Gary J. Ray is charged with diverting money intended to help families affected by the 2014 disaster.

OSO — The former pastor of the Oso Community Chapel is accused of stealing $40,000 in donations for families devastated by the 2014 mudslide.

The money was raised by faith-based organizations. It then was transferred into a personal bank account, according to court records.

Prosecutors allege that Gary J. Ray, 56, diverted the donations for his own use, with “no intention” of distributing them. At least $6,000 also was reported missing from Restoration Church Camano, where he worked after leaving Oso.

He was charged Oct. 5 in Island County Superior Court with first-degree theft. There are three counts, each alleging aggravating circumstances because they involved a position of trust.

The case is being handled in Island County because the investigation started at Restoration Church Camano. People there contacted the sheriff’s office in 2017 with concerns about potential embezzlement. While police were looking into it, they say they learned about what happened in Oso.

After the disaster, the Oso chapel became a place for people to stop, reflect and pay their respects. It was one of the few spots near the highway closure where the public could gather. It was there that President Barack Obama spent time with the families who lost loved ones, and Ray was present for those conversations.

“I believe that all are here for a purpose, and that purpose is to love God and love others,” Ray told The Daily Herald in 2014. “… It is in times like these that character is developed, and by faith, hope is found.”

His salary in Oso had been around $66,000 a year.

Ray started Restoration not long after the slide. The Oso chapel leaders were not on board with the plan, which created tension, according to court papers. There also were questions about his handling of money, though the timeline for that is unclear. He became frustrated when he was not allowed free rein with fundraising, police were told.

The Oso Community Chapel in 2014. (Rikki King / Herald file)

Ray was fired from the Oso church in May 2014, after about four years on the job. Many of the details were kept quiet. His bosses there later told investigators they checked with his former church in California, and it also described problems around him and finances.

At Restoration Church Camano, police believe that Ray wrote the bylaws in a way that avoided restrictions on his use of church funds. At that time, Ray reported that he was drawing an annual salary of $30,000, but it wasn’t in writing and others said that didn’t sound accurate.

A Baptist network affiliated with Restoration was sending Ray another $2,500 a month for the new church, deputies were told. He’d passed on the network’s offer to hire a bookkeeping firm. Members of the congregation, meanwhile, said they were told the Baptist network was handling Restoration’s accounts.

Among other allegations, people at Restoration said that Ray took up collections for projects that were not completed. In particular, prosecutors cited $6,000 raised, purportedly for new carpet. References to the money disappeared from the church’s records, and the carpet never showed up, according to court papers.

Some at the Camano church have alleged much greater losses.

Until the criminal investigation came to Oso, church leaders there were unaware of the $40,000 in reportedly diverted checks, prosecutors say. Those funds were in addition to about $350,000 that was donated to victims through the church, distributed and tracked. The chapel was one of several local and regional organizations that received and managed disaster relief efforts.

The slide, which killed 43 people, was intensely covered by the national news for weeks, and drew international attention and acts of compassion.

Ray was part of Oso’s long-term recovery group, an organization of leaders in the North Fork Stillaguamish valley who oversaw resources and provided assistance. He is no relation to Peggy and Nathan Ray, a Marysville couple who have worked closely with the families since the disaster.

Gary Ray, who lives near Arlington, initially was arrested last year but was released while detectives continued to collect information, according to court records. Arraignment is set for Monday.

Rikki King: 425-339-3449; rking@heraldnet.com; Twitter: @rikkiking.

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