Oh My Fraud

What do the Catholic Church and Oh My Fraud have in common? They both regularly feature absent internal controls, important figures abusing their positions of trust, and are run by people who drink wine on the job. In this episode, Caleb and Greg chronicle the story of a high-ranking cardinal who wound up in a convoluted real estate deal.

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(00:00) - The Catholic Church Loves Real Estate
(01:27) - Welcome to 'Oh My Fraud' Podcast
(01:54) - Listener Email and Show Themes
(03:15) - Fraud in the Catholic Church
(08:59) - Understanding Simony and Priestly Fraud
(14:28) - Historical Context of the Catholic Church
(18:45) - The Vatican's Real Estate Ventures
(22:08) - The Italian Connection: Gianluigi Torzi
(24:05) - Torzi's Bold Extortion Scheme
(26:57) - The Aftermath: Arrests and Losses
(30:14) - Cardinal Becciu's Questionable Transactions
(32:45) - The Trial and Sentencing
(35:54) - Lessons Learned: No One is Above Scrutiny
(44:44) - Conclusion and Final Thoughts

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CONNECT WITH THE HOSTS

Greg Kyte, CPA
Twitter: https://twitter.com/gregkyte
LinkedIn: https://www.linkedin.com/in/gregkyte/

Caleb Newquist
Twitter: https://twitter.com/cnewquist
LinkedIn: https://www.linkedin.com/in/calebnewquist/

Email us at ohmyfraud@earmarkcpe.com

Sources:

Giovanni Angelo Becciu — Wikipedia

Cardinal Becciu Convicted: Six Things to Know About the Prelate and His Trial — National Catholic Register

A cardinal is convicted of embezzlement and sentenced to 5 1/2 years in Vatican trial — NPR

Cardinal Becciu Speaks of ‘Drawing Up a Balance Sheet’ of One’s Life Before God in Homily — National Catholic Register

The Vatican, a Chelsea property deal and Brexit — Financial Times

How the Vatican plans to make and spend its money in 2022—and be more transparent about it — America Magazine

Cardinal convicted of fraud in Vatican court case protests his innocence - Financial Times

A brief history of the Vatican’s London financial scandal — The Pillar

Why priests steal — researchers look to ‘fraud triangle’ in parish life — The Pillar

Parolin pressured Vatican bank over London building deal — The Pilar

Cardinal convicted of embezzlement in landmark Vatican court case — Financial Times

Creators & Guests

Host

Caleb Newquist

Host

Greg Kyte, CPA

Mega-pastor of @comedychurch and the de facto worlds greatest accounting cartoonist.

What is Oh My Fraud?

"Oh My Fraud" is an irreverent podcast from CPA/comedian Greg Kyte and blogger/former CPA Caleb Newquist.

The two come together to unpack their favorite frauds and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulge in victim-blaming the defrauded widows, orphans, infirm and feeble-minded—because who can resist?

If you fancy yourself a trusted advisor—or prefer your true crime with spreadsheets instead of corpses—listen to this show to learn what to watch out for to keep your clients, your firm, and even yourself safe.

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript

Greg Kyte: Chelsea is this ultra posh area of London. Luxury homes, high end restaurants, snooty boutiques. Think Rodeo Drive but super British. So somehow even worse. So then you think, what the fuck was the Vatican doing? Investing €350 million to develop luxury apartments in Chelsea? When I think about how any church should spend its money, I'm thinking homeless shelters and soup kitchens, not [00:00:30] homes for the ultra rich. But here's the thing. It's strange how not strange that is for the Catholic Church. In 2022, the Vatican's budget showed that it expected to receive $877 million of income. 65% of that came from sources like real estate management and commercial investments. But donations you know how most churches get their money only make [00:01:00] up like 30% of the Catholic Church's budget.

Earmark CPE: If you'd like to earn CPE credit for listening to this episode, visit. Earmark Cpcomm. Download the app. Take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Greg Kyte: Hello and welcome to Oh My Fraud, a true [00:01:30] crime podcast where our criminals don't buy indulgences, they sell indulgences and skim a little off the top. I'm Greg Kite. And I'm.

Caleb Newquist: Father Caleb.

Greg Kyte: Well, welcome, father. Caleb. Uh, peace be with you. May, just may you allow me the indulgence to read a listener email real quick.

Caleb Newquist: Proceed, my son.

Greg Kyte: And blessings upon you. Uh, listener Nick wrote us, and he said, uh, I just wanted to write a quick note to [00:02:00] tell you how much I appreciate the podcast. I'm a CPA, and it's really helpful to hear so many examples of internal controls being ignored, or opportunities for people entrusted positions to attempt fraud. At this point, I'm not even listening for the CPA. It's just really enjoyable.

Caleb Newquist: Man, Nick really nailed it. Lack of internal controls and people abusing their position of trust have become two of the main themes of this show, right?

Greg Kyte: That's almost a tagline for oh my fraud.

Caleb Newquist: Yeah, [00:02:30] right. If you like it when people abuse their positions of trust or when companies lack internal controls and honestly, who doesn't? Who doesn't take a minute to write us a review? Who knows, we might even read yours on the show.

Greg Kyte: Also, if your firm is looking for in-house ethics or fraud training, that doesn't suck. We do that. We also do keynote addresses at events and conferences. And don't worry, we're pros. We can work clean, you know, if you want us to.

Caleb Newquist: Yeah, If you like it clean. [00:03:00]

Greg Kyte: If you do, we get.

Caleb Newquist: So if you want more information on pricing and availability, send us an email at my fraud at earmarks e.com.

Greg Kyte: Awesome. So Caleb. Yes. Back back to Nick's email that we just read. Yes. When I think of notable organizations that have multiple examples of people who have abused their positions of trust. Uh, the Catholic Church definitely comes to mind. Uh, arguably hard to find [00:03:30] an organization that could top it in terms of examples of abusing positions of trust.

Caleb Newquist: Yeah. I, uh, I got nothing for you, Greg. Uh, well, you're.

Greg Kyte: You're you've said before on on shows, you're Catholic adjacent.

Caleb Newquist: I'm Catholic adjacent. I've been Catholic adjacent for, uh, let's see, a dozen years or so now. Right. And, um, you know, it's.

Greg Kyte: Because you're your wife. I married [00:04:00] a.

Caleb Newquist: Catholic. Yeah, I married a Catholic, and she's super Catholic, like it isn't. It isn't like one of those kind of like, you know, your your average, kind of, like, cafeteria Catholic. She's like, she has she has, she has an uncle who has passed. He was a priest. She has an aunt who is a nun who's actually a very lovely woman and who actually texted me on my birthday, which was just yesterday, uh, as of this recording.

Greg Kyte: That that's the that's.

Caleb Newquist: She's. This lady is so sweet. Like, she stays with us when she visits. Yeah. And like, oh, my God, she's amazing. Yeah. Um, so [00:04:30] and and, you know, on the big holidays, Easter and Christmas, like, we, we definitely go to mass and with the kids and and the and my, my, um, my wife's sister's family and stuff, so. Yeah. So, yeah, a lot of Catholic going on in the last decade or so of my life and I and yeah, we were married in the church, which I wasn't necessarily crazy about, but, you know, it was just one of those things you do, you know.

Greg Kyte: Yeah, sure. Well, but but I think, like like the stories about [00:05:00] your aunt or your. Wait, your wife's aunt, who's the nun who's just a lovely person. I think that actually underscores something that that probably not a bad idea to address right off the bat is that we are 100% aware of the fact, just like, you know, Enron was a horrible scandal. But the rank and file people at Enron, I'm sure, were not wonderful, nice people.

Caleb Newquist: Regular people.

Greg Kyte: That didn't do a goddamn thing wrong. That's right. Yes. And and same thing with the Catholic Church. [00:05:30] These are people who've dedicated their lives to the service of the of, you know, to be the the love of Christ to the people around them. And, and and I'd say most people who do that, they do a pretty damn good job of being that. So so when we talk about scandal, and that's one of the things that I think makes religious scandals so notable and so memorable, is that you're, like, going, ooh, even there you can get [00:06:00] some. Yeah. Bad actors.

Caleb Newquist: Well, I'll tell you that. The priest that married us, who was who is a lovely man, um, he, um, and who we were very fond of are still very fond of, um, when we would have conversations with him about that, you know, and I think this is probably standard, the standard line for priests. But he's just like the, the, the church is made up of people, and people are people [00:06:30] are imperfect. People make mistakes. And I'm sure there's lots of priests out there that who basically that's that's their explanation for, like you say, people abusing, uh, the, the, their, their positions of power and trust. Yeah. Um, and I think what it's tough because it's just one of those things where, yes, that's true, [00:07:00] and it has happened repeatedly, which suggests that there is something greater than just flawed people making bad decisions. And well, and like, I don't know, maybe we shouldn't be. So I shouldn't be so euphemistic, but like abusing people, right. Or whatever, whatever kind of form of like, bad behavior it takes. Yeah, but there's something about the system that is allowing people to do [00:07:30] these things that they shouldn't be doing, abusing their power and their positions of trust. And it was happening repeatedly for for decades. And I don't know, that is hard to explain away with. Well, there's just a few bad apples. Well, okay.

Greg Kyte: So so also and I'm picking up what you're putting down because also maybe at the top where we should also say by no means take our comments in any way as an excuse for some of the truly reprehensible behavior that has. Because when you talk about scandals [00:08:00] and covers, you know, attempted covers, up covers ups, covers ups, covers ups of scandals, that's, that's that's, uh, that is, uh, just objectively, uh, some bad. That's terrible. Yeah. You just can't label it any objectively.

Caleb Newquist: Yeah. Abjectly terrible. Yeah. Exactly. The worst.

Greg Kyte: So? So if you haven't figured it out yet, uh, today's episode is all about the Catholic Church and what the Italian media has dubbed the Catholic [00:08:30] Church's, quote, trial of the century.

Caleb Newquist: It's probably premature. Only 24 years into the century to call something that Catholic churches trial of the century, especially considering the Catholic Church's proclivity for doing. How do we say this delicately? Some fucked up shit.

Greg Kyte: Unfortunately, the Catholic Church is no stranger to fraud. One [00:09:00] specific type of fraud that I just learned about Caleb is and this is I believe this is specific to the Catholic Church, although it's it's probably does have broader reach, but it's called simony. That's where someone is appointed to a church office in a corrupt fashion.

Caleb Newquist: For there's a word. There's a word for that exact thing. There is.

Greg Kyte: Yeah. And it comes from even if you look at the what is it? What do they call it? The etymology of the word. Yes. It it's some deep cut about [00:09:30] somebody in the Bible named Simon who did did something wrong that they wait.

Caleb Newquist: Simon Peter like Jesus. Not like best.

Greg Kyte: Buddy. Different. There's so many Simon's. There's a lot of Simon's. You gotta. You gotta really dig for this, Simon. There's a lot of Simon's. There are, but it's called Simon. So here's some examples of of Simon. Um, so let's say a priest were to pay a bribe to become a bishop. Boom! Okay. That's simony. Or let's say, if [00:10:00] Pope Nicholas the Third were to have distributed Papal States nepotistically among members of his own family, giving them land and power, resulting in Pope Nicholas the Third being put on blast in Canto 19 of Dante's Inferno. That is also simony. Uh. Did that.

Caleb Newquist: Really happen?

Greg Kyte: That that really did happen? Yeah, that absolutely happened. That's fantastic. Which is actually kind of awesome too, that. Have you ever read Dante's Inferno?

Caleb Newquist: No, I.

Greg Kyte: Haven't. Neither have I. Okay. Nor have I read what? Divine [00:10:30] comedy. I haven't read either of those. Oh, right. I believe I own both of them, but they're a little bit intimidating for, uh, dum dum Greg, uh, to get through. But I do think it's kind of cool that he used his books to actually, uh, talk shit about real people. I think it's fantastic in his in his works of literature, but and.

Caleb Newquist: And let me just say, I think, Greg, for the second half of the century of your life, uh, maybe you should go back and get a classics major. I'm just [00:11:00] maybe throwing that out there. It's so.

Greg Kyte: Funny. I that was one of the majors. That was interesting to me when I was, uh, before I chose math, uh, so that, uh. Yeah. So that happened. Um, but here's another another fun fact, Caleb, I personally find it delightful that someone who commits the act of simony is called a simoniac. Uh, which does, in fact make Simoniac the oh, my fraud word of the day. Try to use Simoniac casually [00:11:30] among your colleagues at work. If you're successful, you will be able to sit alone at lunch for the rest of the year, completely undisturbed, because no one will want to be your friend anymore. What's that word?

Caleb Newquist: Simoniac.

Greg Kyte: Boom! Historically, in the Catholic Church, there has also been plenty of embezzlement. Uh, we found one study that identified five common modern day fraud schemes employed by what they referred to as, quote, priestly [00:12:00] fraudsters. Another great title given to people, uh, here's and here's the list of the five five common fraud schemes. Um, taking cash directly from the weekly collection box. Boom. Makes sense. Two diverting checks payable to the parish into one's personal accounts. Makes sense. Why not? Third, improper reimbursement of personal expenses. These really are making a lot of sense [00:12:30] for using secret bank accounts in the church's name as a slush fund. Kind of has a little Rita Crundwell of Dixon, Illinois, uh, vibe on that one. Yeah. Yeah. And and five coercing vulnerable elderly parishioners, primarily widowed females, to give money to the parish or directly to the priest under false pretenses. You know, making Jesus proud by stealing from widows and orphans. Uh, [00:13:00] it's all right there. Classic, classic. And the study. The study goes on to say this, and I think this is very this is this was an interesting, uh, observation that they made. They said Catholic priests would seem to have a strong ability to commit fraud. They command local positions of unchallenged authority over cash generating operations with weak internal controls. Sounds familiar. Again, the catch phrase for the podcast and for many [00:13:30] priests also exist as citizens above suspicion for misdeeds such as fraud.

Caleb Newquist: Here are a few more fun facts. According to Catholics, the Catholic Church started with Jesus and the first pope was the Apostle Peter. According to scholars who are for sure going to hell. The Catholic Church started 600 years after Jesus, and the first pope was Pope Gregory the Great. Nice name, by the way.

Greg Kyte: A terrific one of the one of my favorite [00:14:00] popes, honestly.

Caleb Newquist: As you remember from your first period World Civ class, from your junior year of high school, the Catholic Church got a huge bump in popularity in 313 AD, when the Roman Emperor Constantine converted and finally made it legal to be a Christian. It made the pitch easier to new converts. You get to go to heaven, and now you don't even have to die in the Colosseum first. Just to be clear, Constantine didn't make Christianity the religion of the Roman Empire, but his conversion arguably [00:14:30] made Christianity cool. Kind of like what Tom cruise did for Scientology.

Greg Kyte: I think it's got to be comparable.

Caleb Newquist: Totally similar abs, right? Jesus. Tom cruise.

Greg Kyte: Constantine was. Oh!

Caleb Newquist: Oh, Constantine. Sorry. Ripped.

Greg Kyte: He was. He was a gym rat, right? Everybody knows that.

Caleb Newquist: Classic.

Greg Kyte: Roman was like, tell me. Tell me two facts about Constantine. He converted to Christianity and leg day was his [00:15:00] jam.

Caleb Newquist: Jam. Another thing to keep in mind is that Catholicism isn't just a religion, it's also a country. Vatican City became an independent country in 1929. It is not a member of the United Nations, but it is a permanent observer state of the United Nations. Whatever the fuck that means. In 1960, no one knows.

Greg Kyte: Not even the United Nation knows. They're like. They're like, well, we have a seat here that [00:15:30] says United Nations on it. But yeah, they just get to they're just they just get to come to the afterparty.

Caleb Newquist: They don't get a microphone, but they do get a good like view of the action.

Greg Kyte: No microphone, no translator headphones. They just get they just get to be bored for a long time. You know those.

Caleb Newquist: Translator headphones those look like they were from the from like about 300.

Greg Kyte: Ad, right? Yeah. Yeah. Well, Constantine developed those. Oh, that's the third interesting fact about Constantine. That is he was a he was a [00:16:00] he was a real regular at RadioShack in 1964.

Caleb Newquist: The Vatican refused full membership in the United Nations in order to preserve its neutrality and political issues. It's also interesting to note that Vatican City is not recognized by the International Olympic Committee, which makes sense because a it only has about 800 citizens, most of whom are over the age of 60. And b it wouldn't be fair. You can't compete in swimming against a country whose leader can turn all of lane [00:16:30] three into holy water and can miraculously heal any of their athlete's injuries.

Greg Kyte: Yeah, it seems like an unfair advantage if you're if your athletic team has a direct line to God.

Caleb Newquist: Right. In 2014, the three most powerful people in Vatican City were Pope Francis. Of course because he's the fucking pope. Then the Vatican secretary of state, who basically acts as the prime minister of the Vatican and the third most powerful person in 2014 was Archbishop Giovanni Angelo [00:17:00] Becciu.

Greg Kyte: Bet. You bet, you bet, you bet. You can't pronounce his name, right?

Caleb Newquist: I bet you right. He was like the vice secretary of state. Or more precisely, the Sostituto apud Vaticanum Secretariat. Civitatis. Right.

Greg Kyte: And if you think that Caleb pronounced that wrong, uh, you're wrong because it's a dead language. So we can pronounce it however we want to at this point. [00:17:30]

Caleb Newquist: In 2018, Archbishop Becciu was promoted from Sostituto to Cardinal. Specifically, he became the Cardinal of the prefect of the blabla of the Latin words of important Catholic shit. It was a big damn deal. Cardinal Béchu was a big damn deal for about nine months. Then he was a big damn problem.

Greg Kyte: In 2019, the Vatican financial [00:18:00] authorities received a complaint about the Vatican's secretary of state, specifically that the secretary of state was putting a bunch of pressure on the Vatican's bank to refinance a shitty mortgage on a depressed property that was owned by the Vatican. I mean, the property was mostly kind of entirely owned by the Vatican, but we'll get to that in a second.

Caleb Newquist: This is a very weird. This seems like a weird problem.

Greg Kyte: It is. And it gets weirder. [00:18:30] Okay. The property. The property in question was a 49 unit luxury apartment development called 60 Sloane in the exclusive Chelsea area of London. Now, just to be clear, there wasn't a problem that the Vatican had invested in luxury apartments in a very expensive part of London. It definitely doesn't feel like a mother Teresa kind of financial move, but it's not unethical or illegal either. In fact, it's [00:19:00] estimated that about two thirds of the Catholic Church's annual income is derived from real estate and commercial investments. So really, investments like this are commonplace for the Catholic Church.

Caleb Newquist: All right. If you say so.

Greg Kyte: And what does that make you feel like? The Catholic Church is just a what? Real estate investment trust. It's a real estate investment trust.

Caleb Newquist: Wait, are you telling me that the Catholic Church [00:19:30] is basically just a big real estate investment trust?

Greg Kyte: It. It is. Most people don't know it, but. But with a.

Caleb Newquist: Very weird dress code.

Greg Kyte: Yeah. Yeah, yeah. Where it's. Yeah, it's it's a real estate investment trust where everybody gets to wear dresses and, uh, and really, what they're looking for more than, like, uh, more than, like, your tithes and offerings is for you to sign up for reverse mortgage on your home. It's it's a fabulous. It's their way. [00:20:00] Uh, the Vatican first invested in the 60s Sloane project in 2014, when Archbishop Becciu was the sostituto. Uh, the Vatican paid €160 million for a 45% stake in the project. Then fast forward to 2019. Five years later, the Vatican paid an additional €190 million to gain full control of the project. [00:20:30] 150 million of that came from a high interest rate mortgage on the property. That's why the Vatican secretary of state was pressuring the Vatican's bank to refinance the mortgage, because they wanted a more favorable interest rate.

Caleb Newquist: Well, that makes sense.

Greg Kyte: Makes sense to me, too. Why would you want to pay a huge interest rate? Even if you've got all of God's money, you still want to save a little bit on interest.

Caleb Newquist: Right.

Greg Kyte: But like I said before, when [00:21:00] the Vatican's bank was doing their due diligence on this loan, probably the equivalent of, like, a title policy, uh, search, they found that the Vatican only kind of owned the 60 Sloan project, even after paying this additional €190 million for it. And that's because of a gentleman.

Caleb Newquist: Are you going to tell us why they only kind of owned it?

Greg Kyte: Yeah. Yeah, it's it's it's because of this gentleman named Gian Luigi [00:21:30] Tozzi. Everyone in this, in this, uh, episode has the most Italian names of Italian names.

Caleb Newquist: I don't think it gets more Italian than that. Yeah, I honestly don't. Like, he could be. He could be. He could be fucking Chef Boyardee. But like that is like his. It? That's as Italian as it gets. My God.

Greg Kyte: Gian Luigi Zorzi. Uh, and this guy, uh, Mr. Zorzi, uh, had balls that were as big as his scruples were non-existent. And let me explain. Okay.

Caleb Newquist: Please.

Greg Kyte: Gian [00:22:00] Luigi Zorzi was hired by the Vatican as a middleman to buy out the other investors in the 60s loan project. Okay. Uh, the transaction was supposed to go down like this. The Vatican would give Taurasi its shares in 60 Sloane. Then the Vatican would also give Taurasi the €190 million to buy out all the other investors. And then once Taurasi had all of the shares for the project, he would then give them back to the Vatican, [00:22:30] at which time the Vatican would own the entire project. Very complex. Very. It seems unnecessarily complex, but that's because the ownership structure of this 60 Sloane Sloan Project. It was ridiculously complex where there was like a shell company that owned another shell company that owned another shell company that owned another shell company that actually owned the real estate.

Caleb Newquist: So you read my mind like, this seems super superfluously complex.

Greg Kyte: Yeah, [00:23:00] yeah. Which again, and none of the research indicated that that complexity of ownership was, uh, that the motivation for the complexity of the ownership was fraud, was for fraud. Okay. There was just no explanation given for the ridiculously complex ownership structure of that. But but that's part of what the the Catholic Church was trying to do is they were trying to get rid of. They just wanted to own the [00:23:30] building. Just Vatican owns the building. And so, so Gian Luigi Torres was supposed to do that. But what really happened, what Gian Luigi Torres really did is he used the Vatican's money to buy out the other investors. And then when Torcy had all the shares in the 60 Sloane project, he restructured the entire business entity. And in doing so, he created this small class of voting shares that controlled the entire project. [00:24:00] So Torcy then gave all of the general shares to the Vatican. But he kept all the voting shares for himself. So all of the ownership did go to the Vatican, but all of the control stayed with Torcy. Um, so.

Caleb Newquist: So who owns the property?

Greg Kyte: The Vatican?

Caleb Newquist: Right.

Greg Kyte: No. But who control? But who gets to make the decisions?

Caleb Newquist: Who controls? Who controls the property?

Greg Kyte: Torcy. So then, in an act of [00:24:30] incomprehensible ballsiness, Torcy began. He began to extort the Vatican for millions of euros, just so that they could have control of the project that they just bought. Wow. Amazing. Impressive. Amazing. And I just have to say, who does that? Who? Who in the world would extort the organization that was behind the Crusades? That's. You're. You are an idiot, sir. [00:25:00] And and sure, sure, the Catholic Church can send you to hell. But I've watched enough gangster movies to know that the Catholic Church is pretty well connected. So I would think that if you tried to extort the Catholic Church, then even the Holy Ghost would have a hard time finding your body after that happened. That's that's that's the level of connection that the Roman Catholic Church has.

Caleb Newquist: That's that's who you're that's who you're messing with, my friend. Yeah. [00:25:30] Like, did.

Greg Kyte: You see Goodfellas?

Caleb Newquist: Of course.

Greg Kyte: Yeah. I mean, I've.

Caleb Newquist: Maybe seen Goodfellas more than any other movie that's ever been made, right?

Greg Kyte: Yeah. And so, uh, so the church would go to Taurasi and say, what do I look like a clown to you? And he'd probably say, well, actually, in those robes, you kind of do. And then it would just go downhill from there. Right.

Caleb Newquist: Well, then Taurasi would walk into that room and get get shot in the face. Right.

Greg Kyte: And then they'd then they'd put him in a trunk and they'd drive him in the middle of the night somewhere and bury him [00:26:00] in a, you know, you've seen the movie.

Caleb Newquist: I've seen the movie.

Greg Kyte: So regardless of all of this hullabaloo with Taurasi, the Vatican eventually gained full control and full ownership of the 60 Sloan Project, a project which later was sold for a loss of €140 million. Taurasi was later arrested on a host of charges, including extortion and aggravated fraud, which is [00:26:30] worse than regular fraud because you're really you're defrauding, really going for it. You're you're very upset about it again. Uh, as a result, this entire 60 Sloane transaction was scrutinized, and in doing so, it came to light that the person behind the Vatican's original investment in 60 Sloane was Cardinal Giovanni Angelo Becciu.

Caleb Newquist: Thanks to Torzi, the 60 [00:27:00] Sloane project clearly became a clusterfuck. But it didn't start that way, right? Wrong.

Greg Kyte: Wrong.

Caleb Newquist: The Vatican didn't invest directly into 60 Sloane. It invested into a fund that owned 60 Sloane. The guy who managed the fund as fund managers do charge the Vatican a 2% annual management fee, plus a 20% fee on profits incentive fee. And once the fund could boast [00:27:30] that the Catholic Church bought a 45% stake in the project, its share price soared.

Greg Kyte: Write in If God wants to buy in in your project? Yeah. Then why wouldn't you want to buy into this project? Right.

Caleb Newquist: Right. Yeah. Get on board. Yeah. Its share price soared, resulting in massive profits, at least on paper. But even paper profits were subject to the 20% fee. The fund manager also reportedly booked a €128 [00:28:00] million profit on the 60 Sloan project when the Vatican eventually bought out the fund. Like we said, Cardinal Becciu was the person greenlighting the Vatican's investment in 60 Sloan, but it turned out to be such a horrible investment, the Vatican decided to take a closer look at all transactions associated with Becciu. One such transaction that came up was the transfer of €125,000 to a charity run by Becciu's brother in Sardinia. Becciu said [00:28:30] that his brother requested the money to build a bakery to employ at risk youth.

Greg Kyte: Sounds like something that the Catholic Church would be interested in.

Caleb Newquist: Sure. Why not? The court conceded that the €125,000 was sent to a valid charity, but nevertheless ruled that it was embezzlement because you essentially sent the Vatican's money to his brother, right?

Greg Kyte: That's kind of.

Caleb Newquist: A related party, Gregg, right?

Greg Kyte: Yeah, right. It is. Yeah. Hard to say that that's not a you're [00:29:00] you're you're, uh, independence is a conflict.

Caleb Newquist: Of interest there. Yeah. Yeah. That's what you're.

Greg Kyte: Saying. Yeah. Well, I like to. I like to think of it as an independence thing. If he's trying to, if he's trying to find great charities that the Vatican should invest its money in, he goes, oh, my, my, uh, my flunky brother here. I'm, I'm a I'm cardinal. Bet you he's at best junior priest. Bet you and he's starting this bakery. So yeah, I'll send him. I'll send [00:29:30] my flunky brother a bone. Uh, a 120 500 €0 bone to get his bakery up and running so we.

Caleb Newquist: Can make some baguettes.

Greg Kyte: Right, right. It's, uh. It's it's definitely. It's, at best, sketchy.

Caleb Newquist: Another suspicious transaction was the payment of €575,000 to a British security firm. The firm was supposed to use the money to negotiate the release of a nun who was taken hostage by Islamic militants linked to al Qaeda. [00:30:00] But the money wasn't sent to a British security firm. It was sent to a woman named Cecilia Marogna. They say that right. Marogna Maronia. Cecilia Marogna from Sardinia. Did we mention Cardinal Becciu was from Sardinia? Apparently, Marogna was indeed an expert in international geopolitics, but she did not use the funds to negotiate the release of any nuns. She spent the money on high end vacations and luxury shopping [00:30:30] sprees.

Greg Kyte: So all of this, the touristy stuff, the fund manager stuff, the inner the the woman of international geopolitics who maybe wasn't so much a woman of international geopolitics. All of this resulted in a two and a half year trial, and it was the first time a Catholic cardinal, specifically Cardinal Becciu, has ever been prosecuted [00:31:00] in the Vatican's criminal court. As a result of the trial, the following people got charged with the following crimes and sentenced to the following punishments Gianluigi Torzi. He was convicted of several crimes, including, unsurprisingly, extortion, and he was sentenced to six years in prison. That fund manager who managed the 60 Sloan Fund, he was convicted of embezzlement and money laundering and sentenced to five and a half years in prison. Cecilia [00:31:30] Marogna. The lady who didn't save any nuns, she was found guilty of embezzlement and sentenced to three years and nine months in prison. And lastly, Cardinal Giovanni Angelo Becciu was found guilty of multiple counts of embezzlement and multiple counts of fraud. He was sentenced to five and a half years in prison, and he was ordered to pay a fine of €8,000. Yeah, not €8 million. €8,000. But for someone who's taken [00:32:00] a vow of poverty, that's a lot of euros. Uh, and fair bet she was also barred from ever holding public office in the future.

Caleb Newquist: Public office?

Greg Kyte: Yeah. So he can't become, I guess, president of the Vatican. I don't know what, because it's just, I think public office. The vet. Right. The Vatican court can't bar him from public office in any country. That's not Vatican City, the Vatican. So it's like you can't be a doctor. You can be mayor of Rome. You can't be pope.

Caleb Newquist: Yeah, [00:32:30] yeah, but you can't be Pope.

Greg Kyte: Yeah, exactly. Well, and speaking of which, uh, despite the results of the trial everyone, including Cardinal Becciu, maintains their innocence, and everyone, including Cardinal Becciu, plans on appealing their decisions. This is this is what the financials were.

Caleb Newquist: What year did the convictions come down?

Greg Kyte: 2023 just happened.

Caleb Newquist: All right.

Greg Kyte: So, uh, the Financial Times said, uh, Cardinal Becciu denies any wrongdoing. A lawyer acting for Becciu said [00:33:00] his client was in no way responsible for any losses suffered by the Vatican, and that the cardinal had relied on the expert opinions of others when investments were made. At one point, Béchu was considered a possible future candidate for the papacy, but any hopes bet you once had to eventually become pope are now a distant memory.

Caleb Newquist: Marty. [00:33:30] So Greg, did we, humble ourselves before God and.

Greg Kyte: And learn and learn the lesson that he's trying to teach, impute unto us. Yeah. Uh, I want to say yes, but the real answer is no. But we got we got a we got a very valuable reminder of lessons that we've seen repeatedly in other cases [00:34:00] in this podcast. And the the big takeaway I take from this is that is, no one should be beyond scrutiny. Um, like like that report said, the one that we talked about at the top of the episode. Uh, many people think that priests exist as citizens above suspicions for misdeeds such as fraud, but clearly they don't, because we just saw a cardinal who was convicted of fraud. [00:34:30] Um, so cardinals are not above suspicion for fraud. Uh, clearly, priests aren't above suspicion for fraud. As of this recording, there are 236 cardinals in the Catholic Church, any of whom could commit fraud. Now, hopefully none of them do, but any of them could commit fraud. And you don't have to have religious skepticism in order to have professional skepticism about religious organizations finances. Everyone who's [00:35:00] an accountant has to stop trusting people. Okay, Caleb, that's the that's really the takeaway. That's what just accountants. That's what the Lord is trying to teach us is stop trusting people. If you're trusting people, you're not doing God's will.

Caleb Newquist: Couldn't have said it better myself.

Greg Kyte: Greg, tell me some people you trust. Caleb. Tell me some.

Caleb Newquist: People.

Greg Kyte: Who do you trust? That's the right answer. Exactly. You nailed it.

Caleb Newquist: Great, great.

Greg Kyte: What [00:35:30] about you, Caleb? Anything. You came away with?

Caleb Newquist: Well, I think I think that I think for me it's the same. I think it's the same is. Which is, um. I think you said it. You said it on a past episode where, um, I maybe didn't see, you know, you maybe wouldn't see this coming, but you shouldn't be surprised. Right, right. I think that's a nice way to to to to kind of to explain the nuance. Whereas anyone's possible of anything given any set of circumstances [00:36:00] given a particular set of circumstances. And in this case, you have someone high up in the Catholic Church who, uh, for whatever reason, invested in a project and then got extorted the shit out of, you know, got ended up getting the church extorted and there's embezzlement, all kinds of money moving around that isn't going to anything. And it's just sure, you know, like when there's that much money sloshing [00:36:30] around, like, yeah anything's just it just feels like anything's possible, you know?

Greg Kyte: Yeah. For sure.

Caleb Newquist: And again, when you've got people in positions of power and people and and positions of influence, um, yeah, they probably feel like it's fine.

Greg Kyte: Right. Well, and and again, I mean, you know, going back even to Nick's email that he sent us that we talked about at the top of the, the podcast, um, you've got people there's there's the whole, the whole concept of management override of controls. [00:37:00] Yep. And when you're a, when you are the third most important person in an entire government of a, of the smallest country on the planet that, like you said, has large coffers. There's a lot of management override of controls that you can you can do that. You can override the controls. What? And this this didn't play directly into this story, but at one point there was there [00:37:30] was an audit that was supposed to happen of the entire finances of Vatican City. And Cardinal Béchu himself unilaterally, was just like, yeah, I'm canceling the audit.

Caleb Newquist: Yeah, we're not going to do that.

Greg Kyte: Yeah, right. He just he just did that. Yeah. And, and and apparently he did. It was like he did it. And everyone was like, oh. Béchu says the audits canceled. So I guess it's and and then later upon further scrutiny, it was like, does he have the authority to cancel an audit? And people [00:38:00] were like, I don't think he had the authority to cancel the audit. But he still did. Yeah, he still did it. That was kind of the, the, the murmurings behind the scene. But you got somebody who can just say, hey, you're trying to look into whether I'm doing things in a untoward fashion, uh, knock it off. And they just go, yes, yes, Your Holiness, and walk away. Ah, well.

Caleb Newquist: So that's that's what I was just kind of thinking about was in any organization, monitoring is a critical [00:38:30] internal control. Yeah. Right. Yeah. Now, if you are part of an organization that regularly says that you only answer to God, then that monitoring is. Mhm. It's kind of squishy. Yeah. Right. Yeah. So it's just like well I'll answer to God. Right. You're just like yeah, but that means you get to steal until you get to answer.

Greg Kyte: Yeah. Yeah. [00:39:00]

Caleb Newquist: It seems.

Greg Kyte: That.

Caleb Newquist: Yeah. Wrong. One of the commandments. Right, right right right.

Greg Kyte: But. Yeah, but but, like, are you trying to say that they're like, you could you could throw me in jail, but I'm really answering to someone who could throw me into the lake of fire. Yes, the lake of fire. So. So you gotta. So there's more at stake to this than than your dumb audit. So. Yeah. You can just trust me and go away that I'm going to do this.

Caleb Newquist: Millions of dollars. When you're. When you are burning for [00:39:30] all eternity.

Greg Kyte: Yeah, another. I don't know if this if this caught your eye, though. One of the things I think that was unique about this specific case was that Cardinal bet you from from everything that we read and saw with the research, he never benefited directly from any of his embezzlements or frauds. It was, you know, he signed up for a crappy investment where the fund manager made a lot of money and he hired, uh, [00:40:00] Gian Luigi Tosi, who in turn extorted the Catholic Church.

Caleb Newquist: Double crossed him.

Greg Kyte: But, but but, uh, but Cardinal Becciu didn't didn't get his pocket lined by that either. But he was instrumental in having that guy do that thing to, uh, that screwed the Catholic Church. And then he sent the $125,000 to his brother, not to him. I mean, maybe his brother had him over for a really nice Thanksgiving dinner because [00:40:30] little, little known fact, they also celebrate Thanksgiving in Sardinia just so that, you know, they don't they don't.

Caleb Newquist: No, no.

Greg Kyte: No it's not. But what but you know what I'm saying. He might he might have tangentially benefited from his brother opening a bakery. Maybe he got a cut, like you said, a couple of nice baguettes out of the deal. Yeah.

Caleb Newquist: Made his mother happy.

Greg Kyte: And I don't think Cecilia Marogna took him on her shopping spree or on her vacations. So even though the dude did, he's, [00:41:00] you know, and again, he's appealing it. So who knows if he'll actually go to jail or if once the sentence is there, if he'll really spend much time at all actually serving that sentence. But he is supposed to spend five and a half years in jail, uh, for crimes that he never directly benefited from. Weird. All right, well, that's it for this episode. Uh, remember, if you're going to steal from the Catholic Church, make sure your right hand doesn't know what your left hand is doing, just [00:41:30] in case your right hand gets subpoenaed.

Caleb Newquist: And also remember, this is the only scandal ever to involve the Catholic Church.

Greg Kyte: If you want to drop us a line, send us an email at oh my fraud at earmarks cpe.com. Caleb, if people just want to get Ahold of you but they can't stand me. Uh, how can they do that?

Caleb Newquist: They can find me on LinkedIn slash Caleb Norquist. Greg, if they just like you a lot and have neutral feelings about me, how [00:42:00] would they just stalk you on the internet?

Greg Kyte: Well, I well, just so everyone knows, I send copies of all of my correspondence to Caleb Norquist. So if you're trying to avoid him, you won't be able to, but you can do your best by sending me a direct message on LinkedIn. I'm Greg Kite, CPA on the old LinkedIn.

Caleb Newquist: All My Fraud is written by Greg Kite and myself. Our producer is Zach Frank. Rate review and subscribe to the show wherever you listen to podcasts. If you're an accountant and you would like some CPE [00:42:30] credit for listening to this podcast, get the earmark app.

Greg Kyte: Do it.

Caleb Newquist: If you want a lot of CPE from the earmark app, you should probably subscribe.

Greg Kyte: It's so worth it.

Caleb Newquist: How much? Greg.

Greg Kyte: Uh, you know, 160 bucks, I think right now. You know that that price changes over time. So if you go on to the app and try to subscribe and it's not the middle of summer.

Caleb Newquist: So it's a steal right.

Greg Kyte: Now, it's probably a steal. Yeah. Uh, yeah. But but even if even if it's [00:43:00] 260 bucks, it's. Listen, it's worth it. Being able to get all you can eat CPE through podcasts. Come on. Come on. Easiest way to get your CPE ever.

Caleb Newquist: Join us next time for more average swindlers and scams from stories that will make you say, oh my fraud.

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