KC Woman Sentenced for Embezzling $547,000 from Health Care Foundation

KANSAS CITY, Mo. – A Kansas City, Mo., woman was sentenced in federal court today for embezzling almost $547,000 from the health care foundation that employed her as an accountant.

Kathleen Frederico, 52, was sentenced by U.S. District Judge Greg Kays to two years and three months in federal prison without parole. The court also ordered Frederico to pay $546,603 in restitution.

Frederico was employed as the accounting and special projects manager at Saint Luke’s Foundation, a non-profit organization established to support Saint Luke’s Hospitals and Health Systems with funding for medical and nursing education, research, charity care, and medical programs, from May 7, 1999, until she was terminated from employment on Feb. 23, 2018.

Frederico, who pleaded guilty to wire fraud on June 4, 2019, admitted that she conducted two related fraudulent embezzlement schemes over a 14-year time period while employed at Saint Luke’s Foundation. According to court documents, an auditor hired by the foundation found that Frederico had embezzled nearly $1.2 million. However, because bank records were not available for the earliest years, the government’s evidence is that Frederico stole at least $546,603 from the foundation.

She began embezzling from the foundation in June 2003 and continued to embezzle until March 29, 2017. The investigation has revealed Frederico’s spending of the embezzled funds included more than $150,000 on shopping and retail; more than $67,000 in cash; more than $30,000 in travel; more than $21,000 in internet purchases to support her illegal drug habit; and mortgage payments, utility bills, and other living expenses.

In the primary fraud scheme, Frederico created unauthorized checks made payable to herself. To conceal the embezzlement, she entered a different payee into the general ledger and created or falsified corresponding invoices. Through this method, Frederico embezzled at least $441,268.

Frederico also created unauthorized checks in which the foundation paid her personal credit card bill, and on two occasions, a relative. The government’s evidence is that through Frederico’s second fraud scheme, she embezzled at least $105,333.

This case was prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney. It was investigated by the FBI.