up to 40 years in federal prison.
“The community of faith at St. James was shocked and saddened by these actions,” the Archdiocese of Los Angeles said in a statement to The Post. “The Archdiocese and St. James Parish and School are grateful to local and federal law enforcement agencies for their work in the investigation of this matter.”