MARBLEHEAD — A former Marblehead police officer, who retired three years ago amid an investigation into possible financial exploitation of an elderly woman and other suspected misconduct, has been charged in connection with the disappearance of currency from an elderly neighbor's home. 

Lori Knowles, 55, of Marblehead, pleaded not guilty to receiving stolen property valued at more than $1,200, a felony, at her arraignment Friday in Lynn District Court. Police note in court filings that they are continuing to investigate and may bring additional charges. 

Knowles' attorney, Paul Moraski, said he believes police rushed to judgment against her based on past investigations, and said he plans to ask a judge to dismiss the case for lack of evidence. 

"They have zero that links her to this," said Moraski. 

Marblehead police went to a Pitman Road home on Aug. 6 after a 75-year-old resident reported that Iraqi currency worth more than $12,500 had been taken from his home, possibly while he was picking up his wife at the airport on the evening of Aug. 2. 

Hours earlier, the man told police, he had confided in Douglas Knowles, the husband of Lori Knowles, about the investment, which he expected to increase in value after a currency revaluation. Shortly before leaving for the airport that evening, he told police he had run into Lori Knowles and told her he couldn't talk because he had to pick up his wife. 

The following morning, he told police, he and his wife were discussing the investment, and he told his wife where he had hidden the FedEx envelope in a closet. Later, he noticed the money had been moved. At first, he told police, he thought his wife had moved the envelope when she went to look at it. Shortly after that, however, she told him she had not looked at the money.

"He panicked, looked in the envelope and found that one of the stacks (of currency) was missing," police said in the report. 

The couple scoured the house looking for the money, to no avail. Nothing else was missing from the home

Immediate suspicions  

The man told police he immediately suspected Lori Knowles, since her husband was the only person he'd told about the currency and because she had a history of entering their home in the past without permission (something Knowles' attorney denied).

The man said that when he confronted Douglas Knowles, he denied having told his wife, but said he would search his own home and speak to her. 

The morning after speaking with police, the man's wife found an envelope containing the missing currency in the trash barrel near their garage. Later that same day, Aug. 7, she told police she saw Lori Knowles outside speaking to and then videotaping the rubbish truck and collectors. 

Police interviewed the driver and a worker on the truck, who both said Knowles asked permission to take video of them as they emptied their neighbor's trash because, Knowles allegedly told them, she'd been accused of stealing something. 

Sgt. Sean Brady contacted Douglas Knowles, who was out of town, to ask him for an interview. He said he would speak to police when he returned, but then added, "Didn't (the elderly man) find his money?" 

Both Douglas and Lori Knowles subsequently declined to speak to police, referring them to their attorney. Douglas Knowles has not been charged with any crime. 

Police have sent the envelope in which the cash was found, as well as the original FedEx envelope in which the money was sent, to the state police crime lab after finding indications that there are some fingerprints on them. 

Moraski said he's confident that had police turned up additional evidence, he would have heard of it by now. "It's just not there, in my opinion," he said.

Instead, he said, he believes investigators are biased against his client due to past incidents in the department, where she was a patrolman until her retirement. 

"She had nothing to do with this," said Moraski. "My reading of the police report is that this guy sees her in the street, they have a conversation as he's going somewhere, that makes her aware 'hey, he's not going to be at home' and then all of a sudden the money is gone." 

Moraski also questioned the stated value of the currency, which he said he believes is worth just a few dollars, not the $12,500 the elderly man paid for it. "It doesn't make sense that anyone would steal this because it's worth nothing," said Moraski. 

Previous investigations, complaints

Moraski declined to comment on the specifics of past investigations, during which he did not represent Knowles. 

Knowles left the department in 2015 as police were investigating whether she had taken advantage of access to an elderly woman she had befriended after being sent to the woman's home on a well-being check, according to internal affairs reports. 

Those reports, provided to The Salem News as a result of a public records request in 2016, indicate that more than $140,000 worth of checks had been drawn on the elderly woman's account in the 16 months before she died, in 2012. 

Knowles was not charged in connection with that investigation, which ended when she reached an agreement with the town to retire. 

Police had conducted three internal affairs investigations into Knowles during a three-year period between 2011 and 2014, the documents show. 

The documents provided to the newspaper included complaints from residents that Knowles had entered their home without permission, and a reference to "numerous" similar complaints. In one complaint, from 2010, medication was reported missing. In a 2011 complaint, jewelry was missing from a home.  

Knowles also was investigated after a crash inside the town dump in November 2014. Video surveillance showed that Knowles, in a department-issued vehicle, spent several hours inside the locked facility before driving through a chained gate, damaging the cruiser, according to the documents. She told investigators she did not call for help because she was embarrassed. 

Another incident police had been called upon to investigate occurred in December 2014, when Knowles went to a home after a woman reported concerns over possible drugs she found in her son's room. While at the home, Knowles, on duty at the time, collapsed inside the bathroom after going through the family's medicine cabinet. Police indicated in a court filing that she admitted consuming two large vodka tonics. 

On Friday, Judge Jean Curran ordered Knowles to have no avoidable contact with the elderly man and his wife. Because Knowles was not arrested, instead appearing in court in response to a summons, no bail was ordered. 

A motion to dismiss the case is scheduled to be heard Oct. 25.  

Staff reporter Ethan Forman contributed to this report.

Courts reporter Julie Manganis can be reached at 978-338-2521, by email at jmanganis@salemnews.com or on Twitter at @SNJulieManganis.