Kimball Allen, the 29-year-old former administrative manager accused of embezzling more than $65,000 from the Greenmeadow Community Association, pleaded not guilty on Thursday (April 14) in Santa Clara County Superior Court.
Allen faces up to three years in prison for one count of embezzlement of more than $60,000, a felony.
He is accused of making more than 250 personal charges on the association's business credit card between February 2010 and January 2011 and falsifying the expenses to cover his crimes, according to a Palo Alto police report.
Allen is alleged to have spent the money on hair replacements, a down payment on a BMW roadster, trips to Hawaii and Mexico, gym equipment for his gymnastics business and a membership at an upscale Palo Alto fitness club, among other purchases.
Allen surrendered at the Santa Clara County Jail in San Jose Wednesday night. He previously wrote a letter of apology to the Greenmeadow association, saying: "The crimes that I have committed are pathetic and hurtful."
He sat tensely during the brief arraignment in Santa Clara County Superior Court's Palo Alto courthouse Thursday, wearing jail-issued plastic orange sandals, a brown jail shirt and gray sweatpants. His wrists were shackled.
Douglas Rappaport, Allen's attorney, said Allen's sister-in-law in Alaska had provided papers showing that she was a reliable source of bail. He asked Judge Douglas K. Southard to forgo bail and to release Allen on his own recognizance, since Allen admitted the crimes and was remorseful and wants to make restitution.
Prosecutors said they would not agree to releasing Allen without bail unless he posted the full $50,000 in a Department of Revenues account for disbursement to his victims.
"That is unconstitutional. It's extortion," Rappaport said.
But Southard said he thought Rappaport had argued to put the $50,000 cash in the fund when he made his request for the release.
"It's not extortion to agree to something you suggested," Southard said.
Rappaport clarified that Allen wanted to use the $50,000 bail money instead to start repaying the association. The arrest is Allen's first offense; he has cooperated and surrendered and has a legitimate source of bail.
"He's a perfect candidate for release," Rappaport said.
Southard disagreed.
"He frittered away $65,000 on a BMW and hair transplants. He's a transient and unemployed," Southard said, indicating that although it is Allen's first offense, his behavior appeared capricious.
He agreed to reduce bail to $10,000 in accordance with the bail schedule, which means that Allen would have to come up with 10 percent, or $1,000 to be freed.
Rappaport said later by phone that his client could be released sometime today, perhaps near midnight, but he did not know for sure. His next court appearance is scheduled for April 29.
Comments
Adobe-Meadow
on Apr 14, 2011 at 5:22 pm
on Apr 14, 2011 at 5:22 pm
Is he in jail right now or was he released?
Greenmeadow
on Apr 14, 2011 at 9:13 pm
on Apr 14, 2011 at 9:13 pm
So what is the difference between him paying $50,000 to "Department of Revenues account for disbursement to his victims" and paying back Greenmeadow itself. If he really want to pay back the association why not do it as part of bail?
Another Palo Alto neighborhood
on Apr 14, 2011 at 9:41 pm
on Apr 14, 2011 at 9:41 pm
how and why does a neighborhood association have so much money?
South of Midtown
on Apr 14, 2011 at 10:59 pm
on Apr 14, 2011 at 10:59 pm
The neighborhood association doesn't have that much money. The theft was mostly in the form of charges to a credit card that was meant for transactions that require a credit card. As you might know, credit is different from money. In paying the fraudulent bills, the association had that much money embezzled from it, which resulted in a lack of money.
Palo Verde
on Apr 14, 2011 at 11:13 pm
on Apr 14, 2011 at 11:13 pm
I believe embezzling is taxable income. The IRS and Franchise Tax Board will be in line ahead of the neighborhood association for any restitution. Whenever I look at bankruptcy filings, the IRS is always the largest creditor and that debt never goes away by itself. Where's an unemployed transient going to come up with $65,000 plus taxes anytime soon? He'll never get a legitimate job anywhere near money with a criminal record of felony embezzlement. My condolences to Greenmeadow. All part of becoming financially educated. Unfortunately now I am beginning to have suspicions about all the organizations which have been getting donations from me through the years. Be careful out there.
Greenmeadow
on Apr 15, 2011 at 8:21 am
on Apr 15, 2011 at 8:21 am
>>I believe embezzling is taxable income.
Maybe he can get a good accountant to write off the BMW and hair transplant as a 'business expense'.
another community
on Apr 15, 2011 at 9:30 am
on Apr 15, 2011 at 9:30 am
I'm I missing something here? How can he plead not guilty when he said he did it.
Greenmeadow
on Apr 15, 2011 at 12:20 pm
on Apr 15, 2011 at 12:20 pm
My family grew up in Greenmeadow, the community is a wonderful place to raise a family. Who was the person responsible for hiring this person, and why was he able to gain access to credit cards? In the future, the association should only allow Board members to use the credit card, and the charges should be reviewed by the Board monthly. Mr. Allen belongs in jail, until he pays the association back the 64K. He still should get some jail time, what would he get if he went into a bank used a gun and walked out the door with $64,000 dollars.
Southgate
on Apr 15, 2011 at 12:56 pm
on Apr 15, 2011 at 12:56 pm
His attorney said bail should be reduced because "Allen admitted the crimes and was remorseful", yet at the same appearance he pleads "not guilty".
Duveneck/St. Francis
on Apr 15, 2011 at 2:22 pm
on Apr 15, 2011 at 2:22 pm
A Bimmer and hair transplant. Dude is livin' the Palo Alto lifestyle.
Greenmeadow
on Apr 15, 2011 at 3:44 pm
on Apr 15, 2011 at 3:44 pm
Several members of the Greenmeadow Association indicated that Mr. Hamilton, a former resident of Greenmeadow aplogized during last months meeting. Why was a former resident allowed to speak at the association meeting? I assume, though I don't have any proof, that Mr. Hamilton had something to do with hiring this person. I recognize you can't personally hold Mr. Hamilton responsible, he should be doing something to help the association regain the lost revenue. At this point, the association will probably get little if any money returned. He will need the money for legal representation.
Adobe-Meadow
on Apr 15, 2011 at 3:53 pm
on Apr 15, 2011 at 3:53 pm
If he really is remorseful, he should plead guilty. Use the money he would spend on a lawyer to pay restitution instead.
Greenmeadow
on Apr 15, 2011 at 4:00 pm
on Apr 15, 2011 at 4:00 pm
Most general business insurance policies have a small portion of coverage set aside for theft and fraud. I would assume that the GM association probably have some level of this sort of coverage.
Greenmeadow
on Apr 15, 2011 at 6:05 pm
on Apr 15, 2011 at 6:05 pm
The issue wasn't the person that hired him though. He performed his job well for a year and a half before the first fraudulent purchase. The fraudulent purchases started small and then accelerated only once he realized no one was looking. The problem was in the lack of procedures for auditing what he claimed to have purchased.
Greenmeadow
on Apr 15, 2011 at 11:02 pm
on Apr 15, 2011 at 11:02 pm
Problem wasn't the "lack of procedures for auditing what he claimed to have purchased." That's blaming the vicitm. Problem was an employee that embezzeled funds. Period, no excuses.
Greenmeadow
on Apr 16, 2011 at 7:18 am
on Apr 16, 2011 at 7:18 am
>>Problem wasn't the "lack of procedures for auditing what he
>>claimed to have purchased." That's blaming the vicitm. Problem
>>was an employee that embezzeled funds. Period, no excuses.
Of course he embezzled funds - "period no excuses" - but proper over-sight would have limited or even prevented the theft. He leased a BMW off the association credit card! Someone looking at the "raw" credit card report could have seen that after only a month. This wasn't a loophole he slipped through; it was a failure of proper auditing at it's most basic and fundamental level. Accounting 101.
Duveneck/St. Francis
on Apr 16, 2011 at 8:29 am
on Apr 16, 2011 at 8:29 am
Mr. Allen admitted to the crime. Prosecute him and put him away for as long as possible.
Greenmeadow
on Apr 16, 2011 at 9:23 am
on Apr 16, 2011 at 9:23 am
Please consider joining Greenmeadow. We are hurting for members, really need the money and could use some good hardy souls to teach us better controls.
another community
on Apr 16, 2011 at 2:12 pm
on Apr 16, 2011 at 2:12 pm
I grew up in Greenmeadow. People can easily complain about the Board, the person who was responsible for hiring the indiviual, and the accounting policies. Since this never happened before, the community wasn't aware that someone like Mr. Allen could easily take advantage of the situation. Passing blame around is simple, the solutions are important so this will never happen again.