City reaches settlement in embezzlement case

Accounting firm that missed detecting theft pays $750K

By Corey Pride / Cpride@losbanosenterprise.comMay 23, 2013 

The city of Los Banos has received more than half of the money it lost in a years-long embezzlement scheme that was discovered in 2009.

Most of the money came from the accounting firm that did not detect the theft.

City Attorney William Vaughn said Los Banos received $750,000 in a settlement with Moss, Levy, Hartzheim, LLP, which had audited the city's finances from 2006 to 2009.

In 2010, Los Banos sued the firm for breach of contract, negligence, and breach of fiduciary duty for not discovering Mary Ann Jones, a former utility billing technician, embezzled $1.7 million from city coffers from 2005 to March of 2009.

In 2009, Jones pleaded no contest to six felonies, including five counts of embezzlement and one count of receiving stolen property.

Despite the city's original stance that the accounting firm owed Los Banos $1.7 million, Vaughn said he is satisfied with the $750,000 that was agreed upon.

"I think it was a good settlement," Vaughn said.

As part of her sentence, Jones was given eight years in prison with the possibility of parole after serving half. She was also ordered to pay restitution.

Vaughn said so far Los Banos has recouped $154,391, including $13,000 in cash, several vehicles, miscellaneous property and two homes from Jones.

Vaughn said he has no way of knowing if the city will be able to get the rest of the money back from Jones.

"I don't know what the chances are," he said. "We still have one of the houses."

Vaughn said the home in the city's possession is being rented out. He also said Los Banos is using one of the vehicles it received from Jones.

Mayor Mike Villalta said he does not believe the city will ever receive all of the money back.

"I doubt it," he said when asked if the entire $1.7 million can be recouped.

"This is what was bankable."

Enterprise reporter Corey Pride can be reached by phone at 388-6563 or by e-mail at cpride@losbanosenterprise.com

Enterprise reporter Corey Pride can be reached by phone at 388-6563 or by e-mail at cpride@losbanosenterprise.com

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