Embezzlement Loss May Be Near $1 Million

The amount of money allegedly embezzled at the headquarters of California Community Colleges from a program for disabled students may turn out to be several hundred thousand dollars more than the $410,000 previously reported, the top official in the college system said Wednesday.

Chancellor David Mertes also said that he expects one or two more people to be arrested soon in the case, which broke Monday night with the arrest in Sacramento of Robert F. Howard, acting dean of student services and special programs. Mertes said the other suspects were not state employees but he would not comment on a statement from investigators that Howard’s wife and mother-in-law have been questioned.

Amount Missing

Howard, a paraplegic who uses a wheelchair, allegedly stole several thousand dollars a month since 1983 by funneling payments to a bogus consulting firm run by his wife, Pamela McNary Howard, and mother-in-law, Tusca McNary, officials say. The acting dean, 42, is charged with grand theft and conflict of interest.

Investigators are still figuring out how much money is missing but Mertes said he expects the total to be less than $1 million. In addition to the criminal investigation by the state Department of Justice, the state auditor general and a private management firm will investigate the handling of all finances at the system’s headquarters, according to Mertes.

“I’m starting from the premise that if it happened once, it can happen again,” said Mertes, who became chancellor July 1 and was in Pasadena on Wednesday to speak to the local Rotary Club about his plans for college reforms.

Ronald Dyste, vice chancellor for student services and Howard’s supervisor, will remain on paid administrative leave until the investigation is over but is not a suspect, according to Mertes. “It’s in everybody’s interest that (Dyste) not be in the office while this is going on,” he said. The locks to Howard’s and Dyste’s offices have been changed and only Mertes has the keys, the chancellor said.

Special Agent Whitt Murray of the state Department of Justice, said that Howard’s wife and mother-in-law were questioned and thad other arrests are expected within the next few days. But Murray would not comment on whether the two women would be arrested.

Identical Addresses

The company, McNary & McNary, is located at the same Riverside Boulevard address as the Howards’ home in Sacramento, according to papers filed with the city to establish the firm’s right to its name. However, a search Wednesday by The Times through other records showed no city or county business license and no state incorporation papers for the company. Authorities said the checks in the alleged embezzlement were sent to a Sacramento post office box that was opened by Howard and his wife.

Howard’s $51,660 annual salary will be suspended quickly but restored retroactively if he is exonerated, Mertes said. Howard could not be reached for comment Wednesday. He is free on $50,000 bail and is scheduled to be arraigned in Sacramento next Wednesday.

Howard was hired by the community colleges system in 1978 as an affirmative-action specialist and was appointed acting dean last year. He oversaw $870,000 a year in programs for the disabled, immigrants, welfare recipients and foster parents.

Discretionary Fund

However, the missing money is from a discretionary fund that is not earmarked for any particular college and none of the 106 two-year schools complained about a shortfall, Mertes said. That may be why it took so long to discover the problem, the chancellor suggested.

“I did not expect to find what came out,” said Mertes, who requested the Justice Department investigation three weeks ago. “I was very, very surprised.”