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A woman who oversaw the finances of a Pinellas County nonprofit that receives millions of taxpayer dollars to help the homeless or mentally ill faces a charge of defrauding her former employer.

The nonprofit, Directions for Living, would not say what it did to examine the woman and what steps it is taking to determine if any of its public funds have been compromised.

Wendy Merson, 62, served as Directions for Living’s chief financial officer for about three years, according to public records. She was in the role as recently as last month when she was arrested by Pinellas Park police for fraud, a crime that carries up to 30 years in prison.

Police said the schemes took place during Merson’s tenure as chief executive of Clearwater’s Windmoor Healthcare, a psychiatric and addiction treatment center, and involved bribes, fraudulent check cashing and the illegal purchase and resale of snow crab legs.

While at Directions for Living, Merson also faced a lawsuit from Windmoor’s insurance company alleging financial fraud and eventually agreed to pay half a million dollars.

The criminal fraud investigation began in 2018, at least a year before Merson was hired at Directions for Living, a Pinellas Park police spokesperson said.

Directions for Living spokesperson Summer Gray said last week that Merson is not currently employed by the nonprofit. The Tampa Bay Times followed up with questions about how the nonprofit screened Merson before he was hired, whether he knew about the civil lawsuit during his work there, and whether he had taken any measures following his arrest to ensure that the money under his responsibility was put to good use.

Gray said in an email that the organization would not comment “because it is a distraction from our mission.”

“In the opinion of our legal counsel, these questions are potentially being asked for the purpose of negatively associating Directions for Living with a story unrelated to our organization,” Gray wrote.

The criminal case against Merson did not appear in court or prison records until his arrest last month, but a police spokesperson said the investigation began at Windmoor’s request . Windmoor did not respond to phone and email requests for comment.

Merson’s attorney, Luke Lirot, said the criminal charges came as a surprise. The terms of the settlement Merson reached with the Windmoor insurance company in 2021 should exclude criminal charges, he said. While it’s not uncommon for a civil case to follow a criminal case, he said he’s never seen the reverse in his four decades of practicing law.

“To arrest someone a few days before Christmas on a case that they thought had been solved for many, many months was shocking,” he said.

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Merson’s arrest report offers few details about the allegations against her. Civil case records, filed in 2020, detail a timeline of alleged fraud after Merson became chief executive of Windmoor in 2006.

The problem, according to the lawsuit, began in 2012 with kitchen renovations in Windmoor. Unable to prepare meals for the residents, Merson asked the hospital to order meals from a catering company partly owned by a former Windmoor executive; Merson, according to the lawsuit, also had a stake in the company.

Windmoor continued to order meals after the renovations, even though, according to the hospital’s insurance company, they were more expensive and less filling than what the kitchen could produce. He also alleged that Merson signed bills for food that did not exist. The insurance company pegged the cost of the diets at over $700,000.

In 2013, he alleged that Merson and the hospital’s business manager contracted with a transportation company in return for kickbacks of around $10,000 a month. The contract lasted five years, the insurance company said, and the kickbacks totaled more than $400,000.

In 2016, according to the lawsuit, Merson began writing Windmoor checks payable to employees, then instructed the employees to cash the checks and return the money to him. She told employees the money would be used “to purchase gift cards for employee appreciation projects,” according to the lawsuit. Instead, she kept it to herself – totaling at least $82,000.

Merson’s final alleged scheme also began in 2016. Merson and the dietary director, according to the lawsuit, used hospital funds to purchase $163,000 in snow crab legs over a two-year period. They kept the shells, gave them away or sold them separately.

It is unclear exactly when in 2018 Merson left Windmoor, or under what circumstances. The criminal and civil cases allege that the fraud continued until February of the same year. In the spring, an internal hospital audit revealed “suspiciously high” prices for food and transportation, said Sgt. Alexander Matson, public information officer for the Pinellas Park Police Department. Detectives took a report and opened an investigation on April 30.

It took four years of witness interviews and subpoenas to build a criminal case against Merson, Matson said.

In the meantime, Merson has found another job. His predecessor at Directions for Living left in April 2019, according to a LinkedIn profile. Merson had started the following spring, when Directions for Living named her chief financial officer in its annual report to the Florida Division of Corporations. She was paid about $106,000 in her first year on the job, according to the nonprofit’s federal tax return that year.

Directions for Living’s services range from psychiatry to homelessness. Pinellas County’s budget for this year includes eight contracts with the nonprofit as well as a grant to replace the roof and install solar panels at its Clearwater facility, totaling nearly $3.5 million. of dollars. In the fiscal year between the summers of 2020 and 2021, according to the nonprofit’s latest available federal audit, it received nearly $20 million in federal, state, and local funding.

The county “has no reason to believe that contractual requirements for these programs have not been met” during Merson’s tenure, county spokeswoman Barbra Hernandez said. “Each has specific requirements that county staff are actively monitoring to ensure they are met within scope.”

The Windmoor Insurance Company filed a lawsuit in the Central District of Florida in April accusing Merson, 10 other people and three companies of performing or benefiting from the fraudulent schemes.

The insurance company eventually fired some of the defendants and reached settlements with the others. The terms of those settlements aren’t usually public, but one was filed as an exhibit in Merson’s criminal case: She and her husband, who was also named in the lawsuit, agreed in 2021 to pay $500,000.

Merson was listed on the Directions for Living website as chief financial officer as recently as Dec. 1, according to a version of the page saved by the Internet Archive’s Wayback Machine. When Pinellas Park police took her to Pinellas County Jail four days before Christmas, the arrest report listed her workplace as Directions for Living.

Times writer Christopher O’Donnell contributed to this report.