AUSA VICKIE E. LEDUC at 410-209-4885

DECEMBER 16, 2005

ELEMENTARY SCHOOL PRINCIPAL INDICTED FOR EMBEZZLING FUNDS INTENDED FOR TEACHER EXPENSES AND BOOKS

Allegany County School Principal is Alleged to Have Stolen $18,308 in Federal Funds

BALTIMORE, Maryland - United States Attorney for the District of Maryland Rod J. Rosenstein announced that a federal grand jury has indicted Diane L. McFarland, age 51, of Frostburg, Maryland, for crimes arising out of a scheme in which she stole funds that were intended to reimburse elementary school teachers for their expenses and to be used to purchase books for the elementary school. The indictment, returned on December 13, 2005, charges McFarland with theft from a program receiving federal funds, wire fraud and mail fraud.

According to the indictment unsealed today, while serving as the principal of Cash Valley Elementary School located in LaVale, Maryland, McFarland stole approximately $18,308 in federal funds granted to the school and the Board of Education of Allegany County. McFarland allegedly stole these funds by submitting fraudulent claims for reimbursements relating to a federal grant program called the Success for All Program. Funds for this program were intended to educate children by paying for teachers and administrators to attend training conferences, and by purchasing books and other educational materials.

The indictment alleges a twofold scheme to misapply the funds. First, McFarland kept for herself funds that were intended to reimburse elementary school teachers for the expenses they incurred attending a Success for All Program training conference in Atlanta, Georgia. McFarland submitted fraudulent receipts to the Board of Education of Allegany County in order to give the impression that the teachers had spent approximately $2,160, when in fact they had spent $773. McFarland did not reimburse the teachers for their real expenses. Through this means, McFarland stole about $2,160.

Second, McFarland allegedly obtained funds on the pretense that they were reimbursements to herself for purchasing books and educational materials for the school. McFarland submitted fraudulent invoices and statements purporting to show her orders, but in fact she never purchased these books and materials. Through this means, McFarland obtained about $12,036 in the 2003-2004 school year and about $4,112 in the preceding two school years.

If convicted, McFarland faces a maximum sentence of 20 years imprisonment and a $250,000 fine. McFarland pled not guilty at her initial appearance and arraignment before U.S. Magistrate Judge Susan K. Gauvey at 11:00 a.m. today and was released.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.

United States Attorney Rod J. Rosenstein commended the Federal Bureau of Investigation, the Department of Education, Office of Inspector General and the Combined County Criminal Investigation Unit of Allegany County (C3I) for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorney Michael J. Leotta, who is prosecuting the case.