The former president and chief financial officer of Kane Realty Corp., Clifford A. “Mickey” Clark, has been indicted on federal charges stemming from the embezzlement of more than $1 million from the Raleigh development company behind North Hills and several other prominent Triangle projects.

“Clark engaged in a complex scheme in which he fraudulently took money directly from KRC’s management account and indirectly from shopping centers’ property accounts,” the Oct. 4 indictment reads. “To conceal this theft, Clark used numerous materially false statements and omissions” including false accounting entries, false financial statements and “use of a shell corporation to disguise the nature of his fraudulent transactions.”

The U.S. Attorney’s Office in Raleigh launched an investigation following an in-depth article published in the Independent on Dec. 14, 2005, which detailed Clark’s dealings at Kane Realty, where he worked for John Kane, the founder and CEO with whom he’d been personally close for nearly three decades, sharing more than two dozen business partnerships. (See “The price of friendship.”)

The six specific charges are: one count of wire fraud for allegedly wiring a check for $14,279 to a floor-covering manufacturing company in Georgia; and five counts of interstate transportation of stolen property, in which Clark allegedly made credit card payments using funds that had been “stolen, converted and taken by fraud.”

The company’s financial records drew the attention of N.C. Real Estate Commission officials after a former investment partner of Clark and Kane’s filed a complaint with the regulatory agency in 1998.

According to audits and interviews compiled by state investigators, as well as a confidential private settlement agreement the two men signed in 2002, Clark used complicated financial transactions over seven years to siphon funds from Kane Realty’s own coffers and those of its commercial property management clients, including Chapel Hill’s University Mall. Clark allegedly transferred money to other businesses he controlled, including an Apex flooring company called Carpet Market.

Kane, whose real estate license was suspended for six months after regulators cited him for failing to implement mandatory financial safeguards on his company’s accounts, declined comment on Clark’s indictments.

Clark, who is expected to appear in federal court in Raleigh later this month, could not be reached for comment.

The federal indictments come after Real Estate Commission officials turned their investigation findings over to Wake County District Attorney Colon Willoughby last year. But Willoughby declined to prosecute, citing Kane’s decision not to complain to authorities and calling the case “a private matter” between two businessmen.

After leaving Kane’s employ, Clark became the chief financial officer at a publicly traded technology firm in Charlotte called Scientigo, which is also known as Market Central, where he worked until June.

Scientigo CEO Doyal Bryant said he and his board of directors launched an investigation of their own after reading about Clark’s history in the Independent.

“Were we mad? Were we upset? Yes,” Bryant said. “Could there have been two sides to the story? We didn’t know. …We did the homework, we did the right thing for the company in letting Mickey go.”

In the wake of the Kane case and prior to Clark’s departure, Bryant also says he put safeguards in place to ensure Scientigo was not exposed to the same problems that Kane experienced when Clark was in charge of the Kane Realty books.