DETROIT (CBS Detroit) Two local businessmen were charged Friday with felonies for allegedly using funds from a non-profit company as a personal bank account that funded a lavish lifestyle.

Jerry Stage, 67, of New Hudson, and George Bauer, 55, of Commerce Township were charged with embezzling $2.6 million from the Compensation Advisory Organization of Michigan while Stage was the CEO for 11 years. Bauer was the bookkeeper.

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“Stealing is wrong—no matter if you’re at the top of the company or near the bottom,” Attorney General Bill Schuette said. “There are consequences to breaking the law, and we will continue to aggressively weed out corruption.”

Stage was employed as CEO of CAOM from 1993 until his retirement in July 2012, Schuette said. The company where he worked was a non-profit that provided administrative and customer service support for the Michigan Workers’ Compensation Placement Facility. It collects data from member insurers licensed to sell workers’ compensation insurance in Michigan and is not associated with state government.

As CEO, Stage had the authority to issue checks, but company policy required two signatures on any check over $1,000. To evade that requirement, it is alleged Stage wrote checks to himself for $995 over a 14 year period, totaling approximately $1 million.

“Stage was also issued a company credit card to pay for business-related incidentals that he allegedly used for personal expenses,” the attorney general said.

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Bookkeeper George Bauer is charged with helping a non-profit company's CEO embezzle money for the sake of getting his own cut. (Photo: Michigan Attorney General's Office)

Bookkeeper George Bauer is charged with helping a non-profit company’s CEO embezzle money for the sake of getting his own cut. (Photo: Michigan Attorney General’s Office)

Following Stage’s 2012 retirement, CAOM undertook a review of expenditures to assess the company’s financial health. Upon the discovery of a number of financial reporting irregularities, the company consequently retained Plante Moran to conduct an official audit. Plante Moran discovered Stage had allegedly embezzled approximately $2.6 million.

It is alleged Stage paid Bauer to help him cut checks to himself, paying Bauer for his silence. Attorney General investigators confirmed Plante Moran’s findings.

Stage also allegedly submitted false or inflated expense reports for events including: week-long family vacations at Disney World, tuition, wedding expenses, pet care and family dinners. Allegedly using this scheme, Stage embezzled approximately $1.4 million. This conduct was not discovered during annual audits because as CEO, Stage did not have to submit documentation of his expenses, as other employees were required to do. The false expense reports were submitted to allegedly cover the amount of funds Stage was siphoning from the company.

The rest of the embezzled funds allegedly came from Stage inflating his own pay raises and bonuses, totaling to approximately $200,000.

The defendants surrendered to authorities in Livonia on May 9, 2013 and the following charges have been filed with the 16th District Court for Wayne County: one count of embezzlement over $100,000, a 20-year felony with a fine of up to three times the amount embezzled; and one count of conspiracy to embezzle over $100,000, a 20 year felony with a fine of up to three times the amount embezzled.
George Bauer was charged with one count of conspiracy to embezzle over $500,000 but less Than $100,000, a 15-year felony.

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Both defendants waived their right to a preliminary examination and were bonded over to the Wayne County Circuit court.