Two sisters who turned a Fresno foster care and group home business into an $8 million-a-year operation used the nonprofit's money "as if it were their own," a prosecutor said Monday.
Prosecutor Regina Leary said Elaine Bernard, chief executive officer of Genesis, and clinical director Carol Dela Torre spent public money intended for abused and neglected children on their own vacations and expensive clothing.
Leary said the sisters were able to steal from Genesis because their close friends and relatives were on the nonprofit's board of directors. "The board was a rubber stamp ... a piece of decoration," Leary said.
In all, about $500,000 was embezzled between 1996 and 2001, Leary said in opening statements of the sisters' trial in Fresno County Superior Court.
Defense lawyers for the women said the Genesis board authorized the women to spend the money.
Five years after the Fresno County District Attorney's Office launched its investigation of Genesis, prosecutors Leary and Michael Elder will start the lengthy process of revealing their evidence against Bernard and Dela Torre. The trial is expected to take two months.
Today, W. Scott Quinlan, who represents Dela Torre, will finish his opening statements in Judge William Kent Hamlin's courtroom. Bernard's lawyer, Roger Nuttall, will follow, and then witnesses will be called to testify.
A 17-count indictment, which came after 10 days of grand jury testimony in Fresno County Superior Court in the summer of 2005, charged Bernard with embezzlement and theft of $150,000 or more. Dela Torre was charged with embezzlement and theft in excess of $50,000.
The other felony charges related to allegedly filing false state income tax returns and evading state taxes.
Bernard, 47, and Dela Torre, 45, have pleaded not guilty.
In opening statements, Leary told jurors that Genesis holds a special status because it receives government money tax-free and must spend it for the benefit of the children it serves.
Because of this nonprofit status, Leary said, the Genesis board cannot legally authorize the use of funds for personal benefit.
Leary said Bernard and Dela Torre violated that trust by using a Genesis corporate credit card on vacations, hotels and jewelry at such stores as Ann Taylor, Sak's Fifth Avenue and Neiman Marcus. She said Bernard then hid the credit card receipts and statements from Genesis board members and auditors.
Often, Bernard would tell her bookkeeper to label hers and Dela Torre's personal charges as "unexplained expenses," Leary said.
Board members George Aguilar, Frank Franco, Tim Rios and Nora Benavides, however, became leery of Bernard's accounting practices. Some of them tried to review the Genesis accounting books, but Bernard thwarted their efforts, Leary said. They resigned after a disagreement with Bernard and the rest of the board, said Leary, a chief deputy district attorney.
The Genesis financial picture came to forefront in late 2001 when Genesis employees Jose Torna and Gina Vagnino went to the FBI, who directed them to the District Attorney's Office. They are key witnesses in the trial.
Dela Torre's attorney, Quinlan, painted a different portrait of the defendants, saying they have devoted their lives to helping children.
In the beginning, the sisters used their own money -- borrowed from their mother, Frances Dela Torre, to start Genesis. As the business grew, the Genesis board authorized Bernard to get corporate credit cards and determine who could use them.
The sisters did put personal expenses on Genesis credit cards, but they had every intention of paying the corporation back once it was determined which purchases were personal and which were business expenses, Quinlan said.
Dela Torre turned in all of her credit card receipts to Bernard, who kept track of the expenditures, Quinlan said.
Quinlan said the sisters agreed to repay Genesis for personal expenses on the corporate credit cards in February 2003, a year after prosecutors launched the Genesis investigation. He said the Genesis board accepted the women's repayment and also concluded that they "did not intend to steal or embezzle" corporate funds and their use of the corporate credit cards "was not unauthorized."
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