SAN JOSE -- The Peninsula Symphony was sitting pretty this past fall -- or so board members thought.
The executive director of the Los Altos nonprofit had just reported the group was in excellent financial shape, ready to embark on its 65th concert season. But then a venue-rental check bounced, and the horrified board learned all its accounts had been drained -- including a $500,000 endowment.
"It was a total surprise," said board Chairman and cello player Alan Bien, who performs with the orchestra of volunteer musicians.
The discovery prompted the sudden resignation of the group's executive director, Stephen Jay Carlton, in September. After an investigation by Los Altos police, the state Franchise Tax Board and Santa Clara County prosecutor Judy Lee, Carlton was arrested last week on charges of embezzlement, grand theft, forgery, identity theft and tax evasion in connection with the symphony's loss.
The 45-year-old Novato resident was being held Wednesday in Santa Clara County Jail in lieu of $350,000 bail. He faces a maximum of 18 years in prison if he is convicted. His lawyer, John Cahners declined to comment.
The investigation allegedly showed that Carlton had begun siphoning off money shortly after he took over in the summer of 2010 from the previous executive director, who retired after eight years, according to Bien.
Carlton wrote numerous checks to himself, including duplicate payroll checks, using some of the money to pay his credit card debts, Lee said. He'd also taken out an unauthorized $25,000 loan on behalf of the symphony and forged the signature of two board members on several of the checks, she said.
At the time, the board didn't have controls in place to monitor the accounts.
"We very much trusted him," Bien said.
The symphony has since hired an accounting company.
It also managed to rally from the startling loss, raising about $350,000 from board members and musicians. But it still needs funds for its Bridges to Music program, which brings music to schools in Redwood City, Mountain View, Sunnyvale and East Palo Alto that lack musical instruction.
Contact Tracey Kaplan at 408-278-3482. Follow her at Twitter.com/tkaplanreport