Appeals panel reverses decision in Elko embezzlement

Greg Tuttle

Tuesday, Oct. 17, 2000 | 10:37 a.m.

A panel of three federal appeals judges have reversed a decision to free an Elko woman convicted last year in connection with the embezzlement of federal funds.

The case involved her twin sister, who was a federal manager and accused of funneling stolen funds to the bank account of her sister, Diana Johnson.

The 9th Circuit Court of Appeals judges said U.S. District Court Judge David Hagen erred when he ruled there was insufficient evidence to convict Johnson despite a jury's finding of guilt.

Johnson was convicted by a federal jury in Reno in July 1999 on a single charge of receipt of stolen government property. But Hagen dismissed the charge when he ruled there was not sufficient evidence that the money allegedly embezzled by Johnson's sister, Barbara Blackstock, belonged to a federal agency.

Blackstock, 47, was head of the U.S. Department of Agriculture's Farm Service Agency in Elko when federal agents began investigating missing funds in 1997.

Blackstone committed suicide two days after FBI agents asked to speak with her about 84 government checks totalling more than $200,000, which were allegedly deposited into her sister's personal bank account.

Federal authorities alleged Blackstone and Johnson laundered the money through Johnson's bank account. After her sister's death, Johnson was indicted on 11 charges related to the alleged scheme.

A mistrial was declared in Johnson's first trial, and a federal judge dismissed seven of the charges. A second jury convicted Johnson on one of the remaining four charges, but Hagen later vacated the conviction when he concluded the jury could not have concluded beyond a reasonable doubt the money belonged to the government.

In it's ruling issued Friday, the federal appeals judges said there was sufficient evidence to conclude the money belonged to the government. The panel ordered Johnson's acquittal vacated, and the jury's guilty verdict reinstated.