Ex-worker charged in $340,000 theft from nonprofit

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For almost 16 years, accountant Michael Scarry paid bills for the Laurel Highlands Foundation Inc., a North Versailles-based nonprofit that aids the mentally disabled.

But instead of cutting checks only for corporate expenses, Mr. Scarry steered money to himself as well, authorities believe.

Mr. Scarry, 41, of Connellsville, turned himself in Tuesday at the offices of North Versailles District Judge Robert Barner to face charges that he embezzled nearly $340,000 from his employer over an eight-year period.

An affidavit supporting Mr. Scarry's arrest by investigators with the Allegheny County district attorney's office indicates that he might have used stamps bearing the signatures of two board members to fraudulently sign off on checks made out to cash or himself.

Problems came to the nonprofit's attention in July when the controller, Cher Moser, was notified that health insurance for her employees had been canceled because Laurel Highlands owed $30,000 in back fees.

Ms. Moser checked the books and found entries indicating checks being cut to the insurer. She put Mr. Scarry in charge of looking into the situation.

Ms. Moser did not get any answers from Mr. Scarry, however, and in December she took matters into her own hands. She quickly learned from her bank that the checks had indeed been cut -- but were payable to Mr. Scarry, not the insurer, the affidavit said.

Laurel Highlands Foundation terminated Mr. Scarry Jan. 4, the same day the police were alerted. A forensic audit determined that the corporation lost $338,670 from July 2001 through December.

Mr. Scarry was charged with six felonies -- two counts of forgery and one count each of theft by unlawful taking, theft by deception, access device fraud, and attempting to cash a check.

He waived his right to a preliminary hearing and was released on his own recognizance.

Mr. Scarry's attorney, Brian D. Aston, would not discuss the case in detail but said, "We are working with the district attorney's office in an attempt to resolve this matter as quickly as possible."

Investigators confirmed that Mr. Scarry was cooperating.

"Part of our effort will be to try to make the foundation whole," said Mike Manko, the district attorney's spokesman.

It is not clear what Mr. Scarry did with any money he might have taken. The county and state both launched investigations in February when news broke of the situation.

Laurel Highlands Foundation earns about $6 million a year in state contracts covering 43 Allegheny County residents. The nonprofit is overseen by the state Department of Public Welfare.

"It seems to be just a financial thing and the agency seems to have operated very appropriately," said Marc Cherna, director of the county's Department of Human Services. "As soon as they discovered something they went to the district attorney and they also had a forensic audit. They handled it right, and I think they're going to move on from here,"

The welfare department is awaiting a copy of the forensic audit, spokesman Michael Race said.

Jonathan D. Silver: jsilver@post-gazette.com or 412-263-1962.


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