(updated November 17, 2009 and December 30, 2009)

A former employee of Kaydon Corp. (USA; NYSE: KDN; 5251R9N7), facing multiple charges of both felony embezzlement and electronic embezzlement for thefts totaling nearly $500,000, has pleaded guilty in Muskegon's 14th Circuit Court.

Elizabeth Horan worked in the Payables department of the bearing manufacturer's Muskegon, Michigan headquarters. She started with Kaydon in 2000 and was laid off in mid-2009.

Horan's was a classic Payables employee embezzlement scheme in both its primitive simplicity and the guarantee it would inevitably be discovered. Ms. Horan simply modified the "pay to" name and address on many Kaydon vendor checks so that they paid her personal debts. It's not clear from the record how she covered up the unpaid Kaydon bills.

Horan began doctoring checks sometime during 2007, escalated the swindle through 2008, and was ramping up even further in 2009 but was laid off. In total, Horan detoured nearly $500,000 to her own use.

The embezzler was quickly discovered in the course of a standard post-layoff audit, although eBearing has learned that Horan's spending habits had been attracting considerable attention. Two sets of charges were filed against Horan because the initial audit and charges filed then led to an in-depth audit and the discovery of more wrongdoing.

Ironically, a number of Kaydon employees suggested to eBearing that Horan's embezzling was at least partially responsible for Kaydon's belt-tightening in mid-2009, in effect causing her own layoff.

She was charged with four felonies tied to the embezzlement and committing the crime electronically. The larger charges (over $100,000) carry a 20 year maximum prison sentence, and the smaller charges (under $100,000) carry up to a 15 year sentence.

Judge Timothy G. Hicks of Michigan's 14th Judicial Circuit Court has stipulated Ms. Horan will serve a minimum of 3-1/2 years, and potentially up to 20 years, as the sentences run concurrently.

Hearings to begin restitution proceedings will be scheduled for a later date.