Principal was in debt, prosecutor tells jury


Saddled with crushing credit card debt, a Western Maryland principal faked travel receipts and forged invoices for school books she never bought in an effort to line her own pockets, federal prosecutors in Baltimore alleged in opening arguments yesterday.

But an attorney for Diane L. McFarland countered that the longtime Allegany County employee never knowingly stole anything and had substantial assets and a good salary.

Custodians who unloaded books at Cash Valley Elementary School in LaVale will also back up her claims that she made legitimate purchases with school funds and that the books were delivered, attorney Fred Warren Barrett told jurors.

McFarland, 52, was charged in December with stealing more than $18,000 from her school, taking funds intended for classroom books and travel reimbursement to teachers who attended conferences.

Assistant U.S. Attorney Michael J. Leotta spoke to the jury for almost an hour yesterday afternoon, outlining a scheme allegedly concocted by McFarland.

"I'm not saying she's a bad principal or a bad person," he said. "She was generally held in high regard."

But, Leotta said, she had a problem of spending beyond her means, landing her in $50,000 of credit card debt. And that financial crush motivated her to steal from the school district that employed her, he said.

An internal audit first discovered discrepancies in her expense reports in July 2004, Leotta said. In fact, the prosecutors said, her deception had started as far back as 2001.

McFarland, of Frostburg, had worked as a teacher, assistant principal and principal at two elementary schools. She was also listed as the campaign treasurer for a longtime Democratic state delegate.

McFarland received substantial help from the delegate, Kevin Kelly of Allegany County, in her unsuccessful negotiations with school district officials. Her lawyer indicated in his opening arguments yesterday that Kelly might testify at her trial.

The case fell under the jurisdiction of the U.S. attorney's office because McFarland is accused of falsifying invoices to receive reimbursement from the Success for All program, which is federally funded.

According to the indictment, Cash Valley teachers attended Success for All training conferences in San Francisco, New York and Atlanta. McFarland was given a $7,000 advance to cover the Atlanta expenses, for example, and handled the teachers' receipts.

She had a sudden case of acute appendicitis and never attended the conference, Leotta said. But in the end, she pocketed more than $2,000 in money that should have gone to her teachers who did attend.

Federal prosecutors allege that after she was interviewed by an auditor in July 2004, McFarland sent a letter to the five teachers the next month with $120 in cash for each one.

Barrett said that McFarland never faked a receipt. She also never gave her own teachers reimbursement funds for meal expenses because the teachers had an unapproved luxury - separate bedrooms. The additional costs, Barrett said, went to pay for the extra rooms, which were against school board policy.

McFarland's trial is expected to last at least a week. If convicted, she could receive up to 20 years in prison and a $250,000 fine.

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