Waterford — A former treasurer of the Quaker Hill Elementary School Parent Teacher Association has been arrested for allegedly embezzling PTA funds.

John Pagano was charged Thursday with second-degree larceny, according to a Waterford Police Department news release. He is accused of stealing more than $16,000. He was the PTA's treasurer beginning in 2018 and until March 29, when he submitted a written resignation.

"Pagano voluntarily turned himself in and was arrested pursuant to an active arrest warrant held by Waterford police," the release read. He was released and is scheduled to appear in Superior Court in New London on June 17.

On March 24, Waterford Detective Todd O'Connell received a written complaint from a board member of the Quaker Hill PTA, referred to in the arrest warrant as Witness 1, regarding Pagano's PTA business practices.

Two weeks earlier, prior to a PTA meeting, Witness 1 went through the association's mail to identify what needed to be given to Pagano. Witness 1 found the PTA's February bank statement and saw the association's debit card was used for a $405.99 cash withdrawal "conducted at Foxwoods Casino," according to the affidavit. Witness 1 said the debit card is entrusted to Pagano, and that such a withdrawal would have nothing to do with the PTA.

Before the March 10 PTA meeting, Witness 1 confronted Pagano about the withdrawal, according to the affidavit. Witness 1 said Pagano said he had gone out to dinner with his wife on Valentine's Day and accidentally used the PTA debit card instead of his personal credit card. He said it was a mistake and promised to pay back the PTA. Witness 1 told police that, a year earlier, "Pagano's wife had confided in her that Pagano liked to gamble and had spent too much of their earnings at the casino."

After the March 10 meeting, Witness 1 informed another board member, referred to as Witness 2 in the police report, of the transaction. The two decided that someone should go to Liberty Bank to obtain the PTA's bank statements and determine if there were other instances of suspicious activity. Witness 1 told police she'd asked for the 2019 statements from Pagano before, and he "had yet to provide the copies, even after being prompted on several occasions."

Upon obtaining the bank statements from Liberty Bank on March 12, Witness 1 discovered a slew of withdrawals from the PTA's account in 2018 and 2019 conducted at ATMs and not associated with PTA events, according to the affidavit. Of the 30 withdrawals, 29 were made at Mohegan Sun Casino, and one was made at Foxwoods Casino.

Witness 2 also reviewed the PTA's financial documents during Pagano's tenure as treasurer. The loss, "between withdrawals at the Liberty Bank, local casinos and unexplained miscellaneous charges was estimated to be $17,394.50," according to the affidavit.

O'Connell, after reviewing the PTA's bank statements from July 2018 through March 2020, came across other large cash withdrawals from Liberty Bank consistent with those made at the casinos, bringing the amount of the allegedly embezzled funds to $18,320.36.

On March 14, Witness 1 notified Pagano about the financial discrepancies and asked him to surrender all PTA financial documents in his possession. Witness 1 and another PTA board member, referred to as Witness 3 in the affidavit, went to Pagano's home on that day to retrieve the materials. They apprised him of how much money had been wrongfully withdrawn.

"Witness #1 stated that Pagano looked surprised by the amount, but never once stated that he had not withdrawn the money," the affidavit reads. "Witness #1 expressed that she and Witness #3 were uncomfortable with the lack of affect that Pagano expressed and were concerned for Pagano's safety."

Due to this safety concern, Witness 1 reached out to Pagano's wife, who "seemed genuinely shocked at this information and kept asking why he would do this, how he could do this to her family, and how this would affect their reputation in the community."

Later in the investigation, O'Connell said that during a May 8 interview, Pagano said he has a gambling problem and "was now going back to his therapist for treatment."

"Pagano stated that the last few years his gambling had gotten out of hand, 'but not like this,'" the affidavit said.

O'Connell had Pagano sift through the 52 questionable transactions, 40 of which — totaling $16,849.30 — Pagano admitted to carrying out "for his 'personal use,'" according to the affidavit.

O'Connell reported Pagano also said that in 2019, he deposited his personal money into the PTA account, amounting to approximately $5,000 and $6,000. "Pagano stated that he had done this in an effort to cover costs that the PTA was about to incur for upcoming end of school year events," the affidavit reads. "Pagano stated that he would use his own money to make direct deposits or add money to deposits that were already being made on behalf of the PTA."

O'Connell concluded the PTA's total loss to be $16,750.39.

In a Facebook message Wednesday morning, the Quaker Hill PTA stated they were "devastated by the recently uncovered financial misappropriation of funds."

"We, as a board, are committed to hold anyone who violates our core principles accountable for their actions," the association wrote.

The PTA also reflected on the impact of the alleged embezzlement on their organization.

"This was an enourmous deficit for our budget, which resulted in a complete restructuring of the proposed budget, drastic cut to expenses, cancellation of events and limited contribution to school programs which had been funded by the Quaker Hill PTA in the past," the association wrote.

Waterford Superintendent Thomas Giard said he was made aware late last week of the charges.

"While the PTA is a completely separate entity from the school district, and we have no financial connection to them, the news is disappointing," Giard said. "The PTA in any school is a vital partner, especially in this era of dwindling financial resources. The Quaker Hill PTA is no different, as their support in many areas of student life, especially in the area of technology, has been appreciated."

s.spinella@theday.com