The Salvation Army was told a year ago its director of planned giving — now charged with defrauding a 77-year-old man out of money meant for the charity — had been convicted of fraud, a federal probation officer said.

The statement is significant because the head of the Salvation Army has said he knew nothing about the criminal past of Timothy Janusz until recently.

Derek Kim, senior U.S. probation officer who was supervising Janusz because of a 1996 fraud conviction in Colorado, said last week that he told David Hudson of the Salvation Army about Janusz's conviction for taking money from clients and using it for personal purposes.

Hudson, however, said he first learned about Janusz's conviction when it appeared in the news media last weekend following his arrest.

Hudson said he remembers getting a call from a man about Janusz's employment, but doesn't recall the man identifying himself as a probation officer or mentioning a conviction. Hudson said he referred the caller to a Salvation Army official in Long Beach, Calif.

Janusz's case has rocked the Salvation Army, which is trying to assure the public that the new criminal charge shouldn't undermine donors' confidence in the charity, or discourage them from contributing.

Janusz, 48, a Kailua resident, is in custody at the O'ahu Community Correctional Center, unable to post the unusually high bail of $5 million.

He is charged with seven felony counts accusing him of stealing $150,000 from March 26 to April 12 from a Salvation Army donor who wanted the money used for an annuity that would benefit the charity.

Janusz is represented by the state public defender's office, which declined to comment on his case.

NO BACKGROUND CHECK

Rich Crawford, chief U.S. probation officer in Hawai'i, said Kim's call notifying Hudson about the fraud conviction is "pretty much documented."

"That's exactly why we called him, to notify him," he said. "I just want to make sure our staff is doing what we are supposed to, and it looks like in this case we did exactly what we're supposed to do."

Hudson, who is in charge of the Salvation Army in Hawai'i, said when Janusz was hired it was not the organization's policy to do background checks on employees except those who work with children. But the policy now covers criminal and credit background checks on all employees who work with the public, he said last week.

"We're doing everything we can to make this situation (involving Janusz) as right as possible," Hudson said. "We're working with the donors to make sure they're not losing any funds at all to the best of our ability."

Hudson did not want to talk about Janusz's employment record at the charity.

"My opinion of him now versus what it was a month ago is night and day," Hudson said.

Janusz still faces prosecution for escaping from prison in 1998 following the Colorado conviction for wire fraud. In that case, Janusz was sentenced in 1996 to five years and three months in prison and placed under three years of supervision. He also was ordered to pay $184,530 in restitution.

SCHEME DEVISED

Janusz was convicted of defrauding A. Carl and Bertha Cass, both 88 at the time, and their granddaughter. Janusz acted as a private financial consultant in handling the couple's finances. To get control of their money, Janusz created false documents, forged signatures and created letters purporting to memorialize conversations with Bertha Cass, who denied ever having those talks, according to court records.

Janusz transferred $2.2 million into accounts he controlled, spending $776,000 for authorized expenses for the couple and their granddaughter, but also spending $109,000 for himself. He also loaned, without authorization, $1.1 million to third parties, court records show.

Janusz appealed the conviction, but the U.S. 10th Circuit Court of Appeals affirmed it in 1998.

"The evidence indicates Mr. Janusz recognized the Casses' age, wealth and diminished capacity, and believing they would soon die, devised a scheme to separate them from their money by making loans which he would collect for himself after their death," the appeals court concluded.

PRISON ESCAPE

But officials say Janusz escaped from a federal prison camp in Yankton County, S.D., 11 days before the appellate court action.

After 14 months, he was arrested in March 1999 in the Dutch Antilles, but fought extradition, according to prosecutors.

Even after he was brought back, federal prosecutors could not immediately go after him for the escape because of a treaty with the Netherlands, which controls the Dutch Antilles. That treaty did not recognize escape as a basis for extradition, said Linda Kaufman, an assistant U.S. attorney in Denver.

So instead, federal prosecutors asked for his return so he would finish serving the sentence for the wire fraud conviction. But that meant Janusz could not be prosecuted on the escape charge until he completed serving his sentence and his supervisory release, Kaufman said.

In November 1999, the extradition was approved, and he was ordered to serve the rest of his prison term.

After he got out of prison, Janusz was placed under supervision, which was transferred from South Dakota to Hawai'i.

'GOD-GIVEN TALENTS'

In July 2003, he was hired as the local Salvation Army's director of planned giving, court records said.

The Salvation Army's spring 2004 newsletter introduced Janusz as a graduate of a law school in Nebraska who worked as a financial consultant.

"He believes that working for The Salvation Army allows him to use his God-given talents to help the needy, as well as assist individuals in reaching their financial and charitable goals," the newsletter said.

Janusz also was an instructor at Wayland Baptist University in 'Aiea, according to court documents.

Court and police records also show Janusz was arrested June 9, 2005, near the Kamehameha Highway and H-3 intersection at 9:40 p.m. on suspicion of drunken driving, found guilty on Dec. 9 and ordered to pay more than $500 in fines and fees.

Janusz was still under supervision in the wire fraud case, and following the arrest U.S. District Judge Helen Gillmor modified the terms of his supervisory release, prohibiting him from drinking alcohol and ordering him to perform 40 hours of community service.

Hudson said if the Salvation Army had known about the DUI, Janusz would have faced disciplinary action because he represents the Salvation Army. Hudson wouldn't specify what that action would be, but said it could have ranged from suspension to termination.

ANONYMOUS E-MAIL

It was an anonymous e-mail about Janusz that led the Salvation Army to the allegation that he was defrauding the charity.

Court documents state his direct supervisor received an anonymous e-mail on March 31 regarding "Timothy Peter Janusz's fraud against the Salvation Army and the elderly."

Authorities say Janusz wrote a letter to a 77-year-old potential Salvation Army donor in March of this year and asked him to write three $50,000 checks made payable to a company Janusz later created.

The name of the company Janusz set up is similar to that of a legitimate California-based managing company for the Salvation Army, court records show.

After the Salvation Army received the anonymous tip, Janusz's direct supervisor searched files in Janusz's office. She retrieved a previously lost file containing photocopies of three checks, each in the amount of $50,000, made payable to the company later created by Janusz.

The donor, Franklin C. Geiger, said the funds were intended for an annuity for the Salvation Army, not Janusz, according to court documents. Also in the file was a deposit slip for $150,000 to the company later created by Janusz.

City Deputy Prosecutor Chris Van Marter said the investigation is continuing and more charges will be filed.

Dennis Holmes, assistant U.S. attorney in South Dakota, said officials there plan to prosecute Janusz on the federal escape charge now that he has completed his supervisory release.

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com.