DECATUR - The 40-year-old former business manager of the Lutheran School Association in Decatur is facing charges of theft of more than $100,000 from a school and forgery for allegedly embezzling funds from the association.

Kristine K. Jones was arrested Friday by Decatur police following an investigation into a complaint by LSA that funds were missing from accounts. She had been fired Sept. 5 by the LSA board.

The Decatur police investigation places LSA's loss at about $244,000 during 2006 and 2007, with prior years under review. Jones had been employed by LSA since August 2004.

LSA Superintendent Brian Ryherd said a statement about the situation was read Sunday in the churches that support the association:

"On Sept. 13, the LSA administration discovered some irregularities in its financial accounts. As a result, the board and Superintendent Ryherd began an internal investigation. It quickly became clear that police authorities should be notified.

"The school is continuing its investigation and understands the authorities are also conducting their own investigation. At a special board meeting last Tuesday, the board voted to engage an independent accounting firm to conduct a fraud audit on all LSA accounts.

"The school board and Superintendent Ryherd ask everyone to understand that because of the ongoing investigations, no further comments can be made at this time.

"This is a very trying and difficult time for the LSA. However, our ministry to kids continues and will continue. We covet your prayers for this vital ministry and for a God-pleasing resolution."

Jones appeared Saturday in Macon County Circuit Court before Associate Judge Timothy Steadman, who set her bond at $35,000. She was released from the county jail after posting $3,500 cash bail. She is scheduled for arraignment Oct. 19, but formal charges have yet to be filed.

State's Attorney Jack Ahola said Monday that his office is reviewing police reports and charges are pending. He said once they are filed, he will seek appointment of a special prosecutor because he is a member of one of LSA's supporting churches and has a conflict of interest.

If a charge of theft of more than $100,000 from a school is filed against Jones, it will be a Class X felony, Ahola said. The crime carries an enhanced penalty because the victim is a school, he said.

Class X crimes are punishable by six to 30 years in prison upon conviction without the possibility of an alternate sentence of probation. Jones has no prior criminal record, according to court files.

In a sworn statement filed in court, police detective Joe Patton explained the way the embezzlement is believed to have occurred.

LSA has a main account for general operating purposes at one Decatur bank and a second account at another bank for the proceeds from sales of gift cards the school uses to raise money for students' tuition, Patton said.

Gift cards good at various retailers can be bought through the school, with a percentage of the face value of each card reimbursed to LSA by participating businesses, Patton said. The reimbursement money is credited toward the tuition of the student who sold the card, he said.

The face value of the cards ranges from $5 to $100 depending on the retailer.

Patton said LSA members place their orders for the cards at any time and pay by check to the special account. The card orders arrive on Fridays.

As business manager, one of Jones' primary jobs was to manage the card orders and the special account, Patton said. An office worker would make out the deposit slips and give them to Jones, he said.

Upon review, police determined that many of the deposit slip amounts were altered from the time they were made out by the office worker until the time Jones deposited them into the bank, Patton said. This contributed to false financial reports and accounts not reconciling, he said.

Ryherd discovered a total $127,780 in gift card orders from Jones during 2007 but no checks from her to pay for the cards, Patton said. Upon review of the total funds Jones was to deposit in 2006, authorities found the total discrepancy exceeded $244,000, he said.

Patton said Ryherd was unable to locate any deposits into the special card account by Jones to pay for any of her card orders during 2006 or 2007.

Ron Ingram can be reached at ringram@herald-review.com or 421-7973.