Nun who ran Catholic school in Torrance accused of embezzling $835K

The retired principal of a Catholic elementary school in Torrance, who as a nun took a vow of poverty, confessed to fraud and money laundering charges involving the theft of more than $835,000 in school funds to pay for personal expenses, including gambling trips, federal prosecutors announced.

Mary Margaret Kreuper, 79, of Los Angeles, was charged Tuesday with one count each of wire fraud and money laundering. In conjunction with the criminal information, prosecutors filed a plea agreement in which Kreuper agreed to plead guilty to the two charges, which carry up to 40 years in federal prison, according to the U.S. Attorney's Office.

Kreuper has agreed to appear in federal court in Los Angeles for arraignment on July 1.

Her attorneys issued a statement saying that Kreuper, who they called Sister Mary Margaret, "is very remorseful for what happened. As soon as she was confronted, she accepted full responsibility for what she had done and she has cooperated fully with law enforcement and the Archdiocese.''

According to defense attorneys Mark A. Byrne and Daniel V. Nixon, Kreuper became a nun when she was 18 years old, and for the next 59 years "dedicated her life to helping others and educating children in Archdiocesan schools. Unfortunately, later in her life she has been suffering from mental
illness that clouded her judgment and caused her to do something that she otherwise would not have done. She is very sorry for any harm she has caused.''

For a period of 10 years ending in September 2018, prosecutors allege Kreuper embezzled money from St. James Catholic School. As principal -- a position she held for 28 years before she retired -- Kreuper was responsible for the money the school received to pay for tuition and fees, as well as for
charitable donations. 

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Kreuper controlled accounts at a credit union, including a savings account for the school and one established to pay the living expenses of the nuns employed by the school, prosecutors said.

Kreuper diverted school funds into the St. James Convent Account and the St. James Savings Account and then, as she admitted in her plea agreement, used the 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.''

Kreuper further admitted that she falsified monthly and annual reports to the school administration to cover up her fraudulent conduct and "lulled St. James School and the administration into believing that 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, continue operating the fraudulent scheme.''

Prosecutors also allege that Kreuper directed St. James School employees to alter and destroy financial records during a school audit. Kreuper admitted that, over the course of the scheme, she caused losses to St. James Catholic School totaling $835,339, according to the U.S. Attorney's Office.