OIG: Office of Inspector General
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Investigative Report

  United States Attorney
District of Maryland
Northern Division
Rod J. Rosenstein

For Immediate Release
June 15, 2006

Media Contact:
Vickie E. LeDuc
Public Information Officer



BALTIMORE, Maryland - Diane L. McFarland, age 51, of Frostburg, Maryland, was convicted today of theft from a program receiving federal funds, wire fraud and mail fraud in connection with a scheme in which she stole funds intended to purchase reading materials for the elementary school students and to reimburse elementary school teachers for their training expenses, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to the evidence presented at trial, while serving as the principal of Cash Valley Elementary School located in LaVale, Maryland, McFarland stole approximately $18,000 in federal funds granted to the school and the Board of Education of Allegany County during the 2002, 2003 and 2004 school years. Witnesses testified that McFarland stole the funds by submitting fraudulent claims for reimbursements relating to a federal grant program called the Success for All Program, in two ways:

First, testimony at trial showed that McFarland obtained federal funds on the pretense that they were reimbursements to herself for purchasing books and educational materials for the school. McFarland submitted fraudulent invoices and statements for books and materials she never purchased. McFarland obtained about $12,000 in the 2003-2004 school year and about $4,100 in the preceding two school years through this means.

Second, testimony also showed that McFarland kept funds that were intended to reimburse elementary school teachers for expenses they incurred attending Success for All Program training conferences in Atlanta, New York, San Francisco and San Antonio. In relation to the Atlanta trip, for example, McFarland submitted fraudulent receipts to the Board of Education of Allegany County in order to give the impression that the teachers had spent approximately $2,160, when in fact they had spent only $773. McFarland then did not reimburse the teachers for their real expenses, instead keeping the funds for herself.

The sentencing guidelines suggest a range of 18-24 months imprisonment for this crime, although the statutory maximum sentence is 20 years imprisonment and a $250,000 fine. U.S. District Judge Richard D. Bennett has scheduled sentencing for September 15, 2006.

United States Attorney Rod J. Rosenstein commended the Federal Bureau of Investigation, the Department of Education, Office of Inspector General and the Combined County Criminal Investigation Unit of Allegany County (C3I) for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorneys Michael J. Leotta and Stephen M. Schenning, who prosecuted the case.

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Last Modified: 06/20/2006