Woman Accused Of Embezzlement Claims Company Misused Program Funds

Sunday, April 22nd 2007, 1:59 pm
By: News On 6

OKLAHOMA CITY (AP) -- Jury selection is scheduled to begin Thursday for an Edmond woman accused of embezzling nearly $240,000 from a restaurant chain founder's company.

Pamela Elaine Johnson faces 40 counts of embezzlement, one count of falsifying corporate records and one count of unlawful computer use. Prosecutors charged Johnson, 47, in 2004 with embezzling $240,000 but they believe she took nearly $600,000 from Stars Restaurants founder James L. Barrett.

"The evidence will show that the defendant was addicted to shopping and living far beyond her means," prosecutors told a judge.

But Johnson contends the funds she took were hush money authorized by Barrett to keep her from talking to authorities about him, The Oklahoman reported in Sunday's editions.

"James L. Barrett arranged and consented to compensating her in a secretive manner (through hidden payments of her credit cards) in order that she would remain silent regarding his personal indiscretions and his criminal business activities," defense attorney Mack Martin wrote in court documents.

Johnson, 47, provided The Oklahoman with copies of company documents showing Barrett, his daughter and his business received about $200,000 in indirect payments from state contracts designed to educate pregnant women about the dangers of alcohol use.

The Oklahoma Department of Mental Health and Substance Abuse Services paid more than $1.7 million in taxpayer dollars for the program from 1998 to 2005. Records show agency officials raised internal concerns at times but apparently never monitored the program or audited how the money was spent.

Johnson claimed she prepared bogus invoices at the request of Barrett and that little or nothing was done to earn the fees that were paid. "I just did what I was told," she said.

Barrett, who served as chairman of a legislative pay committee that voted in 1988 to give state lawmakers a 60% pay raise, denied the accusations.

"This is a desperate move by desperate people. It's not true," said attorney Stephen DeGiusti, who is representing Barrett's company.

Stephen Carleton, a former educator, said he and his wife, a nurse, were recruited by Barrett to run the program. Initially, the state mental health agency paid North Care Center, a nonprofit mental health organization, to administer the program, and North Care subcontracted the work to a business run by the Carletons.

Randy Tate, chief executive of North Care, said he sought to end the pass-through arrangement after taking over North Care because of concerns about how the money was being spent and the lack of oversight.

"I don't know anything about the quality of your work. ... I just don't want the liability for what your people are doing," Tate said he told Barrett.

In 2001, state mental health officials began contracting directly with the Carletons and their business, Behavioral Health Care Solutions.

Behavioral Health Care Solutions made payments to Barrett, his daughter, Hollye Barrett and Stars Restaurants, the Oklahoman reported. Over a 2 ½ year period, Hollye Barrett received more than $72,000 for "professional services" but those stopped in 2000, Johnson said, in the wake of the "ghost employee" scandal at the state Health Department.

Hollye Barrett did not return calls seeking comment.

After the payments to Hollye Barrett ceased, Johnson said James Barrett had her start sending monthly bills to Behavioral Health Care Solutions for rent, professional services, and legal and consulting fees.

Records provided by Johnson show Stars Restaurants billed Behavioral Health Care Solutions $1,000 to $1,200 a month for rent and $1,200 to $1,500 a month for professional services.

Johnson also provided copies of additional bills for consulting fees claimed by attorney James Barrett that amounted to about $36,600 for him and $94,600 for his company, The Oklahoman reported.

Johnson said the rent was for a seldom-used office of an out-of-state Stars Restaurants executive that the Carletons only used to store brochures. She said the professional services payments involved her taking about four calls a month related to the program and relaying messages to the Carletons.

Stephen Carleton, 69, now retired and living in Texas, said the former secretary shouldn't be believed and the Barretts deserved their pay.

"We operated our thing as best we could and kept records of all that and there were certainly services provided by Mr. Barrett. I needed his help and expertise and that's what he provided," Carleton said.

Prosecutors contend in court papers that jurors should not be exposed to the accusations Barrett, his company and his daughter received payments from the program "but did no work in return."