The former chief financial officer for the Fort Worden Public Development Authority is facing a charge of first-degree theft.

Diane Machelle Moody will make her first court appearance in Jefferson County Superior Court on Friday on the allegation.

Jefferson County Prosecutor James Kennedy has filed court documents accusing Moody of stealing from the Fort Worden Public Development Authority while employed by the public agency. The filing was submitted to the court Sept. 30.

Moody was at the center of a fraud investigation conducted by the Washington State Auditor's Office last year.

The investigation found Moody set up false vendor accounts and billed the PDA for $10,054 that was paid to her husband’s construction business.

The construction business was no longer in operation at the time of the misappropriation of money.

The fraud happened in 2019, before the current PDA board of directors was seated, and during the time frame the authority was overseen by former executive director Dave Robison.

Representatives from the State Auditor’s Office presented the findings of the state fraud investigation in late December.

The case was eventually referred to the Jefferson County Prosecutor’s Office.

PDA officials would not comment about the pending charge of first-degree theft.

“The FWPDA does not and cannot comment on ongoing litigation. We respect the process,” David Timmons, executive director of the PDA, said in an eight-sentence press release Wednesday. 

A detective from the Port Townsend Police Department interviewed Moody about the misappropriation of PDA money on Jan. 19.

In a police report about the interview, Moody blamed her husband for the bogus checks and said she was shocked about the allegations.

"Moody stated the reason she was shocked was because if she had committed fraud she would have, in her head, thought about it, and that it never occurred to her," Detective Jon Stuart wrote in his report.

Moody said her husband had given her time sheets for the work that his company billed the PDA for, but "stated that she does not participate in any of that world," Stuart wrote.

Moody told police she had written out the checks from the PDA that were paid to her husband, but did not give a clear answer about who deposited the checks' into her husband's Wells Fargo business account.

"Moody paused and stated either her or him (her husband) and that she doesn't honestly remember," Stuart wrote in his case report.

"I advised Moody that one of the things in question was whether or not the work had been done and that those funds were not approved to be written. Moody stated, 'No, I was stupid' and that the bottom line, she knows after reading this 'I'm like, yeah, my bad.'"

The fraud report after the state investigation into allegations of embezzlement said Moody, the PDA’s chief financial officer who resigned in July 2020, entered two expenditures payable to her husband’s business into the PDA’s electronic payment system.

The first was for $4,822, and was made Sept. 15, 2019.

An invoice supporting the payment did not provide specific details about the work that the business did, according to the fraud report, and did not include the typical approval signature.

The report noted Moody printed and signed a check for payment.

Moody again entered another expenditure of $5,232 for repair expenses payable to the same construction business on Nov. 19, 2019. She also printed and signed a check for that payment.

An invoice supporting the payment could not be found.

Moody was listed as the registered agent for her husband’s business. The fraud report said the business had been dissolved March 3, 2019 — more than six months before Moody recorded and made the first payment as the PDA's chief financial officer.

The fraud report noted attempts were made to contact Moody without success.

“In October 2021, we made multiple phone call attempts to reach the former CFO for an interview. She did not respond to our requests,” the report said.

Moody resigned from the Fort Worden PDA in 2020, which the report said happened “after the authority identified a bank account transfer she attempted without a documented explanation or board approval.”

Last year, in its response to the fraud report, PDA officials noted they had uncovered other “violations of law” by Moody.

According to the PDA’s 2018 and 2019 statements filed with the state, the PDA noted: “In 2020 the district became aware that its CFO was violating finance-related legal and contractual provisions as follows:

• Failure to file annual financial reports;

• Failure to comply with BARS [Budgeting, Accounting and Reporting System];

• Diversion of Capital Funds to Operations without proper authority;

• Possible embezzlement.”

Late last year, the Washington State Auditor’ Office asked the PDA to seek recovery of the $10,054 in bogus checks, as well as the $21,000 it cost to conduct the investigation.

In court documents filed Sept. 30 that accuse Moody of first-degree theft, the prosecutor's office noted the alleged theft occurred between Sept. 1, 2019 and Dec. 31, 2019.

Documents allege Moody made two fraudulent claims that exceeded $5,000 in value.

Conviction of first-degree theft can result in a maximum sentence of 10 years in prison and a $20,000 fine.

Moody has not been arrested on the theft charge.

A summons was issued for her Oct. 14 court date.

"Because this is a pending case I am not able to offer a comment on it," Kennedy said in an email Wednesday to The Leader.