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Brown Recovers College Scholarship Funds Raided by Trustee

Wednesday, January 20, 2010
Contact: (415) 703-5837

Mendocino, Calif—Attorney General Edmund G. Brown Jr. today announced a settlement with James L. Harrison, 62, of Ukiah, after he “looted college scholarship funds” from a Trust intended to benefit female graduates of Ukiah High School pursuing careers in medicine.

Brown’s office, working with the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Institutions, recovered both the principal and the interest—totaling over $650,000—owed to the Trust. In the settlement, Harrison agreed to a lifetime ban from serving as a charitable trustee or officer of a public benefit corporation.

“Harrison looted college scholarship funds intended to help women graduating from high school achieve their dreams,” Brown said. “Today’s agreement makes sure that he is never in a position to steal from a non-profit again.”

In 1993, Ukiah residents Viola and Oscar Allen established a Living Trust. It was their wish that upon their deaths, funds from the Trust would be administered as scholarships for female graduates of Ukiah High School interested in pursuing further education in the medical field.

Harrison, who was then Vice President of Savings Bank in Mendocino County, became Trustee in 1993. Instead of funding scholarships for students, he began spending the money for his own benefit. He invested in real-estate ventures and loaned money to friends and family.

In 2005, the FDIC was notified of suspicious activity involving the Trust. The Attorney General’s Office began its own investigation and found that Harrison had diverted hundreds of thousands of the approximately $474,000 in the original Trust.

In February 2007, Brown’s office filed a civil lawsuit against Harrison seeking to remove him from the Trustee position. Brown’s office also filed criminal charges against Harrison in 2008.

In February 2009, Harrison entered no contest pleas to the following felony counts:

• Misappropriation of trust assets (Penal Code sections 487/506)
• Filing willfully false tax returns (Revenue and Taxation Code section 19705(a)(1))
• Admittedly taking in excess of $200,000 (Penal Code section 12022.6(a)(2))

Harrison was sentenced to one year in county jail and three years probation.

As a result of the civil action, a new trustee was appointed to administer the Viola and Oscar Allen Trust and scholarships have been distributed for the last two years to female graduates of Ukiah High School.

A copy of the settlement agreement is attached.

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Harrison Settlement Agreement547.67 KB

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