Ten Counts of Theft: $137,000 Traced to Transactions Allegedly Made by Debbie Knapp From Museum Accounts [The Chronicle, Centralia, Wash.]

Dec. 30--Since November, the Lewis County Historical Museum has been trying to figure out how over $460,000 could have disappeared from the museum's endowment fund in less than three years.

Chehalis police on Thursday appeared to have solved a piece of the puzzle, and the person most closely associated with the museum's day-to-day operation for over five years is now accused of stealing more than $100,000 from the fund.

Former Lewis County Historical Museum Executive Director Debbie Knapp was booked into the Lewis County Jail Thursday afternoon, and made a preliminary appearance Friday on 10 counts of first-degree theft in connection with at least $137,000 in alleged fraudulent transactions with money that belonged to the museum.

Knapp appeared subdued during her few minutes in front of Judge Richard Brosey in Lewis County Superior Court Friday afternoon, sitting in front of a gallery that included members of her family and some who came to express support for the Knapp family.

Public defender Bob Schroeter -- who has previously served as the museum's president in years past, but said he did not know Knapp personally -- said Knapp is now receiving unemployment benefits totaling $1,200 per month and lives in an RV in Centralia.

Lewis County Prosecutor Jonathan Meyer, in turn, said Knapp used a position of authority to in essence aggravate the theft charges, as reflected in charging documents.

Meyer also said he anticipates additional charges to be filed as the investigation continues.

Brosey ordered Knapp released on $25,000 unsecured cosigned bond, with standard conditions and the requirement that Knapp surrender her international passport to appointed attorney Ken Johnson. Knapp is tentatively scheduled to appear in court at 1:50 p.m.Jan. 12. If convicted, each theft charge -- all Class B felonies -- carry a maximum penalty of 10 years imprisonment and/or a $20,000 fine, plus restitution.

Members of Knapp's family declined to comment immediately following Friday's proceedings.

The Chronicle on Nov. 1 first reported the disappearance of roughly $460,000 in the museum's endowment fund over the course of just under three years, from January 2008 nearing the end of 2010. Chehalis Police began investigating the fund's drawdown in November after board members turned in the financial records they had acquired from Security State Bank.

Court documents obtained by The Chronicle Friday allege Knapp, who received a salary of $43,000 per year, made numerous draws from the museum between 2008 and 2011, totaling $44,600. The draws were in addition to her pay and were alleged to have not been paid back.

According to court documents, Knapp allegedly wrote the draw checks to herself with no other people being aware they had been issued. Knapp also allegedly entered the checks as "void" into the museum's check register.

Chehalis police questioned Knapp about the draws; court documents say she initially denied being overpaid but then acknowledged she had been overpaid.

Knapp is also alleged to have personally benefited from more than $137,000 in unauthorized transactions, including purchases made with the museum's debit card at Aaron's Furniture, AGIA Insurance, Walmart, Rite Aid, Kmart, Walgreens, Safeway, Staples and the Lewis County Public Utility District. Court documents also allege that Knapp paid for her electricity bill for the previous two years using the card.

The disappearance of the funds created an uproar among museum membership, who in November voted out all sitting executive board members and replaced them with President John Panesko, Vice President Peter Lahmann, Secretary Julie Zander and Treasurer Daryl Lund for the year 2012.

However, the executive board resigned en masse shortly after the annual meeting, handing the reins of leadership to the four incumbents a month and a half early.

The new executive board in mid-November moved to lay off Knapp and other paid museum staff, citing financial difficulties. At that meeting, the museum board reported just over $2,000 in its primary bank account, with over $13,000 in unpaid bills. The board later voted to accept what it called a "gracious" loan offer from Security State Bank to help pay off the museum's debts.

The board also voted in December to amend the bylaws, which now state that a majority of board members must approve any financial transaction related to the endowment fund.

Panesko, speaking by phone Thursday afternoon following Knapp's arrest and subsequent booking, said the new museum board "feared the worst" after discovering the museum's financial records did not reflect those obtained from Security State Bank in November after the board voted to view the bank's records.

"This is sad because Debbie has been our friend and she did so much for the museum," Panesko said. "We hope it's not true, but we fear it is."

Knapp had initially been hired in July 2006 as the museum's executive director, replacing Jesse Clark McAbee. Chehalis police have said they are continuing to investigate financial transactions from 2006 and 2007 as well.

Edna Fund and Dennis Dawes, museum board representatives from the cities of Centralia and Chehalis, respectively and who both had initially been appointed to an emergency finance committee to investigate the funds' disappearance, both expressed sadness over the situation.

"I don't think anyone takes any personal satisfaction in seeing this, and I'm particularly bothered that there's a chunk of money that in all likelihood is not going to be recovered," Dawes said. "There's a lot of info that's still not public knowledge, but now the process is in the hands of the courts."

Panesko said the museum itself continues to move forward from the alleged theft of funds, with numerous people and organizations pledging money to what he called "a complete break" from the museum's old leadership.

"Our finances are excellent and our first order of business is to pay off the (Security State Bank) loan," Panesko said. "We will rely on memberships, bookstore sales and donations to keep this prize active in our community."

Christopher Brewer: (360) 807-8235

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