April 11, 2014
This story was updated on Sept. 22, 2014:
On Sept. 8, 2014 Stephen Carlton entered a not guilty plea in a case that alleges the former executive director of the Peninsula Symphony embezzled $244,000. He has also waived his right to a preliminary hearing. And now to arraignment. The next court date is on Sept. 23 at 1:30 p.m. in superior court in Palo Alto. The original article continues below ...
Stephen Carlton, the once “lovely and charming” executive director of the Peninsula Symphony, shuffled off the elevator on the fourth floor of the Palo Alto courthouse on Tuesday, shackled hand and foot, and chained to three other inmates. They moved centipede-like into Dept. 89, and Carlton, with his wavvy hair and looking a little haggard after nearly two months in jail, did not acknowledge any of the people standing on either side of the courtroom door, including several symphony board members.
Carlton stands accused of forgery, theft, and the embezzlement of at least $244,000 from the Peninsula Symphony Association. He had been called to a plea hearing, but the matter was put off until May 27th.
Afterwards, more than a dozen symphony association members huddled in the hallway for a conference with the deputy district attorney Judy Lee, who explained the long and arduous legal process, including not only the matter of incarceration but also restitution. Carlton, who carries a prior strike, a manslaughter conviction, will most certainly be facing several years in prison, perhaps five to eight by one estimate, 13 at the max. But exactly how long is an algorithmic-like calculation based on, among other things, time served, the way credits for time served are counted (especially considering the weight of a prior conviction), the way this kind of crime is regarded in Santa Clara County, the judge’s personal predilections, the amount of restitution, the victim’s appeals, and the sway of Carlton’s attorney, John Cahners, who arrived in court looking slim, tanned and, tennised, as it were. He is no Rumpole of the Bailey.
As for restitution, it would appear not much can be expected. It will be “Like squeezing water out of a rock,” predicted Ms. Lee, who suggested a worst-case schedule on the order of $50 a month. That in turn would have to be split with the California Franchise Board, which has it own claims. A civil case is in the works.
Carlton has made no effort to make bail, which is set at $150,000 — he would need to put up about 10 percent of that in cash or kind. That might mean he’s trying to collect as much ‘time served’ as possible, or else he honestly doesn’t have the money. How much he’s paying his attorney isn’t known, nor whether his wife, Karen, has the assets or the desire to help free him.
And where did all the money go that Carlton is accused of stealing? Part of it went to pay for trips to Las Vegas.
The Nicest Guy
The scandal broke last September; a police investigation followed along with a complaint, and Carlton turned himself into police on Feb. 27, 2014.
When Carlton was hired on July 1, 2009, at an annual salary of $75,000 plus full medical benefits, the balance sheet for the Symphony at the fiscal year ending June 2009 showed about $500,000 in endowment funds with close to $10,000 in the checking account. On Sept. 20, 2013, when the alleged fraud began to unravel, there was $1,400 in endowment funds and $0 in the checking account. According to a police investigation, nearly $250,000 benefited Carlton, while the remainder of spent monies may have been legitimate symphony expenses.
According to those on the Peninsula Symphony Association (PSA) board, Carlton had an easygoing manner and presented himself as a “knowledgeable and respectful” member of the symphony's leadership group. “He seemed comfortable with his responsibilities,” Association board chairman Alan Bien said recently, “and was adept at public speaking when introducing the orchestra's performances and in representing the Symphony at local community organization events — although it may have been in a self-serving interest to establish a public image for himself.
“Ironically, we’ve discovered that he did an extremely poor job of maintaining a relationship with several long-time supporters who contributed significant funds. They were never asked for financial support during his years in office.”
Apparently, Carlton did a much better job transferring monies — from the Association’s endowment accounts at Boston Private Bank to the Association’s checking account at Avid Bank. From that account, he wrote some 29 checks to himself as well as to a credit union in his and his wife’s name, and to three credit card companies: American Express, Chase, and Citibank. Some American Express accounts were PSA accounts; some not. The checks to himself included half a dozen written in lieu of checks from a payroll service. In effect, he sometimes didn’t report his hours to the service and paid his own salary but did not withhold social security, for example, and so underreported his earnings.
In June 2013, he also arranged a “future receivables sale agreement” with a financial company called Swift Capital. Under the agreement the Symphony would receive $25,000 in cash in exchange for future credit card receivables totaling $29,975. It appears that to receive the monies Carlton forged the signature of one of the board members: John Givens, board secretary.
When he first arrived at the Symphony, Carlton allegedly discharged the financial auditing company that had been overseeing the books and when a volunteer took over those duties, he eventually let that person go as well. And when he resigned last September, he left almost no trace of what he had done: no statements, no logs, no records at all. To make matters worse, the Symphony had been going over budget for the previous three years, by as much as $100,000 a year. But Carlton never told them that. Indeed, at a board meeting on August 20th, at the end of the Association’s fiscal year, Carlton gave an encouraging presentation suggesting that all was well with the finances. The numbers were consistent with what the board was expecting, and so took his word.
End of the Line
Things fell apart a few weeks later, on September 18, when Avid Bank emailed a message to one of the board members saying there were insufficient funds in the association’s checking account. The police were contacted and advised that there be no contact between the board and Carlton. On September 25, Carlton resigned, citing “health reasons.”
But the end had been foreshadowed several days earlier, just after Labor Day, when one of the Symphony’s musicians was asked to play at San Mateo High School, in a concert for a theater performance on a particular date; as it turned out the very same date the Symphony was scheduled to play its opening concert of the year. Bien called the school to resolve the confusion only to find out that Carlton had never secured the date. When asked about the missed date, Carlton replied that there had been some “screw-up” in the school district and another venue could be found.
“Was it because he knew we didn’t have the money?” asked Bien. The Symphony pays for the use of school facilities. “In hindsight,” he added, “one of the first things that should have been challenged was when Mr. Carlton told the board that there was an accounting company offering pro-bono services in lieu of advertising in the concert program books. I don’t recall anyone asking about the name of the company or the person who would be doing the pro-bono work. Same holds true for the auditor. As they say, ‘seldom are there free things in life’ or ‘you get what you pay for.’”
Since last fall, the board has re-instituted a policy of having two signatures for any check over $500. The requirement had been dropped in 2007, before Carlton arrived, and as a result he stepped into a position where he had “signature authority for all transactions.”
“We should have caught it earlier, we should have had somebody to verify bank statements, but we didn’t. We just never imagined he would do these things he’s accused of.” - Alan Bien, Chairman, Peninsula Symphony Association
In addition, the board has sought out a local accounting company to clarify how financial information should be gathered and reported and who is responsible for what. Asked what advice he might have for other nonprofits, Bien suggested requiring prospective employees to provide a credit history, financial statements showing personal holdings, and a copy of a most recent tax return.
“I don't know if it's possible,” Bien adds, “but permission for a criminal background investigation might also be useful.”
The board may still face financial liability in the matter and Bien is reluctant to comment, except to say, “We should have caught it earlier, we should have had somebody to verify bank statements, but we didn’t. We just never imagined he would do these things he’s accused of.”
The board next meets on April 23 to reconstitute itself. Some members are termed out. Two new members are expected to join. And there is an ongoing search to find more. The symphony is three-quarters the way through the season and has enough money to finish, but the future is uncertain. The Association needs to come up with roughly $500,000 a year to make ends meet.
As for Stephen Jay Carlton himself, his charm is certain but not much else. He was born on August 17, 1968 and plays the tuba. He goes by the name of Steve as well as Stephen. In his early 20s, he lived in Upland, California, in San Bernardino County, at the bottom of the San Gabriel Mountains, and from there moved to Turlock, in the Central Valley, and eventually to Santa Rosa. He would appear to have strong ties in Modesto. He may have also lived in Burbank. A few of his addresses include post office boxes. Others include circles and courts. One phone number attributed him in the public record is answered by a tax preparation service in Sacramento, but no one remembers anybody working for the franchise named Carlton.
Before turning himself in to Los Altos police, he was living in Novato, with his wife, Karen, 48, in a rambling warren of two-story, 1500-square-foot, two-story townhouses, each with a carport in front and a deck in back. Residents include many retired people. When we paid a visit the other day to the Carltons’ house, at the end of a narrow cul-de-sac no one answered the door. A neighbor across the way, a retired mattress salesman, said he’d been in the division for 20 years, but didn’t know the Carltons. He noted that the townhouse at their address is for sale and thought the asking price was $440,000.
Before coming to the Peninsula Symphony, Carlton headed the Sonoma office of Big Brothers Big Sisters, where he worked “for a short time”. He had a reputation as “an easy-going, very nice guy” and, in light of what one might think from the current charges, “not manipulative.” A representative of Big Brothers, Big Sisters who asked not to be identified could not say precisely how long Carlton was employed or why he left, although it appears he departed in good standing. The Sonoma office has since been folded into the organization’s main office in Marin, but apparently that had nothing to do with Carlton.
Interestingly, while with the Symphony, Carlton wrote a check to BBBS for $2,000. The Symphony board did not approve it; BBBS would not comment except to acknowledge receipt of the check.
A Prior Arrest
There is one other part of the man’s past not discovered by the symphony board until after he resigned, although you could find it on any search engine. You need merely include his name and the word “arrest” and a few screens down you find a two-inch story from one of the zoned editions of The Los Angeles Times in 1991. It seems that out in Upland, on August 13 that year, at 8:30 a.m., Carlton, then 23, called the local police to say he’d just come home to find his wife dead. Police arrived and, after questioning, arrested Carlton who was charged with the strangulation of Shellye Roberts Carlton. She was 20 and once a resident of Simi Valley. The charge was eventually settled with a voluntary manslaughter conviction.
The Santa Clara deputy district attorney handling the Peninsula Symphony case, Judy Lee, would not confirm the nature of the conviction, much less any details about the charge or the punishment, saying only that she has ordered records from San Bernardino County.
Nor would Lee respond to the question of whether Carlton’s wife, Karen, had been considered for prosecution, inasmuch as her name was on one of the deposit accounts used by Carlton. “I won’t answer that question,” Lee said.