Aspen’s enduring embezzlement problem
Aspen is still the little mountain outpost of old where trusting residents frequently leave their front doors unlocked and car keys on the floorboards.
And while the upper Roaring Fork Valley is mostly free of the violent and rampant property crime that sets more populated areas apart, there is one crime that seems to arise here with regularity: embezzlement.
“Aspen remains a small town,” said Don Nottingham, deputy district attorney who works in Aspen. “And one of the things people love is that small-town feel. We feel like we know each other.
“But the difference between Aspen and most small towns is there’s a lot of money here.”
The latest — and by far largest — example of this long-term trend is the $6 million worth of skis, snowboards and other equipment stolen over approximately 15 years by former Aspen Skiing Co. executive and Aspen City Councilman Derek Johnson and his wife, Kerri Johnson. Prosecutors say the couple made more than $3 million from the early 2000s to late 2018 selling the equipment on eBay despite the fact that Derek Johnson earned more than $115,000 a year in salary by 2017.
Derek Johnson, 52, was sentenced to six years in prison last month after pleading guilty to felony theft. Kerri Johnson, 49, avoided prison but currently is serving a 90-day sentence at the Pitkin County Jail, and will spend five years on probation after that for pleading guilty to felony theft.
“The people you work with here are your neighbors — whether it’s at Skico or The Aspen Times,” Nottingham said. “It allows us to trust people more. The other side of that is when theft happens (here), it’s maybe theft from your neighbor or a family member and it becomes a much more personal betrayal.”
While the $6 million worth of goods stolen by the Johnsons is easily the largest known embezzlement case ever from Aspen and the Roaring Fork Valley, the massive theft and breach of trust is just the latest in a long, rich line of betrayal by employees who somehow gained money management positions with little to no oversight.
“It tends to happen a lot … because we’ve got lots of money here,” said Aspen Assistant Police Chief Bill Linn. “When you hire someone and put them in charge of your money — if you don’t stay on top of it, bad things can happen.”
The late Pitkin County District Court Judge J.E. DeVilbiss remarked on the trend 20 years ago when he lowered the prison sentence from 24 years to 12 for former Boogie’s Diner bookkeeper Linda Mae Fratis, who admitted stealing $1.7 million from the popular eatery in the 1990s.
“DeVilbiss told the courtroom he’s noticed embezzlements happen frequently in Aspen when an employee gets ‘an awful lot of slack in managing money or access to money,’” according to an Aspen Times story from July 2002.
Jeff Fain, a longtime Aspen police detective and now an investigator with the 9th Judicial District Attorney’s Office in Glenwood Springs, said not much has changed in the interim years.
“I feel like there is a level of trust in the (Aspen) community that’s inevitable,” he said. “But I feel like that trust can be exploited, as well. We feel like we can let our guard down and let people do things without supervision.
“People just don’t expect (embezzlement or fraud) to be coming.”
And the cases that have come to light are probably not the only cases of embezzlement that have occurred in the Aspen area in recent years, said Fain and Pitkin County Undersheriff Ron Ryan.
“I think it happens a lot more than we’re aware of,” Ryan said. “A lot of it is inside (a company) and they would rather deal with it internally than report it to us.”
According to a 2017 study by international insurance company Hiscox, 55% of embezzlements in the U.S. in 2016 occured at companies with fewer than 100 employees, 37% involve someone in the financial or accounting departments and nearly a quarter of cases ring up losses of $1 million or more. The average age of those who embezzle is 48, while 51% of cases are committed by women and nearly 29% involve schemes that lasted more than five years, according to the study.
With the exception of Derek Johnson, all of Aspen’s top embezzlers have been women.
Fratis — who was estimated to have actually stolen closer to $4 million from Boogie’s — comes in second on the all-time list of known Aspen embezzlers. She’s followed by Marlana Lu Howell, who stole more than $700,000 while working as a bookkeeper at Anderson Ranch in Snowmass Village from 2007 to 2009, Shannon Nagle, who embezzled more than $660,000 from her sister’s medical clinic in 2015 and 2016 while serving as office manager, and Sarah Hart, who took more than $500,000 while managing an Aspen shoe store in the 1990s.
But there’s plenty more.
A dog-walker stole her wealthy employer’s checkbook in April 2017 just before she was fired, then proceeded to write herself $160,000 worth of checks over the next nine months. The head of the Red Brick Center for the Arts, a city of Aspen-owned nonprofit, helped herself to $125,000 between 2014 and 2017 partially to prop up her failing snowboard business. A former bookkeeper for the Aspen Valley Land Trust admitted stealing $105,000 from that nonprofit in the early 2000s to pay her personal expenses.
Others take smaller amounts.
A former teller at the Aspen office of the Grand Junction Federal Credit Union embezzled more than $40,000 from member accounts, including Assistant Police Chief Linn’s, in 2012. An attorney for the Roaring Fork Transportation Authority pleaded guilty in 2013 to charging $30,000 in personal expenses, including golf, to his company credit card. An administrator for a local insurance agent admitted stealing $6,000 in 2014.
“Sometimes it’s really big and sometimes it’s really petty,” Linn said. “You give someone access to money and that temptation gets the best of them.”
And don’t forget Aspen’s community-wide embezzlement deception: The parking scam that occurred between 2010 and 2014 and led to more than $600,000 in city losses, for which no one was criminally charged. In that scheme, mainly local drivers used maxed-out, prepaid debit cards to fool the meters, which approved the parking despite the fact that the cards were later declined when they were processed at the end of the day.
“That was an interesting twist on it,” Fain said. “That was theft by the citizens of Aspen from the city of Aspen.
“People were like, ‘Forget this rich city of Aspen. I’m gonna steal from them.’”
Still, in terms of amount stolen, length of time and the number of people impacted, the Johnsons’ theft dwarfs any previous Aspen embezzlement cases.
The couple’s crimes “absolutely” cut deeply for employees who missed out on bonuses, 401k contributions and promotions because of the Johnsons’ actions, but also for Skico executives who worked alongside Johnson for nearly two decades and called him a friend, Nottingham said.
“If I was in the skin of the people personally betrayed, it’s hard not to look back on the time spent with the Johnsons and think, ‘We were being stolen from right then,’” he said. “‘You stole stuff while we were working together — while we were friends.’”
Indeed, in a letter to Judge Chris Seldin before Derek Johnson’s sentencing, a Skico senior vice president said he’d been friends with him for a decade, their families regularly interacted, they traveled in the same circles and had the same friends. Upon discovery of the embezzlement, he wrote “that I really didn’t know this man at all.”
“The crime impacted every aspect of my personal and professional life,” he said. “I couldn’t sleep for months and this continues to take a tremendous toll.”
Skico CEO Mike Kaplan called discovering the theft “one of the most heartbreaking experiences for me in my 25-plus years at the company.”
“Derek was part of a core group who’d been with the company for nearly two decades,” Kaplan wrote. “The initial feeling resulting from what he had done was that the company had been betrayed by a person who felt as much like a family member as a coworker.”
In the aftermath, Skico is a different company, current executives said.
“… Derek’s actions have forced us to balance that culture with a more dispassionate pragmatism,” Kaplan wrote.
The senior vice president wrote of Skico spending “significant monies on loss prevention measures and systems upgrades” meant “to protect our assets and employees and ensure crimes like this never happen again.”
A man who worked for eight years with Johnson — who served one term on the Aspen City Council from 2009 to 2012 and ran unsuccessfully for mayor in 2013 — in Skico’s rental/retail division said the former executive left the company with “serious trust issues.”
“Because of the magnitude of Derek’s crimes, upper management lacks trust in the rental/retail employees … and we underwent an upheaval in company policy to prevent this from happening again,” the man wrote in a letter to Seldin before Johnson’s January sentencing. “We have had privileges taken away from us and our day-to-day duties have been put under a microscope even though we didn’t do anything wrong.”
David Clark, Skico vice president and associate general counsel, succinctly summed up the reason Johnson was able to get away with his scheme for long.
“The answer is simple,” he said at Johnson’s sentencing in January. “We trusted Derek Johnson.”
That deep-seated sense of betrayal extends to many of the other large and small embezzlement cases that have occurred in the Aspen area during the past 25 years.
Leonard “Boogie” Weinglass, owner of the now-defunct Boogie’s Diner, expressed similar sentiments 20 years ago, when his former bookkeeper was sentenced.
“When you trust somebody, you trust somebody,” Weinglass said in March 1999, according to an Aspen Times story. “But I feel like an idiot today. Everyday for nine years she came to work and carried this out. It was all premeditated.”
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