Former financial professional for Philly Pops and Jewish Exponent sentenced to prison for embezzling nearly $1.7M

A former financial director for the Philly Pops and the Jewish Exponent was sentenced to more than a year in federal prison Tuesday for embezzling nearly $1.7 million dollars from the nonprofits whose books she was charged with overseeing.

Cheryl Lutts, 42, of Philadelphia, used the stolen funds to pay for everything from mundane bills and shopping sprees to her daughter’s private high school tuition, the legal cost of a personal bankruptcy, and even her mother’s funeral.

But at her sentencing hearing Tuesday, she told U.S. District Judge Timothy J. Savage that her graft had been driven by a yearslong addiction to prescription painkillers.

“I was only thinking of myself and getting high — not the harm that I was inflicting on everyone else, especially the companies that trusted me,” she said, choking back tears. “Never in my life have I felt this ashamed and humiliated … My behavior was unacceptable in every way.”

Lutts’ pattern of theft — which stretched over five years and first came to light in 2019 — was only exacerbated by the financial struggles faced by both nonprofits.

Roughly a year before Lutts started her job as director of business operations for the Exponent — the second continuously published Jewish newspaper in the United States and a subsidiary of the Jewish Federation of Greater Philadelphia — the publication was forced to lay off its entire 15-member editorial staff in the face of losses averaging $300,000 a year.

Within months, Lutts began using her position to drain its accounts of $1.4 million. She hid the theft by doctoring bank statements presented to her employers, secretly taking out a corporate credit card in her name, and lying when people questioned the eye-opening balances on the credit cards she had been legitimately issued.

She told one employee that hackers had stolen her credit card number, prosecutors said.

The federation fired Lutts in 2019 for unrelated performance issues, and her replacement discovered the financial anomalies she’d left behind.

But by that time, the damage had already been done.

Addressing the court Tuesday, Michael Costello, the Exponent’s finance director, said that the financial losses “completely shattered trust and confidence” at the news organization.

As a result, the Jewish Federation’s insurers hiked their rates, affecting the sums it could devote to programs including youth camps and senior programs. The federation sold the Exponent at a significant loss to Baltimore-based Mid-Atlantic Media last year.

Meanwhile, Lutts had already moved onto another job — signing on in 2019 as controller for the Philly Pops, the largest stand-alone popular music orchestra in the country and a nonprofit that had emerged from bankruptcy just seven years before.

There, too, Lutts stole — a total of more than $280,000.

It was only after a routine review of its books uncovered a series of questionable transactions that the nonprofit discovered the true breadth of her crimes and fired her, said Karen Corbin, the nonprofit’s president and CEO.

Since then, the Pops has continued to struggle financially and was evicted from its longtime home at the Kimmel Center earlier this year.

“The impact of Cheryl’s fraud to the Philly Pops was devastating, coupled with the [COVID-19] pandemic inability to sell tickets or raise money during this time,” Corbin said. “For those who trusted her, her actions were … a costly betrayal.”

Lutts’ attorney, Maranna J. Meehan, acknowledged the harm her client had caused to both nonprofits Tuesday, but she pleaded with the judge to recognize the hold addiction had over her client.

Lutts first became addicted to painkillers after a car accident in 2014, and soon found herself in thrall to the doctor writing her prescriptions — Andrew Berkowitz, a Huntingdon Valley physician who is currently serving a 20-year prison sentence for overprescribing pills, Meehan said. He was prosecuted by the same U.S. Attorney’s Office responsible for putting Lutts in prison.

“The offense has a clear and direct cause — opioid addiction,” Meehan said. “It is clear that but for an addiction, this crime would never have occurred.”

Prosecutors, however, balked at the suggestion that, after pleading guilty to 24 counts including mail and wire fraud last year, Lutts should be spared prison time.

“The breadth of [her theft] shows that Lutts was not engaging in the fraud simply to pay a few necessary personal expenses due to tight economic times,” Assistant U.S. Attorney Maryteresa Soltis said. “Rather, it demonstrates that she used the … funds as her own personal treasure trove.”

In the end, the judge agreed.

While crediting the progress she’d made in recovery from her addiction since her arrest and noting that he believed her remorse was genuine, Savage maintained Lutts still must be held accountable for her “pattern of deceit and manipulation.”

In addition to the 20-month prison sentence he imposed, he ordered her to pay back $1.3 million she still owes the nonprofits that once employed her and the insurance companies that helped bail them out.

Some of her debt has already been covered, prosecutors said in court filings, after she signed over the deed to her Fishtown home to the Philly Pops.

“What she did had devastating consequences for both institutions — venerable institutions in Philadelphia,” the judge said. “She contributed to the demise of the Jewish Exponent as it was known and the Philly Pops.”

Still, after he had announced the punishment and as Lutts, deflated, gathered up her belongings, Savage prepared to leave the courtroom, then paused.

He turned toward her once again with an encouraging stare and said: “You can do this.”