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Former Select Staffing Inc. Vice President of Risk Management Fred O. Pachón was jailed Friday on a charge of felony grand theft for allegedly embezzling about $700,000 in workers compensation payments from the Santa Barbara, Calif.-based firm.
Mr. Pachón also was charged with five felony counts for allegedly filing false income tax returns, the Santa Barbara County District Attorney's office announced Wednesday.
He pleaded not guilty to the charges Wednesday during an arraignment in Santa Barbara Superior Court. He is scheduled to return to court Friday for a preliminary hearing on the embezzlement and income tax charges.
Santa Barbara police said Mr. Pachón was arrested on Aug. 30 after being served a search warrant at his home.
An investigation began after Select Staffing contacted the Santa Barbara Police Department in May to report that an audit had uncovered the alleged embezzlement.
Mr. Pachón “devised a scheme in which funds from (workers compensation) medical bill invoices that should have been paid to Select Staffing were instead deposited into his personal account,” police said in a statement.
“It was not a very complicated” arrangement, Santa Barbara County Senior Deputy District Attorney Brian Cota said in an interview.
The complaint alleges the theft from Select Staffing occurred between Jan. 1, 2008, and Dec. 30, 2012.
Mr. Pachón's bail is set at $100,000, but he has the additional burden of establishing that any bail money presented was not obtained through felonious means, Mr. Cota said.
“In high-dollar embezzlement cases, you don't want them using the stolen money to post their bail,” Mr. Cota said. “It's pretty standard in these types of cases” to require proof that bail money was not obtained illegally.
Mr. Pachón currently is the president and CEO of consulting firm Ventura, Calif.-based Risk-Minds/Risk-Guards. He also was named Business Insurance's 2009 Risk Manager of the Year®.