(WBIR - Blount County) The Alcoa Board of Education is now suing a former employee accused of stealing thousands of dollars from the district.

The lawsuit comes after a state comptroller's office investigation found that Kathy A. Winters took more than $344-thousand dollars of district money for personal use.

The school system is asking to be paid back the money they say Winters stole, a civil penalty between $2500 and $10,000, punitive damages to be determined by the court, and all court costs and attorney fees.

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A former employee at the Alcoa School District diverted more than $400,000 in public money for her own use.

A six year investigation by the Tennessee Bureau of Investigation revealed the woman, who helped manage the district's federal funding for various projects, took $428,000 from the district and used it to pay for her home mortgage, food jewelry, clothing, iTunes downloads, and an investment at a local gym.

It also identified more than $160,000 in questionable spending by the employee, according to the State Comptroller's Office. Because of a lack of documentation, the TBI could not determine if that money was spent for valid reasons or not.

The investigation showed that she spent the money on herself and gave some to two different organizations she represented.

She gave the school district fraudulent invoices, and when she received money from the district, she diverted the money to the Tennessee Attendance Supervisors Steering Committee and the East Tennessee Attendence Supervisors Association. She served as treasurer for both.

The woman also used the school district's credit cards for personal purchases, forging her supervisor's signature on billing statements, and had logged 70 trips for the school district that she did not take.

The investigation also revealed she had been taking money from participant fees and dues from both of those organizations.

Once the money was diverted, the woman would withdraw the money via ATMs or checks written out to cash or to herself.

Because the woman has not been indicted or arrested yet, the State Comptroller's Office or the TBI has not released the woman's identity.

According to a press release sent Monday, the Alcoa School Board and the City of Alcoa said they have fully cooperated with the investigation by the State Comptroller's Office.

"We are saddened by the allegations that a long-time employee has taken funds directed toward Special Education children and other school purposes for her own use," said the statement.

Alcoa Director of Schools, Brian Bell said, "We will continue to cooperate with the prosecuting agencies and will seek restitution through the appropriate legal channels."

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