Estes, 61, has pleaded not guilty to obtaining property by false pretenses and conspiracy, both felonies. He was among seven people charged in connection with the Wake school invoice fraud scheme.

Estes was not an employee of the school district or Barnes Motor & Parts Co., the two agencies that exchanged phony invoices to rip off nearly $4 million from taxpayers.

During the four-year scheme, Estes was living with Connie Capps, who is now his wife. Capps is one of six former employees of either the school district's transportation department or Barnes who have pleaded guilty in the invoice scheme.

Wake District Attorney Colon Willoughby called Carol Dail Finch, the former budget analyst in charge of auditing the Wake school transportation department, to testify Wednesday. She has pleaded guilty to obtaining property by false pretenses and conspiracy but has not been sentenced.

Finch said the fraud started when Vern Hatley was named transportation director in May 2001. According to Finch, Hatley said that he was told to "spruce up" the department and wanted to buy new furniture for every office. Finch testified that she told her boss that it was too late in the year to do that through the proper channels. Finch said that Hatley told her to find a way to do it. She said she contacted Barnes.

The fake invoices from Barnes to the school district had item numbers and amounts but no descriptions, Finch said. They were kept under $2,500, which meant that the purchases could be authorized with just Hatley's signature.

When the school district paid those invoices, the credit run up with Barnes was used to buy office furniture as well as luxury items, including large-screen TVs, vehicles and Jet Skis, for transportation department and Barnes employees.

Estes is accused of running some of the money through his personal bank account and writing checks for some of the luxury items.

And, Finch said, a Barnes manager who has not been charged began giving her gifts. The first was a John Deere riding lawn mower. She later picked out a prebuilt wooden storage shed to house the mower and received two golf carts. Finch said she gave the mower to Estes' son, who agreed to cut her grass.

Hatley was sentenced in February to seven to 10 years in prison for his role. The parts company pleaded guilty to a single charge and has agreed to repay more than $4 million to the school district.

The trial resumes this morning in Courtroom 10C of the Wake County Courthouse.

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