Although expressing skepticism about the strength of the prosecution’s case, this morning Judge Kelly Neel held former North Coast Journal bookkeeper Carmen Marie England to answer on a charge of grand theft by embezzlement.

England is accused of stealing about $60,000 from the Journal during the 10-plus years she worked there. During her testimony, England admitted changing numbers to balance the books each month, but she insisted she did so under the explicit instructions of Journal co-owner and Publisher Judy Hodgson.

In fact Hodgson, in her absence, in some ways ended up seeming like the accused.

England testified during the preliminary hearing that every month she would find budget discrepancies and point them out to Hodgson. The publisher would say “Don’t worry about it, we’ll look for it later,” and then tell her to “force” the books so they balanced. She would do so, she said, never imagining she would someday be charged with stealing the money that went missing.

In making her ruling today, Judge Neel acknowledged she had concerns about Hodgson’s testimony on the first day of the hearing.

“The court has heard testimony from Ms. Hodgson that there was no petty cash,” Neel said, yet financial entries refer directly to petty cash “and that’s a problem.”

“The court heard from Ms. Hodgson that no one else had access to QuickBooks (financial software), that the only person was Ms. England.” But a financial expert testified she found records indicating six separate individuals had access to the accounting system.

And Neel said it appeared from testimony that some Journal employees were using the office cash drawer as “a piggy bank.”

On the other hand, Neel said, England “tells the court that she is the one who modified the numbers to make sure they matched, at the direction of Ms. Hodgson.”

Ruling on probable cause in this case “is a closer call than the court initially thought,” Neel said. In the end she decided to hold England to answer, noting that after England left her job no more money was reported missing.

“I am going to hold her,” she said, “recognizing that the case perhaps isn’t as strong as the People thought.”

Defense attorney Michael Robinson and Deputy District Attorney Steven Steward responded that they have already been having informal discussions about resolving the case before trial.

During closing arguments, Robinson asked Neel to dismiss the charges, characterizing the case as one that “doesn’t even approach the standard of probable cause.”

“The identity of the perpetrator hasn’t been established,” Robinson said. He called the charges “needless, groundless and baseless” and said it was “fundamentally wrong and downright unconstitutional, forcing (England) to prove she did nothing wrong.”

Steward argued that England admitted during testimony that she changed numbers, which is probable cause for holding her to answer.

“Whether Ms. Hodgson forced her to do it is something a jury should decide,” the prosecutor said. “… Ninety-five percent (of the issues) is appropriate for a jury to decide.”

Steward said the theft was “not the work of multiple people” and it coincided with the time England worked at the Journal.

The investigation began when Hodgson discovered a credit line for the business had a balance of $8,000 instead of the approximately $4,000 she expected. An audit by accountant Katherine Almy revealed a total of about $60,000 missing.

That number was disputed today by defense-hired Certified Public Accountant and Certified Fraud Examiner Kim McReynolds, who also testified the Journal had a “messy” accounting system with few internal controls to prevent theft.

McReynolds, who reviewed Almy’s list of accounting discrepancies, said “Some of them I agree with and some of them I don’t.”

For example, she found some of the money listed as missing in other accounts. Another problem, she said, was there was no petty cash account “but they were using cash.”

During Hodgson’s testimony, the publisher recalled a day when she had collected $2,000 from a long-time, non-paying customer. She gave it to England to add to the $18,000 bank deposit she was preparing to make, but the bank statement showed a deposit of just $18,000.

Robinson asked England today about handwriting on the deposit envelope indicating $2,000 had been removed. The handwriting was Hodgson’s, England said.

McReynolds said she found “really odd” Hodgson’s testimony that suspicion first arose when the credit line balance was thousands of dollars higher than thought. McReynolds reviewed transactions on the credit line and they matched with bank statements.

Asked about England changing budget numbers at Hodgson’s request, McReynolds said England told her that when she brought discrepancies to Hodgson’s attention, Hodgson would tell her “It’s no big deal. It might have been trade (with customers). Just don’t worry about it.”

McReynolds said that contrary to Hodgson’s statement that England was the only person with access to the QuickBooks software, she found five other people had used it, including Hodgson.

Steward asked McReynolds whether it concerned her that England admitted to manipulating numbers.

“To be honest,” she said, “a lot of bookkeepers are just going to do what their boss tells them do do.”

“If you were asked,” Steward said, “would you have to say no?”


As to where the missing money ended up, it wasn’t in England’s bank account at Coast Central Credit Union in Willow Creek. Eureka Police Detective Amber Cosetti testified she subpoenaed the bank statement and it showed nothing unusual.

Unless the case settles beforehand, England is expected to be arraigned on the charges on Oct. 26.


Disclaimer: Many people who work at the Outpost previously worked at the Journal at one time or another.