Former Health Services Research Initiative employee Barbara O’Donnell was arraigned yesterday in Washtenaw County Circuit Court following a five-month investigation that alleges showed she embezzled more than $425,000 from HSRI.

University spokeswoman Julie Peterson said O’Donnell was arrested on four counts of embezzlement over $20,000, one count of conducting a criminal enterprise and one count of money laundering. O’Donnell, a University employee since December 1990, was an administrative worker in the HSRI from 1998 to 2002. In her last two years, she was responsible for overseeing many financial matters in HSRI, like budget preparation and approval of expenditures.

But when HSRI shut down because of unrelated financial problems, other administrative workers found irregularities committed by O’Donnell in the financial records.

When the investigation was turned over to the Department of Public Safety, it was discovered that O’Donnell had paid herself for hours she never worked. She had also charged items to her University charge card, known as a P-Card, without ever reimbursing the University.

In addition, she made her husband, Francis O’Donnell, a phantom employee on the payroll.

“He was actually never working in that department,” Peterson said, adding that O’Donnell forged the signature of her supervisor, Prof. John Wheeler, in order to process some financial documents. Peterson said University employees who wish to charge work items to the University do so on their P-cards, adding that if personal items were to get mixed up with business items, employees must reimburse the University.

“She bought some items that were clearly not related to her job and she did not reimburse the University,” Peterson said, adding that all University employees must reconcile their P-Card accounts every 30 days.

Joseph Burke, chief assistant prosecutor for Washtenaw County, said O’Donnell was arraigned on one count of embezzlement, although he said she had been charged with more felonies. Burke also said O’Donnell’s preliminary examination is scheduled for Dec. 18, in front of a judge yet to be named. He added that her bond was set yesterday in the amount of $25,000. He was unsure if she had made bail. “I’m guessing she did, but I don’t know the answer to that,” Burke said.

Peterson said the University would be completing its investigation of HSRI and would be making appropriate recommendations in regard to oversight of financial managers. She added that the University already has very strict procedures in place, which they will remind employees of.

“They may well look for … areas that can be strengthened,” she said. “It’s crucial to follow our existing processes.”

HSRI was created in 1998 in order to build a network of health service researchers at the University. It helped acquire research for certain professors and sponsored seminars on a variety of topics, including health care organization and the health professions work force. Due to its inability to form a self-supporting funding model, the initiative ended last June.

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