EPHRATA - An Ephrata attorney accused of taking more than $5,000 pleaded not guilty Monday.

Kathleen C. Kilcullen made her first appearance in Grant County Superior Court after being charged with first-degree theft.

Civil Deputy Prosecutor Lee Pence did not ask for bail. He did ask Kilcullen stay in the state, unless she asks permission to leave.

Kilcullen's attorney, Garth Dano, said he planned to file a motion to dismiss the case, saying it was initially filed in district court and Pence made an offer for a plea agreement.

"I just want to say I'm troubled by the procedure," he said. "This matter was filed in district court, and Mr. Pence had communicated with me a proposed offer ... I indicated back to him that I needed to do additional discovery before I'd entertain that."

Pence replied an offer to settle the case was made, saying the additional discovery material was sent to Dano, and the prosecutors waited an additional week before filing the case in superior court.

The case started when Kilcullen was assigned the case of a Vietnam War veteran, who was appealing the denial of Social Security benefits, according to an Ephrata police report. When the case was reviewed later, it allegedly didn't appear Kilcullen did any work on the case.

Kilcullen was terminated from her position with Calbom and Schwab on Jan. 27, 2010, according to court records. The veteran first elected to stay with Kilcullen, and later decided to return to the law firm after Kilcullen reportedly told him she wouldn't be able to handle his case.

The law firm assigned the case to a different attorney, and notified the Office of Disabilities Adjudication and Review, as well as the Board of Industrial Insurance Appeals of the client's decision, according to the police report. A judge granted his motion in April 2010, giving him full benefits.

The Social Security Administration allegedly mistakenly paid Kilcullen $5,917 for representing the veteran in August 2010, according to court records. Kilcullen reportedly cashed the check in December 2010.

The Social Security Administration reportedly notified Kilcullen of the mistake in February 2011, according to court records. G. Joe Schwab reportedly the alleged theft, along with Kilcullen seeming not to do any work on the case, to the Washington State Bar Association in March 2011.

Schwab reported he believed Kilcullen held onto the money hoping the mistake would be unnoticed, according to court records.

Kilcullen allegedly paid the money back to the Social Security Administration in April 2011, which reissued the check to Calbom and Schwab, according to court records. In a letter to the bar association's Office of Disciplinary Counsel, Kilcullen allegedly admitted to depositing the check after finding it in a drawer. She reported needing money after being terminated, and she was about to lose her home.

Kilcullen reportedly told police she was blind-sided by the accusations, and did not provide any further details about the incident, according to the police report.

Kilcullen is presently facing a disciplinary hearing with the bar association. The hearing was originally scheduled for January, but is likely to be delayed until the criminal proceedings are finished.

Sachia Stonefield Powell, disciplinary counsel for the bar association, claims Kilcullen failed to pursue the veteran's case for 15 months and failed to pursue the matter diligently, along with keeping the fees, according to the formal complaint.