OAKLAND -- A jury convicted a former Alameda County anti-poverty official of a felony Monday for falsifying a memo, but the jury found Nanette Dillard innocent of misusing public money for personal profit and still is deliberating on four other felony charges.

The jury also acquitted her husband, Paul Daniels, of a charge of misusing federal grant money awarded to the now-disbanded Alameda County Associated Community Action Program, but the jury still is pondering three other charges against him.

The unusual partial verdict, delivered Monday morning before jurors went back to deliberate, came about because of what Alameda County Superior Court Judge Allan Hymer described as "some confusion" in the jury room.

The jury of three women and nine men has been sitting since October in the Rene C. Davidson Courthouse in Oakland, listening to the testimony of more than 30 bureaucrats, bankers, elected officials and other witnesses called by prosecutors and several more witnesses brought in by defense attorneys. The trial delved into the inner workings of the nearly 40-year-old public agency, known as ACAP, that Dillard directed until she was placed on administrative leave and later fired in 2011.

Dillard defended herself on the witness stand for nearly seven days last month. Daniels, who managed grants at the agency, also defended himself. Jurors began deliberating early last week.


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A note delivered by jurors Thursday to Hymer reported that one juror was refusing to consider circumstantial evidence, only direct evidence, in concluding whether the married couple was guilty of criminal wrongdoing.

Hymer on Monday accepted the three verdicts -- one guilty and two not guilty -- that the jurors unanimously agreed upon. Then, he sent them back to the jury room after clarifying the law, instructing them that circumstantial evidence must also be considered as they mull over the other seven felony charges.

Still undecided by the jury is whether the married couple stole money from the federal government and conspired with one another to overstate the agency's fiscal holdings in order to obtain more than $200,000 from the federal Assets for Independence grant.

The grant matched the savings of low-income East Bay residents to help them buy a home, start a business or further their education, but Dillard is accused of using too much of the grant money for payroll and trying to keep her cash-strapped agency afloat. Dillard has said the way she pulled grant money from one account to fill a budget hole was approved and guided by ACAP's fiscal sponsor, the Alameda County Social Services Agency.

In his closing arguments on Feb. 24, her attorney Thomas Mesereau read from the prosecution's own opening arguments in trying to eviscerate what he described as a "bogus set of charges." He suggested the Alameda County District Attorney's Office was trying to silence the "feisty" Dillard for publicly fighting with county officials and East Bay politicians over the agency's funding and cash-flow problems. Dillard sued the governing board for wrongful termination in 2012, winning a settlement award of more than $300,000.

Prosecutors labeled the county financial issues a "red herring" distracting jurors from the crimes allegedly committed.

But in finding her not guilty Monday of misusing public money for personal profit, jurors found at least one of the prosecution's charges unconvincing. The allegation stemmed from work done on her house by a crew of hard-to-employ workers recruited by the agency, along with pricey out-of-state restaurant meals and a pair of massages at the Claremont Hotel and Spa for Dillard and the deputy director she was having a hard time getting along with.

Dillard sought to explain those as legitimate business expenses during her testimony, and even Alameda County Deputy District Attorney Greg Dolge acknowledged in his closing arguments that the couple's actions did not appear to be motivated by a desire for personal wealth.

But jurors did find Dillard guilty Monday of falsifying records of some of those questionable expenses in preparation for the trial or another legal proceeding. Prosecutors accused Dillard of altering some of her expense records after she was placed on leave by ACAP's governing board in February 2011, and surveillance cameras captured her and Daniels returning to her Hayward office in the middle of the night.

The maximum penalty for the false evidence conviction is three years in prison.