Reno man’s lawyer blames bookkeeper in fraud case

RENO — The bookkeeper for a Reno businessman accused of bilking the government out of $200,000 intended for nonprofits was the culprit who embezzled the money then agreed to testify against her boss after prosecutors promised her immunity, a defense lawyer claimed Wednesday in his opening trial statement.

Government lawyers have accused Michael Stickler of going on a $13,000 Hawaiian vacation with some of the faith-based grants he is accused of stealing from the U.S. Department of Health and Human Services in 2007 and 2008.

Public defender Michael Kennedy told jurors in federal court in Reno that bookkeeper Kathryn Petri was the only one who had direct access to the funds. He said she made more than 50 wire transfers of money during a seven-month period beginning in the fall of 2007 to hide the fact she was stealing from Stickler’s Faith Based Solutions LLC.

“Katie moved the money. Katie took the money and Katie comingled the money by making wire transfers in between bank accounts,” Kennedy said at the trial before U.S. District Judge Miranda Du.

Petri has not been charged in the case. She acknowledged when she took the witness stand Wednesday that she had been granted immunity but said the deal required her to tell the truth and insisted she never took any of the money, the Reno Gazette-Journal reported.

“The evidence will show it was not Katie Petri but Michael Stickler who stole this money,” Assistant U.S. Attorney Carla Higgenbotham said in her opening statement on Tuesday.

Kennedy showed the jury a series of charts and spreadsheets detailing the way Petri allegedly shifted money obtained through a $500,000 grant from one fund to another then back into the company’s original account.

“It’s a circle. The money is moving around like a tornado. To say which dollar is which dollar is impossible,” Kennedy said.

Lola Montgomery, an official for the Department of Health and Human Services who monitored the grant, testified that Stickler was responsible for money as the managing partner of Faith Based Solutions. He was the authorizing official and formal applicant for the grant in March 2007, she said.

“The authorizing official has ultimate responsibility to be sure all expenditures are authorized,” said Montgomery, a program specialist in the Office of Family Services under HHS Administration for Children and Families.

Petri testified that she spoke with Stickler about the company’s money problems almost daily, and she continually moved funds to different accounts to try to keep checks from bouncing, the Gazette-Journal said.

“Normally we talked about everything before it was paid,” she said. “Often there were checks that would not clear if I did not move money.”

In his opening statement, Kennedy said there was “no notation, no email, no evidence at all” that Petri was acting under Stickler’s direction. He also dismissed prosecutors’ claim that Petri was just a bookkeeper.

“She had 20 years in banking and was the business manager for Faith Based Solutions ... the grant manager,” he said, urging jurors to consider Petri’s motivation for agreeing to testify that Stickler was the one behind the scheme.

“She can be charged with no crime related to this because she has this thing called immunity,” Kennedy said. “As long as she testifies consistent with the government’s opening statement, regardless of all I’ve shown you, then she walks away from this.”

Stickler has pleaded not guilty to theft of public money. A grand jury indicted him in 2012. If convicted, he could face up to 10 years in prison.

Stickler’s Faith Based Services was one of several groups he ran that he said raised money to benefit Christian and other nonprofits, including a project to build homes in Haiti.

His application indicated $200,000 of the $500,000 grant would be distributed in $25,000 increments to eight other subcontractors, but prosecutors said the amounts were not paid and that Stickler paid himself $10,000 more than allowed.