Woman sentenced for embezzling from Danielle Steel

In this June 17, 2008 file photo, author Danielle Steel poses for a photo after her appearance on the NBC "Today" television show in New York. (AP Photo/Richard Drew, file)

April 21, 2010 9:37:38 AM PDT
The Marin County woman who defrauded celebrity author Danielle Steel was sentenced today to 33 months in prison and ordered to pay $60,677 in restitution after being convicted of wire fraud and tax evasion, the U.S. Attorney's Office said.

Kristy S. Watts, 48, pleaded guilty in federal court in San Francisco on Sept. 24 to all five counts charged against her, one for wire fraud and four for tax evasion.

As Steel's bookkeeper for approximately 15 years, Watts was trusted with overseeing Steel's personal and professional management, according to the Department of Justice.

While managing Steel's bank accounts and credit card statements, handling petty cash and paying bills, Watts devised a scheme to steal approximately $768,000 from Steel, money that was used to finance a lavish lifestyle of luxury vehicles and jetsetting, the Department of Justice said.

Watts deposited checks made payable to "cash" into her personal account, gave herself additional salary and bonus payments, and raided Steel's credit card rewards points to fund trips for herself and her family to several domestic and international locations.

Watts formerly lived in San Rafael and now resides in Tiburon. In November 2004, Watts and her husband purchased a home in San Rafael for $1,275,000 and spent more than $1 million remodeling and furnishing the home.

U.S. District Court Judge Vaughn R. Walker handed down the 33-month sentence and also sentenced Watts to a three-year period of supervised release, during which she much perform 400 hours of community service.

As a result of the criminal case and civil lawsuit Steel filed immediately after Watts plea, Watts has already turned over more than $969,000 to Steel through the sale of her San Rafael home, its furnishings and her and her husband's vehicles.

Because Watts paid no taxes on the embezzled funds, she has been ordered to pay $60,677 to the U.S. as a result of the tax evasion convictions.

She will begin serving her prison sentence on June 4.

The prosecution is the result of a seven-month investigation by the FBI and the Internal Revenue Service criminal investigation unit.


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