Worker pleads not guilty in fraud case
Charged with taking $750K from state coffers

By Sarah Antonacci

State Journal-Register, Springfield, IL
Published Wednesday, May 7, 2008

The state treasurer’s office employee charged with embezzling $750,000 from state coffers pleaded not guilty to the three federal counts Tuesday.

Debra Kay Kirby, 54, of Taylorville had a federal public defender appointed for her, though she and her husband make a combined $5,200 a month. Of that, $2,900 is from her pension as a 33-year state government employee, but by law cannot be considered in evaluating her need for a court-appointed attorney.

Kirby declined to comment after the hearing, leaving through the back door of the federal court building, and her attorney, Robert Scherschligt, said he was prevented from discussing the case. He referred calls to the federal public defender’s Peoria office.

She is charged with wire fraud, which carries a penalty of up to 20 years in prison, conducting monetary transactions with the proceeds from the embezzlement, a crime punishable by up to 10 years in federal prison, and criminal forfeiture, where the government is asking that she pay back the $263,000 that she allegedly spent on personal expenses.

Kirby remains free on bond but must not incur new debt and must tell the people and businesses she owes money about her pending criminal charges, as well as any potential employer. She also has to check in with the federal probation department.

Paul Miller, general counsel for state Treasurer Alexi Giannoulius, said after the hearing that the treasurer’s office has been analyzing each of the transactions conducted by Kirby at her job as head of the clearing unit in the banking division. At that job, she was responsible for banking transfers and Miller said the office was confident no money was missing. He said safeguards were in place when she was caught and more have been instituted since.

“Obviously, we were shocked and concerned about this incident,” he said. “We strongly hope she’s prosecuted to the fullest extent of the law, so that people know this type of behavior will never be tolerated.”

He said Kirby worked her way into a position of trust and was making $67,000 annually when she retired in May 2006. Much of the $750,000 was transferred back to the state, but the $263,000 sought as reimbursement apparently was spent.

“Our understanding is the money was spent on boats, a cruise, a camper, a trip to Orlando, a mortgage payment and one college tuition payment,” Miller said.

A trial date has been set for July 1, but Miller said a plea agreement might be worked out.

Kirby allegedly ordered a wire transfer of $750,000 into an account she created and used a scheme of paperwork transactions to account for the money. An investigation was launched after one of the entities she used, the Internal Revenue Service, questioned the transactions.