Accountant stole $550K from KC hospital nonprofit, spent on shopping, travel, drugs

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A Kansas City woman pleaded guilty Tuesday to embezzling more than $550,000 from a nonprofit that serves St. Luke’s Hospital.

Kathleen Frederico, 51, was charged in federal court with one count of wire fraud, according to the Office of the U.S. Attorney for the Western District of Missouri.

Frederico was the accounting and special projects manager for the Saint Luke’s Foundation from May 1999 until she was terminated in February 2018. The foundation supports Saint Luke’s Hospitals and Health Systems with funding for medical and nursing education, charity care, research and medical programs.

The embezzling began in June 2003 and continued until March 2017, prosecutors said.

In her guilty plea, Frederico admitted to conducting two fraudulent schemes. In the primary scheme, she created unauthorized checks made payable to herself. She entered a different payee into the ledger and created or falsified corresponding invoices to conceal the embezzlement. Evidence showed she stole at least $452,342 under this arrangement.

Frederico also created unauthorized checks in which the foundation paid her personal credit card bill and, on two occasions, a relative. She collected at least $105,333 using this method.

An investigation revealed how Frederico used the stolen money, spending more than $150,000 on shopping and retail; more than $21,000 on internet drug purchases and more than $30,0000 on travel. She also used it for mortgage payments and other living expenses.

According to the foundation, an independent audit in 2018 revealed potential financial misconduct, which was reported to authorities. Another review was conducted to ensure best practices in financial oversight and management were in place.

The foundation said Tuesday it was grateful to law enforcement for the successful resolution of the case.

Frederico faces up to 20 years in federal prison. A sentencing hearing has not yet been scheduled.

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Luke Nozicka covers local crime and federal courts for The Kansas City Star. Before joining The Star, he covered breaking news and courts for The Des Moines Register.
Katie Moore covers crime and justice issues for The Star. She is a University of Kansas graduate and was previously a reporter in her hometown of Topeka, Kansas.