As reported yesterday, the former CFO of the Milwaukee Public Museum has been charged with four criminal counts against him for his part in the raiding of the organization’s endowment fund.

Here is a summary of the criminal complaint against Terry Gaouette:

Count 1 – Theft By Officer – From March 1, 2004 and February 28, 2005, transferred money out of the endowment fund without the owner’s consent.

This relates to the transfer of endowment funds into an operating account for the Museum. The endowments funds were not to be used for regular operating expenses, except for a very small amount (3%) each year. The Milwaukee Public Museum Endowment Fund Board was not aware that funds were being used for operating expenses. By March 2004, the endowment fund had been exhausted.

At a March 12, 2004 Endowment Fund Board meeting, Gauoette stated that the museum’s operating budget was now based upon the endowment’s draw down policy. He further stated that the endowment fund was preserved, when a transfer of $500,000 out of the endowment fund was done on March 11, 2004.

When confronted by museum controller Gail Boym, Gauoette stated that he was authorized to borrow money from the endowment fund for operating expenses.

The total transferred without authorization was $3.8 million.

Count 2 – Fraudulent Writings – On May 16, 2003, falsified a record.

A report prepared by Gaouette indicates a balance of $6,127,673 in an investment account, when that money did not exist.

Count 3 – Fraudulent Writings- On June 4, 2004, falsified a record.

Gaouette reported to the Endowment Committee that the Endowment Fund was $1 million lower
than the previous quarter because of a transfer of $500,000 for the final payment to M&I for bond
reduction, and two other transactions. The $500,000 bond payment was not made.

Count 4 – Fraudulent Writings – On September 10, 2004 , falsified a record.

A report from Gaouette indicated funds available included $4.6 million investable and $1.1 million cash. He also reported that no draws or requests for trust activity were made in the six months ending June 30, 2004. The cash of $1.1 million did not exist, and draws of $1.825 million were made from the investment accounts in the six months.

The first count has a maximum penalty of $25,000 fine and 10 years in prison. Counts 2 through 4 have maximum penalties of $10,000 fine and 6 years in prison each.