A former employee of the Lucile Packard Foundation for Children’s Health has been arrested on allegations that she embezzled over $350,000 from the children’s health foundation during an eight-year period, according to a Wednesday press release from Santa Clara's District Attorney office.

The foundation is the primary fundraiser for the Lucile Packard Children’s Hospital at Stanford and for the pediatric programs at the Stanford School of Medicine.

Marilyn Machalowski, 68, worked as an accounting manager and payroll/benefit manager during the embezzlement period of 1999 to 2007. She was charged Wednesday with one count of grand theft, along with an allegation of embezzlement in excess of $200,000.

“Machalowski often wrote company checks to her daughter, and then deposited them in their joint account,” the press release noted. “She also wired money from the Foundation’s account into her own account, as well as putting additional money towards her 401(k). To conceal the embezzlement, Machalowski recorded much lower dollar amounts in the check register than what she had actually written.”

In a phone interview with The Weekly, the foundation’s president and CEO, David Alexander, said routine accounting processes unearthed Machalowski’s scheme about two months after the long-time employee resigned.

“Following a routine check of our finances, it immediately became apparent that something was amiss,” Alexander said.

The foundation then hired an independent forensic accounting firm — Deloitte FAS — to investigate their financial system and processes. As soon as investigators confirmed a single employee had diverted $350,000, the foundation contacted the authorities.

“Once we figured out what had happened on our own, we turned everything over to the Palo Alto [Police Department],” Alexander said.

The President and CEO also noted that changes to the foundation’s financial system have been implemented to prevent future embezzlement.

“I think the biggest lesson learned from all this for us is that we had too much responsibility invested in one person who abused that trust,” Alexander said. “We have changed the financial system so that no one person can do what she was able to do. It would be virtually impossible.”

According to Wednesday’s press release, Machalowski faces a maximum sentence of five years in state prison. She is scheduled for arraignment on Aug. 7 at 9 a.m.