Woman's Embezzlement leads to layoffs, wage freezes

A woman who embezzled so much money from a local company that it had to lay off some employees and freeze wages has been sentenced to four years in prison. The U.S. Attorney's Office in Seattle says Sarah Jane Johnson, 42, formerly of Redmond, was sentenced in U.S. District Court in Seattle on Monday for wire fraud.

She was also ordered to pay more than $800,000 in restitution and spend three years on supervised release after she is out of prison.

She pleaded guilty earlier this year.

Johnson was head of human services for Driessen Services Inc., which designs and makes equipment for airplane galleys. Prosecutors say that beginning in 2005, Johnson kept former employees on the payroll system after they had left the company. She then changed their direct deposit to one of nine bank accounts she controlled.

Prosecutors say that over five years Johnson fraudulently directed $986,481 in payroll. About $715,000 was for her own use and $250,000 was paid in state and federal taxes on the payroll.

Prosecutors say the embezzlement was discovered after she left the company.

"Johnson's actions caused a complete mess at the company," prosecutors wrote in court documents. "During the period of Johnson's fraud, the company struggled to understand why it was not profitable. " As a result, the company laid off employees, froze pay, and demoted the managing director, who later left the company.  After the company discovered the fraud, it determined that Johnson's actions had accounted for nearly fifty percent of the company's losses in fiscals years 2007 and 2009.

"The company achieved profitability after Johnson left the company and the fraud

The scheme also meant that some former employees were told by the IRS that they owed more  in taxes and that others couldn't qualify for unemployment benefits because it appeared they were still employed, prosecutors said.