Ex-Director of Legal Aid Center Admits He Embezzled $263,000 : Crime: James Steven Carroll, who resigned from the Pacoima agency a year ago, says he gambled away the money.

The former director of a Pacoima legal aid center that represents poor people pleaded guilty Wednesday to charges that he embezzled more than $260,000, admitting he used the money to feed his gambling habit.

James Steven Carroll, 41, who resigned last July as head of San Fernando Valley Neighborhood Legal Services, pleaded guilty to one count of theft of public money and two counts of theft from a program receiving federal funds.

Carroll, who is free on a $10,000 bond, faces a maximum sentence of 30 years in prison and a $750,000 fine when he is sentenced Oct. 18 in U. S. District Court.

But Assistant U. S. Atty. Steven M. Arkow said that in return for Carroll’s guilty plea, he agreed to recommend that Carroll receive less than the maximum sentence. A specific sentence was not agreed upon, Arkow said.

He also said that even though Carroll pleaded guilty to only three charges involving about $263,000, Carroll may be required to make restitution of nearly $500,000 he is believed to have embezzled.

During the brief court hearing, U. S. District Court Judge Stephen V. Wilson asked Carroll what he did that made him guilty of the crime.

“Well, I took funds . . . and gambled them away,” Carroll said.

Arkow said that Carroll opened a phony bank account in September, 1989, in which he deposited at least 13 checks intended for the legal center.

Carroll, of San Fernando, admitted last July that he had embezzled nearly $400,000 from the 26-year-old nonprofit, publicly funded agency that served about 12,000 poor people in the northeast San Fernando Valley last year. He returned $50,000 and agreed to cooperate with authorities.

At the time, his attorney, Mark A. Gottesman, said his client gambled away all the money he took, betting primarily on sports. Gottesman said that Carroll has been attending Gamblers Anonymous meetings regularly.

During his 13 years of working with the center, his last four as executive director, officials said Carroll never gave any indication that he had a gambling problem.

“Both everybody here and in the legal community were totally shocked,” said Neal S. Dudovitz, who took over as the center’s executive director last month.

Dudovitz said the center has returned to some semblance of normalcy.

“We’re back to normal in the sense that we are fully staffed and we were able to complete some office remodeling,” Dudovitz said. “However, we did not receive back all the funds that had been taken.”

Dudovitz said that even after an insurance payment, the center was short nearly $150,000 of the money that Carroll stole.

“We have always believed that people who violate the public trust should be prosecuted to the full extent of the law,” Dudovitz said. “Mr. Carroll’s actions have made this past year a difficult one for our program, but we have emerged even more determined that poor people who reside in the San Fernando Valley will continue to receive the high-quality legal representation they deserve.”

The center, which employs 12 attorneys and 10 paralegals, has a $2.2-million annual budget funded primarily by the federal government. The State Bar of California and the city and county of Los Angeles--through community development block grants--also provide funding.