After a state audit of Bellingham Housing Authority found thousands of dollars had been embezzled by a privately contracted employee in 2006, the next year’s audit found no financial discrepancies.

In August and September 2006, several discrepancies were found in properties managed by Pinnacle Management Group employee Courtney Diehl. Pinnacle Management Group is a private property management company hired by the housing authority.

The discrepancies were followed with a review by a forensic accountant, a criminal investigation by police and a state audit, which reported more than $2,000 of public funds missing.

Diehl is believed to have stolen as much as $60,000, but the state audit only reported on public funds, said John Harmon, executive director and CEO of the housing authority.

Diehl was fired after failing to provide an adequate explanation for the missing funds, and on March 11, 2008, she pleaded guilty to first-degree theft and three counts of forgery. Diehl was sentenced to six months in jail, which she could serve as part of a work crew, and was ordered to pay $15,003 in restitution, according to Whatcom County Superior Court records.

The housing authority still contracts with Pinnacle Management Group, which has made many changes since the embezzlement in how the company is run, Harmon said. One such change includes having two to three people check every deposit so that money isn’t handled by just one employee, he said.

According to the latest state audit, which examined financial transactions from Oct. 1, 2006, to Sept. 3, 2007, the housing authority complied with state laws and regulations, and public funds were adequately protected.

Bellingham Housing Authority and Whatcom County Housing Authority work together to provide housing for about 3,400 people in the county who are elderly, have disabilities or have low incomes.