The state of California has reached a settlement with the trustee of a scholarship fund intended to benefit female graduates of Ukiah High School pursuing careers in medicine.

James L. Harrison, 62, of Ukiah, "looted college scholarship funds intended to help women graduating from high school achieve their dreams," said Attorney General Edmund G. Brown Jr. The agreement, Brown said, "makes sure that he is never in a position to steal from a non-profit again."

Working together, Brown's office, the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Institutions recovered both the principal and the interest -- totaling over $650,000 -- owed to the Trust. As part of the settlement, Harrison agreed to a lifetime ban from serving as a charitable trustee or officer of a public benefit corporation.

In 1993, Ukiah residents Viola and Oscar Allen established a Living Trust. Upon their deaths, funds from the Trust were to be administered as scholarships for female graduates of Ukiah High School interested in pursuing further education in the medical field.

Harrison, who was then Vice President of Savings Bank in Mendocino County, became Trustee in 1993. Instead of funding scholarships for students, he began spending the money for his own benefit. He invested in real-estate ventures and loaned money to friends and family.

In 2005, the FDIC was notified of suspicious activity involving the Trust. Brown's office began its own investigation and found that Harrison had diverted hundreds of thousands of the approximately $474,000 in the original Trust.

In February 2007, Brown filed a civil lawsuit against Harrison seeking to remove him from the Trustee position. The AG's office also filed criminal charges against Harrison in 2008.

In February 2009, Harrison entered no contest pleas to the following felony counts:

• Misappropriation of trust assets (Penal Code sections 487/506)

• Filing willfully false tax returns (Revenue and Taxation Code section 19705(a)(1))

• Admittedly taking in excess of $200,000 (Penal Code section 12022.6(a)(2))

Harrison was sentenced to one year in county jail and three years probation.

A new trustee has been appointed to administer the Viola and Oscar Allen Trust and scholarships have been distributed for the last two years to female graduates of Ukiah High School.