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    United States Attorney's Office
    Central District of California

    Thom Mrozek
    Public Affairs Officer

    (213) 894-6947

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    Release No. 07-105

    August 20, 2007


    The former assistant director of accounting at the Orange County Chapter of the American Red Cross, who previously pleaded guilty to federal charges of embezzling more than $100,000 in Red Cross funds, was sentenced today to six months imprisonment, immediate payment of $110,000 in restitution to the Red Cross, and three years supervised release with a term of six more months in home detention.

    Karen Shuerger, 59, who resided in Santa Ana until she resigned from the Red Cross in October 2005 after 17 years of employment, was sentenced this morning by United States District Judge James V. Selna in Santa Ana. Shuerger, who now lives in Henderson, Nevada, pleaded guilty three months ago to four counts of mail and wire fraud related to her embezzlement during the final five years she worked at the Red Cross.

    The American Red Cross is a non-profit charitable organization with approximately 35,000 employees and more than 800 local chapters. The Orange County Chapter is located in Santa Ana and has approximately 60 employees. American Red Cross employees and volunteers provide aid in time of war to the sick and wounded of the armed forces and respond to disaster situations throughout the United States and abroad. The Red Cross relies heavily on voluntary donations to fund its activities.

    As assistant director of accounting, Shuerger was responsible for monitoring money and donations received by the Orange County Chapter and ensuring that the financial records were prepared accurately. Shuerger admitted that she violated these duties and that, over many years, she embezzled at least $110,000 in funds from the American Red Cross.

    Shuerger admitted that she bilked the Red Cross in two ways. First, she used her supervisory position to order American Express traveler’s checks, which were purchased with funds from the Orange County Chapter’s bank account, and then used them to make purchases for herself and her family members. Local chapters maintain an inventory of traveler’s checks to provide funds or travel advances to employees responding to disaster situations. Instead of causing the traveler’s checks to be used for Red Cross travel, disaster relief, and other authorized expenses, Shuerger used the traveler’s checks to make payments for personal and unauthorized items, including personal credit card payments, purchases at Home Depot, payments directly to her family members, purchases during visits to Sam’s Town Hotel and Gambling Hall in Nevada and while on vacation at the Hilton Hawaiian Village.

    The second part of Shuerger’s embezzlement scheme involved credit cards. Shuerger admitted that she used an American Red Cross credit card issued to her to make unauthorized purchases of goods and services for her and her family members. The purchases included, among other things, Gateway computers, jewelry, personal clothing and shoes, pool products, cooking items, Major League Baseball tickets and merchandise, a San Diego Zoo membership, and a waterproof digital camera.

    To conceal her extensive embezzlement, Shuerger altered Orange County Chapter documents and made false entries in the financial records that she was responsible for maintaining.

    In handing down the sentence, Judge Selna noted Shuerger’s lack of prior criminal conduct and her considerable health problems. However, Judge Selna found that Shuerger had abused a position of trust at the Red Cross causing serious financial and reputational harm to the charity, which warranted a sentence of imprisonment and immediate payment of $110,000 in restitution to the charitable organization.

    “The American Red Cross has a zero tolerance policy toward fraud and we were pleased that the judge ordered incarceration and also ordered Mrs. Shuerger to pay restitution to the Red Cross,” said Stanley Perdue, Chief Executive Officer of the Orange County Chapter of the American Red Cross. “The American Red Cross has worked closely with the U.S. Attorney’s Office and federal officials and we would like to express our appreciation and thanks for their due diligence in bringing this matter to justice.”

    This case is a result of an investigation by the Federal Bureau of Investigation. The American Red Cross conducted its own internal investigation which uncovered some of Shuerger’s suspicious activities. The American Red Cross then referred the matter to the FBI and fully cooperated in the investigation.


    Release No. 07-105
    Return to the 2007 Press Release Index