SEATTLE — Terry L. Davis, the longtime Arlington city employee who was accused of embezzling more than $700,000 from the city coffers, pleaded guilty, Dec. 30, in U.S. District Court in Seattle to mail fraud and filing false tax returns.

The former human resources administrator and assistant finance director was charged in a 10-year embezzlement scheme that finally reached over $1.3 million, according to court documents.

Davis, 57, faces up to 20 years in prison and a $250,000 fine when sentenced by U.S. District Judge Ricardo S. Martinez on March 27, 2009.

As part of her plea agreement Davis agreed to forfeit two properties, two cars and a Whistler time share condo to the government. She also agreed to make full restitution to the city of Arlington of more than $1.3 million.

Her fellow employees at the city are relieved, said the city’s spokesperson, Kristin Banfield.

“The plea helps bring closure for the staff,” Banfield said. “We are all relieved that this case is moving forward.”

The two houses, which are home to Davis and her husband, and their daughter and family, will become federal property, Banfield said.

“The feds don’t want the houses so they will sell them both,” Banfield said.

Davis’s family members will have an opportunity to defend their ownership of the properties, Banfield said.

Davis worked for the city since 1972. Federal prosecutors say she began stealing in 2000. Between 2000 and 2008, Davis was the assistant financial director and human resources administrator. As part of her job, she tracked and paid invoices for benefits provided to city employees. During that time, she made out 103 unauthorized checks payable to herself and deposited them in her bank account. After the checks cleared and were returned to the city of Arlington, she altered the checks and the records relating to the checks to hide the embezzlement.

According to court papers, she embezzled about $1,311,989 with this scheme which she used to pay mortgage payments on two houses, two car payments and a time share condo payment, as well as credit card bills, trips and hotel stays, clothing and jewelry.

To top it off, she failed to declare the embezzled income on her income tax returns, resulting in a tax loss to the government of more than $281,000.

Thus, the Internal Revenue Service Criminal Investigations continued the investigation after the Snohomish County Sheriff’s Department started.

The case is being prosecuted by assistant U.S. Attorney Darwin Roberts.

“We just want the money to be returned and used as the tax payers intended,” Banfield said, adding that everyone got their retirement benefits.

“The money was taken from the general fund,” she said. “We could put that money to some good use.”

The city will present a victim statement in court in March.