President and founder of non-profit accused of stealing its funds
The president-founder of the non-profit Susquehanna House Inc. was arrested Friday afternoon on felony charges of allegedly misappropriating $530,000 of the company’s money, according to county District Attorney Eric Linhardt.
James M. McCloy, 46, of 43 Kennedy Drive, Pine Creek Township, Clinton County, faces one count each of theft and theft by failure to make required disposition of funds received.
“McCloy allegedly used the non-profit’s funds to pay for gambling, strip clubs and other personal expenses, including to pay off obligations to his ex-wife from a 2010 divorce settlement,” Linhardt said.
Based at 748 Broad St., Montoursville, Susquehanna House Inc. provides residential services, foster care, transitional living and day treatment for youths at a number of facilities that are located in Linden, Jersey Shore, Montoursville, Williamsport and Atlantic City, N.J.
The company is licensed by the state Department of Public Welfare and contracts with individual counties to provide services.
In an eight-page affidavit, county Detective A.E. Diaz Sr. outlined in detail how McCloy allegedly misappropriated the company’s funds between 2009 and last year.
The charges are the culmination of a year-long investigation that began in the spring 2012 when the Bureau of Charitable Organizations in the Pennsylvania Department of State received “a complaint that McCloy was using the non-profit’s funds for personal gain,” Diaz said.
The investigation was handed over to the state Attorney General’s Office, which presented much of the information to Linhardt’s office.
Upon examining the company’s bank records over a four-year period, investigators determined that “Susquehanna House Inc. funds were used for cash withdrawals and point of sale transactions at gambling establishments, bars and strip clubs at locations in Atlantic City, and Harrisburg, among other places,” Diaz said.
Diaz alleges that McCloy also misappropriated company funds by having Susquehanna House pay for financial obligations that he alone owed his ex-wife concerning a log home in the 8600 block of Route 220 near Linden that the couple had purchased when they were married.
Diaz said there is a “second mortgage on this property” that was the sole obligation of McCloy, but that Susquehanna House Inc. made the payments to the seller.
At his arraignment before District Judge Gary A. Whiteman, McCloy denied the charges filed against him.
“I don’t believe I have done anything wrong and I’m going to fight these accusations,” he told a reporter during the proceedings. “I have cooperated fully with the state Attorney General’s Office.”
Referring to the misappropriated funds, McCloy said “the amount is very misleading. They involve properties owned by me and leased to Susquehanna House. I’ve not made any profit from it.”
He has obtained the services of a defense attorney in State College. He was released on $150,000 bail.
Linhardt said he wanted “to thank state Attorney General Kathleen Kane, not only for her office’s excellent work, but also for her willingness to bring the resources of her office to bear in this investigation.”
While the investigation is ongoing, Linhardt said there “is no evidence that McCloy’s financial issues detracted from the work Susquehanna House employees are doing on a daily basis in treating children in the juvenile justice and Child and Youth systems.”