Yellowknife (Feb 07/05) - A former school authority treasurer was sentenced to house arrest Thursday for embezzling $146,000 from a pair of Fort Smith schools.

Tracey Steed admitted to funnelling the money from a daycare program and a scholarship fund, among other sources, into a personal bank account and doctoring financial statements to cover up the theft.

She was working for Fort Smith District Education Authority at the time.

"This was a serious breach of trust," said Supreme Court Justice Rene Foisy during an hour-long sentencing hearing in Yellowknife.

Steed pleaded guilty to a single count of theft over $5,000 during an earlier court appearance.

The Crown attorney's office agreed to withdraw a second charge of theft on Thursday.

Foisy gave Steed a two-year conditional sentence, which will allow the 36-year-old mother to avoid jail. For the first six months of the sentence, she will be confined to her home in Red Deer, Alta.

Council officials first became aware of financial irregularities in the fall of 2001, after Steed left her position as executive treasurer.

A government audit revealed Steed had taken $146,000 in unauthorized "payroll advances" from 1996 until 2001.

"She exploited her position for her own financial benefit," said Crown attorney Mike Ewenson, who along defence attorney Paul Smith asked for the two-year conditional sentence.

Steed admitted the thefts in a letter to the superintendent of the eduction authority in November 2001.

She wrote: "I want to make things right and most importantly, I wanted to tell you the truth."

The audit revealed Steed had repaid nearly $90,000 of the $146,000 she had stolen, a factor that counted in her favour, Foisy said Thursday.

"Your heart was in the right place," he said.

Foisy ordered Steed to repay the $58,000 that was outstanding.

A report by a court worker expressed doubt as to whether Steed would be able to repay all of the money.

Steed was the second treasurer of a territorial school board to be convicted of embezzlement last week.

Marcel Blanchet, who worked for Yellowknife's French-language school board, the Commission Scolaire Francophone de Division, admitted Tuesday to stealing $72,000 over the course of three years.

Both Steed and Blanchet were given a remarkable amount of financial autonomy by their respective boards.

Each had access to blank cheques - signed by board members in advance - and Blanchet was allowed to pay his own salary.

Julie Lys, chair of the Fort Smith District Education Authority, said the board changed its policies after the Steed thefts came to light.

"There are strict measures in place to make sure this does not happen again," she said.

Currently, only four officials have the authority to authorize payments and members are no longer allowed to sign blank cheques.

"We were too trusting. It is a hard lesson to learn," Lys said.