Former Anchorage middle school clerk charged with embezzling $50K

Anchorage police said Tuesday a former school clerk has been accused of embezzling tens of thousands of dollars from the Anchorage School District over more than five years, according to school and police officials.

Kellie Fagan, 61, who worked as a financial data clerk at Central and Gruening middle schools, is charged with felony counts of scheme to defraud, theft, falsifying business records and forgery, according to a joint statement Tuesday from ASD and the Anchorage Police Department. Fagan was fired in April.

"In a 5½-year time frame (Dec. 2010-Mar 2016) it is believed that Fagan embezzled a total of $50,000-$60,000 from the two middle schools," police wrote.

At a news conference Tuesday morning, APD Detective Anthony Pate said the embezzler had taken a series of complicated steps to evade financial-security measures at the district.

"The forged checks were part of a dual-signature system the school district uses," Pate said.

The district requires a principal and assistant principal to sign checks, said Andy Ratliff, executive director of the district's office of management and budget, in an interview after the press conference.

Both signatures on the checks were forged, according to police.

[Read the charging document]

Paramo, discussing the case alongside Pate on Tuesday, credited school district assistant controller Jim Farrington with discovering the fraudulent transactions. The improprieties came to light during an annual audit of the district's activities account, completed in spring 2016, Ratliff said.

"It was a matter of moving money from one venue to another, from cash through to checks," Paramo said. "Less than 24 hours after discovering this, she was removed from her position."

Two earlier high-profile fraud cases at the district date back to 2011, when former Chugiak High School clerks Brenda Burge and Gayle White were fired on suspicion of embezzling a combined $210,000 in student activity fees dating back to 2006. Both Burge and White pleaded guilty to criminal charges. A 2013 audit found the district's safeguards for more than $27 million in fees it collects each year remained inadequate.

According to the police statement, the most recent fraud took several steps to complete. Police accuse Fagan of voiding items from computer records and using an ASD procurement card, similar to a credit card, to buy items, then submitting requests for personal reimbursement and forging those reimbursement checks. Fagan is accused of holding checks to cover the theft of cash from future deposits.

"You can't keep people from stealing," Pate said.

As the financial data control clerk, Fagan collected money for student activities, said a charging document, signed by Pate. He said he called Fagan in September and she admitted to taking money from the district and forging checks, according to the charges.

Efforts to reach Fagan Tuesday were not successful. According to the charges, Fagan told Pate she had left the state.

Paramo said ASD is currently reviewing its business processes and looking at a new system to allow students and parents to pay student activity fees online. They would receive an electronic receipt, rather than a handwritten one.

"When employees steal from ASD, they steal from our classrooms, the community and the entire state of Alaska," Paramo said in a statement.