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Reno man on trial on faith-based fraud charges

March 19, 2014

RENO, Nev. (AP) — A Reno businessman accused of defrauding the U.S. government went on a $13,000 Hawaiian vacation with some of the $200,000 in faith-based grants he claimed to be spending on charitable groups but instead converted for his own use, federal prosecutors said Tuesday.

Michael Stickler shuffled money between accounts with more than 51 wire transfers over a seven-month period in 2007-08 to hide the true use of a $500,000 grant he obtained through the U.S. Department of Health and Human Services’ faith-based initiative, Assistant U.S. Attorney Carla Higginbotham said.

Stickler’s Faith Based Services was one of several groups he ran that he said he used to raise money to benefit Christian and other nonprofits, including a project to build homes in Haiti.

Defense attorneys said his bookkeeper, Kathryn Petri, is responsible for any money missing, but prosecutors said she was acting under orders from Stickler.

“This is a very simple case. There is one defendant, one grant and one charge — theft of government property,” Higgenbotham told the jury during her opening statement in U.S. District Court in Reno.

“When the government asked him to show them the money — to explain what he did with it — he never was able to do so,” she said. “To this day, he’s never provided a full accounting of how that money was spent.”

Stickler secured grant money from Health and Human Services’ faith-based initiative by portraying Faith Based Services as a “training company to provide leadership and training for other nonprofits to apply for, qualify for and obtain other grants,” she said.

His grant application indicated $200,000 of the money would be distributed in $25,000 increments to eight other subcontractors, but they never were paid, Higgenbotham said. In addition to taking a monthlong vacation in Hawaii during the grant period, he paid himself $10,000 more than allowed, she said.

“The defense is effectively this: I didn’t do it, my bookkeeper did,” Higgenbotham said.

Petri has been granted federal immunity and is expected to testify at the trial running through the end of the week.

Higgenbotham acknowledged Petri wrote checks to herself and to cash, but that money was properly deposited in other accounts at Faith Based Services.

Stickler “was the boss. He was in charge of finances. He knew exactly what was happening with the accounts and how chaotic those accounts were being kept,” she said. “The evidence will show it was not Katie Petri but Michael Stickler who stole this money.”

U.S. District Judge Miranda Du postponed the defense’s opening statement until Wednesday morning after prosecutors objected to graphics they wanted to present to the jury outlining the flow of money in the accounts.

But Michael Kennedy, chief U.S. public defender in Nevada, said during an exchange before the judge outside the presence of the jury on Tuesday that Petri knew she was not allowed to draw down the grant account below the $300,000 level because the other $200,000 was to be directed to the subcontractors.

“When she did that, she committed a crime,” Kennedy said.

“She comingled the money so no one could distinguish between the grant money and non-grant funds,” he added. “Money was flowing back and forth, making it almost a nightmare to unravel as to which was supposed to be in which account.”

Du dismissed several potential jurors before the start of the trial, including one who said he’d hold faith-based organization to a “higher standard” partly because “the Bible teaches honesty.”

If convicted, Stickler could face up to 10 years in prison.

Stickler also was indicted in March 2013 on charges that he allegedly withdrew federal taxes from his Faith Based Solutions employee paychecks between 2007 to 2010, but failed to send the funds to the IRS. He also has pleaded not guilty to that charge. That trial is set for June 3.

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