LOS ANGELES (CNS) — Federal prosecutors filed charges June 8 against a now-retired woman religious who has agreed to plead guilty to fraud and money laundering for stealing over $835,000 in funds from a Catholic elementary school in Torrance, California, where she had been the principal.

For a period of 10 years ending in September 2018, Sister Mary Margaret Kreuper, 79, of Los Angeles embezzled just over $835,000 from St. James Catholic School to pay for personal expenses, including gambling trips.

As principal — a position she held for 28 years — Sister Kreuper was responsible for money the school received to cover tuition and fees and she oversaw charitable donations.

She controlled accounts at a credit union, including a savings account for the school and one established to pay the living expenses of the religious sisters employed by the school.

The U.S. Attorney’s Office for the Central District of California said in a news release that Sister Kreuper admitted to diverting school funds into the St. James Convent Account and the St. James Savings Account and then used the diverted funds “to pay for expenses that the order would not have approved, much less paid for, including large gambling expenses incurred at casinos and certain credit card charges.”

Sister Kreuper, a Sister of St. Joseph of Carondelet, is to appear in U.S. District Court for arraignment July 1. The two charges to which she pleaded guilty carry a maximum statutory penalty of 40 years in federal prison.

She further admitted in her plea agreement “that she falsified monthly and annual reports submitted to the school administration to cover up her fraudulent conduct and ‘lulled St. James School and the administration into believing that the school’s finances were being properly accounted for and its financial assets properly safeguarded,'” the U.S. Attorney’s Office said.

In turn, Sister Kreuper was able “to maintain her access and control of the school’s finances and accounts and, thus, continue operating the fraudulent scheme.”

A second woman religious at St. James, Sister Lana Chang, also a Sister of St. Joseph of Carondelet, was initially implicated in the scheme. She had been a teacher at the school then its vice principal.

On June 9, KTLA-TV Channel 5 reported that a spokesman for the U.S. Attorney’s Office said that only Sister Kreuper was charged in the case, “and the government considers the investigation closed.”

Sisters Kreuper and Chang retired at the end of the 2017-18 school year. An examination of financial records undertaken after the women left revealed the discrepancies.

The sisters’ religious order in Los Angeles was notified of the investigation in late 2018, and both sisters were removed from their residence and placed in a religious house under the supervision of community leadership. They also were removed from all public ministry.

In December 2018, the Archdiocese of Los Angeles filed a criminal complaint of embezzlement with the Torrance Police Department, and the Sisters of St. Joseph announced the congregation would “make complete restitution to St. James School.”

The Los Angeles Times quoted Sister Kreuper’s attorney, Mark Byrne, as saying his client is “very remorseful for what happened.”

Since age 18, when she entered the convent, she has dedicated her life to helping others, Byrne said, but in recent years Sister Kreuper has suffered from a mental illness “that clouded her judgment and caused her to do something that she otherwise would not have done.”