North Idaho woman sentenced for embezzling over $570,000 - East Idaho News
Crime Watch

North Idaho woman sentenced for embezzling over $570,000

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COEUR D’ALENE — A northern Idaho woman whose husband died in what investigators call suspicious circumstances was sentenced in U.S. District Court on Tuesday for stealing over $570,000 through wire fraud and federal program theft.

Laurecene “Lori” Barnes Isenberg, 64, will spend the five years in a federal prison after she pleaded guilty Nov. 28 to three counts of wire fraud and one count of federal program theft. Senior U.S. District Judge Edward J. Lodge ordered Isenberg to pay back $579,495 in restitution and $20,400 in fines and fees for the crimes. Once released from prison, Isenberg will be placed on three years of supervised release.

When Isenberg pleaded guilty she admitted to stealing the $579,495 from the North Idaho Housing Coalition. Grants from the U.S. Department of Housing and Urban Development given through the Idaho Housing and Finance Association partly funded the organization. Court documents show Isenberg schemed with her four daughters to submit false invoices and expenses to the organization for payment. She served as the coalition’s executive director at the time.

“These invoices were often submitted in the names of companies she set up in her daughters’ names,” a Idaho U.S. Attorney’s Office news release stated. “Isenberg provided her daughters with some of the money she took.”

Lodge also sentenced two of Isenberg’s daughters, Tracy Tesch, 34, of Rathdrum, and April Barnes, 42, of Coeur d’Alene, on Wednesday. They both pleaded guilty to conspiracy to commit program theft on Jan. 30. Tesch was placed on three years of probation, and April Barnes was sentenced to one month of house arrest and three years of probation for their participation in the crimes. In pleading guilty, Tesch admitted to receiving about $15,300, and April Barnes admitted to receiving about $11,500. Both were ordered to pay back the money they received in restitution, according to a news release.

Isenberg’s other two daughters, Amber Hosking, 40, of Spirit Lake, and Jessica Barnes, 32, of Spokane Valley, Washington,
were previously sentenced on Jan. 30 for their participation in the wire fraud. In total, the two daughters admitted to receiving $32,000 from the embezzlement scheme for work they did not do. Both women were sentenced to three years probation and 100 hours of community service. Hosking and Barnes are ordered to pay $16,500 and $15,500 in restitution, the amount of money they received in the scheme, according to court documents.

During Isenberg’s sentencing, victim impact statements were made by the North Idaho Housing Coalition President and the Idaho Housing and Finance Association Program Manager. Both outlined how Isenberg’s theft from the nonprofit prohibited the Coalition from helping low income families find affordable housing.

Judge Lodge noted “Isenberg’s crime affected many needy people”, according to the news release.

Investigation into husband’s death

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Lori and Larry Isenberg | Facebook

Isenberg is also under investigation in the death of her husband, Larry Isenberg, whose body was found in Lake Coeur d’Alene after the couple had reportedly been boating in early 2018. A coroner’s report states the 68-year-old died from a drug overdose, not drowning. The one-page report lists diphenhydramine toxicity as the cause of death, the active ingredient in Benadryl. The drug is an antihistamine used to treat allergies. Diphenhydramine is known to cause drowsiness and is also used as a sleep aid.

According to a search warrant issued in Spokane County obtained by The Coeur d’Alene Press, normal dosages of diphenhydramine are between 100 and 1,000 nanograms. Larry Isenberg was found to have 7,100 nanograms of the drug in his blood, a lethal dose.

After they learned of Larry Isenberg’s cause of death, investigators served search warrants for evidence of a conspiracy to commit murder and first-degree theft at the homes of Lori Isenberg’s children.

At the time of his death, Lori Isenberg was under investigation for the embezzlement scheme involving her four daughters. So far, charges have not been filed in her husband’s death.