The Rohnert Park man charged with embezzling $1 million from his Petaluma employer is accused of using part of the money to upgrade his house, installing 14 flat screen TVs, including two by the Jacuzzi, and an expensive security system.

John C. Sheehan, 43, is alleged to have stolen the money from Bibbero Systems Inc., the business filing products maker that employed him for 15 years as head of management information systems.

Investigators claim he created a fictitious company in 2006 that billed Bibbero for office supplies such as printer ink that were never provided. Sheehan cashed checks in his name and spent some of the money on a vast home makeover, prosecutor Amy Ariyoshi said.

"He redid his house to the nines," she said, describing his pool, backyard kitchen and high-end electronics.

Sheehan, whose original name is John Christopher Schoenthal, became a suspect after a Bibbero manager became curious about an invoice from the false company and tried to find it on the Internet.

When the phone number came back disconnected, officials at Bibbero, which had been struggling financially, called police. Sheehan was arrested Aug. 2 and charged with seven felonies, including enhancements for white collar crimes.

He faces 12 years in prison if convicted.

Sheehan remains in custody in lieu of $1 million in bail. He appeared in court Friday and pleaded not guilty to the charges.

Judge Robert LaForge ordered him to turn in his passport, which was discovered during a search of his house, so he could not leave the country legally if he is released.

He had been planning a vacation this month, Ariyoshi said, and a Facebook picture shows him in what appears to be a tropical setting.

Investigators in Petaluma are continuing to look through financial records to determine other ways in which the money was spent. So far none of the money has been recovered, Ariyoshi said.

"We're still looking," she said.

It appears Sheehan billed the company several times a month in amounts ranging from the low hundreds to more than $1,000, Ariyoshi said.

"As time went on and he wasn't being noticed, the amounts went up," Ariyoshi said. "His invoices got bigger and bigger."

His boss, Bibbero president Michael Buckley, said the losses created a financial hardship, causing layoffs over the past few years. The company that once employed 130 people is down to about 70, Buckley said.

"It's beyond words what he did to this company," Buckley said Friday outside the hearing which he attended with other Bibbero managers. "We're struggling but we're going to survive."

He said the theft went unnoticed for so long in part because the scheme was "so clever" but also because Sheehan was trusted by all.

"No one ever thought he would do this," Buckley said.

You can reach Staff Writer Paul Payne at 568-5312 or