Lake Forest Park woman being investigated for embezzlement

Kids’ Club provides after school care and a summer camp
for more than 100 families at Capitol Hill’s Stevens Elementary
Photo courtesy Capitol Hill Seattle

From our news partner, Capitol Hill Seattle Blog

By Bryan Cohen

Multiple trips to Disneyland and Hawaii, a new car, a pet retreat, and thousands of dollars in college tuition payments — all paid for by the director of a children’s after school program in Capitol Hill, allegedly using the Kids’ Club bank account.

According to the lawsuit and police report, recently obtained by CHS after a public records request, for three years ending in 2011, Cathy Reed stole more than $236,000 from her former employer, Kids’ Club at 18th Ave’s Stevens Elementary. According to the allegations, Reed used the Club’s money like it was her own personal bank account. The roster of alleged transactions runs more than 15 pages of the 24-page suit against her.

Kids’ Club runs before school and after school programs, as well as a summer camp, from the Steven’s Elementary School campus at 18th and Galer.

This is the first time the allegations against Reed have been revealed to the public.

Month by month the Kids’ Club civil suit, filed in April in King County, documents Reed’s alleged spending spree as she used the nonprofit’s checks and credit cards to buy everything from the lavish to the mundane. In some transactions, the complaint alleges she spent thousands of dollars of the nonprofit’s money on vacations and tuition fees at Washington State University, where her daughter attended. Other times, it was a few dollars for coffee and a purchase at the Wallingford toy store, Archie McPhee’s.

The allegations of Reed’s amazingly brazen embezzlement included giving herself unauthorized raises and bonuses totaling $62,500 and spending nearly $175,000 in unauthorized personal purchases. The director’s role was authorized for a salary of $42,000 a year when she took the job in 2007. The board authorized a raise to more than $45,000 in 2008. The next year, according to the lawsuit, Reed took matters into her own hands by increasing her salary to more than $50,000. The organization’s lawyers say, by that time, she had already begun abusing the Kids’ Club credit card and bank accounts starting with a March transaction:

In the beginning, the Kids’ Club and its board were apparently oblivious to the alleged embezzlement. While the suit says Reed allegedly began stealing thousands of dollars from Kids’ Club as early as 2008, only six months after she was hired, no one in the organization appears to have said anything until 2011. Current board president Kari Kaill told CHS she couldn’t comment on the previous board’s actions.

Kaill said she joined the volunteer board in September 2011, shortly before Reed was fired in December.

CHS attempted to contact Reed several times without success. At the Reed’s home in Lake Forest Park, a man who identified himself as her husband told CHS she was not home Tuesday evening and declined to comment further on the case. Calls to a number listed for the Reed household have gone unanswered.

In May, Kaill reported Reed’s alleged embezzlement to Seattle Police. The case is being handled by SPD’s fraud unit, according to the police report.

“We aren’t seeking attention with this,” Berntsen said, who is only representing Kids’ Club in the civil case. “[Kid's Club] just wants their money back.”

According to court documents, Reed allegedly stole at least $236,000 from the nonprofit program including these local expenditures:

• September 2008 - Kids’ Club check for $21 check to Shorecrest High School.
• October 2010 - $1,307 to the Shorecrest High School booster club.
• November 2011 - Reed wrote a $3,800 Kids’ Club check made out to the City of Lake Forest Park, where she lives.