2 nuns allegedly embezzled $500K from California Catholic school

TORRANCE, Calif. -- Two longtime nuns at St. James Catholic School in Torrance, Calif., allegedly embezzled as much as $500,000 in tuition, fees and donations, according to the Archdiocese of Los Angeles.

It is believed the nuns used that money to spend on travel and gambling at casinos over the years.

The figure represents only what auditors have been able to trace in six years of bank records and might not include other cash transactions, officials from the Archdiocese of Los Angeles told parents and alumni.

The school said the nuns, Sister Mary Kreuper and Sister Lana Chang, admitted to stealing the money.

"They're taking away the money from kids in school, from kids that need the money. To do that, it's terrible," said Francis Grimes of St. James Catholic Church.

Kreuper is the former principal who had been at the school for 29 years. She retired earlier this year. Chang was an 8th-grade teacher for 20 years. She too retired this year.

The theft was uncovered during a recent audit.

"This matter came to our attention during financial reviews in connection with the change in leadership at our School. Other staff persons were not implicated or responsible," the parish's pastor said in a statement.

The nuns' order, the Sisters of St. Joseph of Carondelet, said the nuns are cooperating and intend to pay back the money in full.

At first, the school said it didn't want to pursue criminal proceedings, but now the archdiocese tells ABC News the investigation has deepened and they are considering making it a criminal case.

The Sisters of St. Joseph released a statement saying:

The Sisters of St. Joseph of Carondelet confirm that we have been notified that the Archdiocese of Los Angeles has filed a criminal complaint with the Torrance, California Police Department against Sisters Mary Margaret Kreuper and Lana Chang for misappropriation of funds.

As a religious community we will not defend the actions of our Sisters. What happened is wrong. Our Sisters take full responsibility for the choices they made and are subject to the law.

The Sisters of St. Joseph are committed to work with the Archdiocese to discover the amount taken. We are unable to confirm any sum until the discovery phase is completed. We intend to make restitution to St. James School as soon as a total is known. Justice demands this of us.

Canonical Restrictions have been imposed. The two Sisters are removed from their residence and placed in a religious house under the supervision of community leadership. They are also removed from all public ministry.

The Sisters of St. Joseph of Carondelet are concerned and saddened by this situation and regret any pain this has caused many in our Church, especially the families connected to St. James School. We hold the sorrow of our Sisters' actions deep in our community hearts.