Retired nun who embezzled $835,000 from school to pay for her gambling habit sentenced to one year imprisonment

A now-retired nun and former Catholic elementary school principal who admitted to stealing more than $835,000 in school funds to feed her gambling trips and personal expenses has been sentenced to 12 months and a day in federal prison, according to federal prosecutors.

The US Department of Justice says she was the principal of St. James Catholic School in Torrance, California, for nearly three decades and embezzled $835,339 over a 10-year period.

Federal prosecutors said Kreuper, who had taken a vow of poverty, used money intended for the school to pay for large gambling expenses incurred at casinos, and other charges.

In a sentencing recommendation, prosecutors said Kreuper “stole the equivalent of the tuition of 14 different students per year,” arguing that the embezzled funds “were intended to further the students’ education, not fund (Kreuper’s) lifestyle.”

“She is very sorry for what she’s done, very remorseful, very ashamed, very embarrassed and accepts full responsibility for her actions,” said Kreuper’s lawyer, Mark Byrne

In July 2021, Kreuper pleaded guilty to one count of wire fraud and one count of money laundering. 

On Monday, February 7, US District Judge Otis D. Wright II ordered Mary Margaret Kreuper, 80, sentenced to 366 days in Jail and also ordered her to pay $825,338 in restitution.

Before the sentencing, Prosecutors had recommended a 24-month prison sentence, three years of supervised release, and restitution.

After charges were filed, her attorneys issued a statement saying Sister Mary Margaret suffered “from mental illness that clouded her judgment and caused her to do something that she otherwise would not have done. She is very sorry for any harm she has caused.”

Kreuper acknowledged in court that for a period of 10 years ending in September 2018, she embezzled $835,339 from St. James Catholic School. As principal, a position she had for nearly 30 years before she retired — Kreuper was responsible for the money the school received to pay for tuition and fees, as well as for charitable donations, according to documents filed in Los Angeles federal court.

When an audit threatened to expose the scheme, Kreuper instructed St. James employees to destroy documents.

Kreuper also controlled accounts at a credit union, including a savings account for the school and one established to pay the living expenses of nuns, who had taken a vow of poverty, employed by the school, prosecutors said.

Diverting embezzled funds into secret accounts, Kreuper used the money “to pay for expenses that the order would not have approved, much less paid for,” including large gambling expenses and trips to Las Vegas, Lake Tahoe and Temecula, according to her plea agreement.

She starts her prison time immediately.