David A. Johnson would laugh and joke about how he and his friend Silas Potter Jr. were making easy money for doing nothing, according to newly disclosed court documents that detail how Seattle Public Schools was bilked of $250,000.

Under police questioning, Lorrie Kay Sorensen, who was Johnson's girlfriend, said Johnson confided to her that stealing from the district was possible because they had someone on the inside — Potter — to authorize payments.

Sorensen acknowledged to a detective she wanted part of the action, according to the documents made public Tuesday.

Her statements were contained in felony theft charges filed by King County prosecutors against Potter, Johnson and Sorensen, alleging they engaged in a scheme to steal the money from the school district's small-business program.

Potter, a onetime furniture repairman and real-estate agent, managed the program from 2006 to 2010 before resigning from the district and moving to Florida. Prosecutors alleged Potter was given wide latitude to run the program, and hired Johnson and his Tacoma nonprofit, Grace of Mercy, to teach small businesses how to bid on public projects.

Potter, 60, also hired a cleaning company set up by Johnson, 48, and Sorensen, 45, to do janitorial work, according to the court documents.

But little or no work was performed, prosecutors said.

Grace of Mercy pocketed $168,000, with a portion kicked back to Potter, according to the documents.

The janitorial firm, described as a front company called Emerald City Cleaning, collected more than $83,000, with Sorensen keeping $21,000 and Potter and Johnson splitting the remainder, prosecutors said.

The charges added a criminal element to the financial scandal that rocked the district in February, when a state audit questioned about $1.8 million in contracts awarded through the district's Regional Small Business Development Program.

Auditors found the district spent $280,000 for work that wasn't done or that didn't benefit the district, and paid $1.5 million for questionable services.

Grace of Mercy, originally incorporated in 2005 to help homeless and battered women, was singled out previously in the audit for suspicious activity.

But it took bank records subpoenaed in the criminal investigation to discover the existence of Emerald City Cleaning, Prosecuting Attorney Dan Satterberg said at a news conference Tuesday.

Potter, who owed the Internal Revenue Service and was having trouble making child-support payments, stole thousands of dollars from the district, according to the court documents and Satterberg, who didn't provide a precise figure.

"He was a trusted employee who abused that trust," said Satterberg, flanked by Seattle Public Schools Interim Superintendent Susan Enfield and School Board Vice President Michael DeBell.

Potter could not be reached for comment Tuesday. Efforts to reach Johnson and Sorensen also were unsuccessful.

DeBell said the district has made several policy changes to prevent future scandals. He outlined the reforms, including beefing up the district's internal auditing staff and contracting with the city of Seattle to work together on ethics investigations.

Before the district shut down the small-business program a year ago, it had grown into an operation that spent up to $1 million a year, offered dozens of classes and signed partnership agreements with other government agencies, including Tacoma Public Schools and the Port of Seattle, the state audit found.

Auditors detailed overbilling, ethics violations and cronyism.

Potter and Johnson each were charged with nine counts of first-degree theft, punishable by between 33 and 43 months in prison. Sorensen, who previously lived in Renton with Johnson and now resides in Henderson, Nev., was charged with four counts of first-degree theft, punishable by six to 12 months in jail.

Each has been summoned to appear for arraignment Nov. 8, at which time they are to enter pleas to the charges.

No charges were brought against other current or former district officials or against contractors who received payments.

Prosecutors said most of the contractors were able to show they performed services or taught classes for the small-business program, set up several years ago primarily to help minority- and women-owned companies.

But two people who refused to speak with the Prosecutor's Office without immunity from prosecution remain under investigation, Satterberg said, adding his office has refused to grant immunity.

One was identified as Tony Orange, who received nearly $162,000 for various services for which auditors found incomplete invoices. The other, Leon "Skip" Rowland, received $91,800 to teach classes for the program, $77,780 of which auditors classified as a loss to the district.

Neither could be reached for comment Tuesday; Rowland has previously declined to comment.

The scandal prompted the School Board to dismiss Superintendent Maria Goodloe-Johnson in March and replace her with Enfield, the district's chief academic officer, who was named interim superintendent.

Potter left the school job in July 2010, shortly after the district went to the state Auditor's Office to ask it to investigate why a $35,000 check from the Tacoma district that was meant for Seattle Public Schools ended up in the bank account of a private organization Potter helped establish. Potter returned the money after the Seattle district filed a police report.

After receiving preliminary findings from the auditor, two School Board members and the district's general counsel went to the Prosecutor's Office in late 2010 to report possible criminal conduct.

Potter, in a March interview in Florida with a Seattle Times reporter, said he was being made a scapegoat, blamed others above him at the district and denied being behind the alleged misappropriation of district money.

Yet, Potter in August told a Seattle police detective who met with him in Tampa that he conspired with Johnson to obtain money from the school district by creating invoices from Grace of Mercy for classes Johnson never taught.

"Potter admitted that he approved the invoices and received cash from Johnson in return," Detective Keith Savas wrote in a court statement.

Potter said he received about $1,000 a month from Johnson, explaining that $2,500 monthly allocations found listed on his computer represented his "dream" budget, Savas wrote.

Invoices to the school district showed Johnson teaching business classes on subjects ranging from growth strategies to contracts to using Microsoft Word.

But, in an interview with The Times in March, Johnson said, "That's crazy. I'm computer illiterate."

Savas cited Johnson's comments in his statement.

Seattle Times staff reporter Brian M. Rosenthal contributed to this report, which includes information from Times archives.

Steve Miletich: 206-464-3302

or smiletich@seattletimes.com