The onetime president of Goodwill Industries in Santa Clara County masterminded an embezzlement scheme that siphoned off millions of dollars in donations meant for job training for disabled people, according to a federal indictment unsealed this week.
Andrew Liersch, 67, will go before a federal judge Friday to face charges of money-laundering and wire fraud, which prosecutors and Goodwill officials say cost the charity $26 million.
The case caps a six-year investigation into financial wrongdoing at Silicon Valley Goodwill stores, in which donated clothing, furniture and other items were sold to benefit conspirators rather than the charity.
Liersch, who left the country after the investigation began, was arrested Friday at Los Angeles International Airport after arriving from Guatemala. Guatemalan officials expelled him when U.S. authorities alerted them that he had been indicted by a grand jury.
Liersch's attorney did not return calls seeking comment.
The U.S. attorney's office accuses Liersch of overseeing a scheme to skim profits from Goodwill stores across Santa Clara County over almost 18 years. The scheme was allegedly carried out with the participation of several other Goodwill managers.
Prosecutors say Liersch and others employed more than 100 workers whose job it was to skim the most valuable items donated. Prosecutors say Liersch then put money from sale of the items into bank accounts in Switzerland, Scotland and Austria.
Authorities began investigating the Goodwill operation six years ago when one of the alleged conspirators was going through a bitter divorce. Her husband called authorities to complain about the reputed fraud.
Seven people have been convicted in the scheme so far. Another alleged conspirator, Carol Marrs, Goodwill's director of stores, shot and killed herself shortly after investigators searched her home in 1997. Investigators found nearly $1 million in accounts allegedly set up with profits from the scheme.
Goodwill officials expressed hope Wednesday that Liersch's arrest would bring the scandal to a close.
"It was a sad period in our history," said Hugh Barnett, current president of the organization's Santa Clara County operation. "We've learned from it. We've put in an extensive series of theft prevention controls. It would be very difficult to have this happen again, but we know that temptation is everything."
Goodwill Industries is a nonprofit charitable organization that collects donated goods from the community and sells them in retail stores. Money from those sales is intended to provide job training to disabled and underprivileged people.
Barnett said the Santa Clara County scheme was able to remain undetected for so long because management continued to pull in strong revenues for the charity. "They produced good results for Goodwill," he said. "They had better results every year."
Liersch was president of Santa Clara Goodwill stores from 1976 to 1993. Authorities believe that the embezzlement occurred between 1979 and 1997.
To help conceal their actions, the conspirators reported false daily cash receipts from Goodwill stores, authorities said.
The indictment alleges that between 1988 and 1997, one of the conspirators, Faye Marcil, would deliver envelopes containing $3,000 in cash to Marrs, who in turn would deliver it to Liersch.
"Basically, this was all started 20 years ago by Carol Marrs," said Santa Clara County Deputy Dist. Atty. Stephen Lowney, who prosecuted the other defendants.
"It started at yard sales, when she would just pocket the cash. When Liersch came to the Goodwill, he partnered up with her and took it to a new level," he said.
Liersch is being held without bail. In additional to the criminal charges, prosecutors want him to turn over more than $800,000 allegedly placed in overseas bank accounts.
Times staff writer Chris O'Connell in Oakland contributed to this report.