ANDERSON, Ind. — A woman who stole hundreds of thousands of dollars from an Elwood company, nearly bankrupting it, will spend two years in prison.

Melissa Hazelwood of Jonesboro received a 10-year sentence from Madison Circuit Court Judge Rudy Pyle for her role in bilking about $700,000 from MDSC Corp., previously known as Modern Die Systems, 1104 North J St., Elwood.

Hazelwood will serve two years in prison, three years on in-home detention and five years of probation, said a Circuit Court administrator.

Prosecutors had charged Hazelwood with six counts each of forgery and theft, as well as conspiracy to commit forgery and conspiracy to commit theft. Hazelwood’s husband, Mark Hazelwood, received a three-year suspended sentence for his role in the crimes, per a plea agreement with prosecutors.

Melissa Hazelwood’s most serious charges, for forgery, each were punishable by two to eight years in prison.

According to police, Melissa Hazelwood gave MDSC’s owners checks to sign that were to be sent to vendors for various materials. Instead of sending the checks, she erased the vendor’s name and replaced it with her own.

Melissa Hazelwood’s bank alerted the company in February 2007 after she deposited several large checks, according to court documents.

MDSC hired Melissa Hazelwood in 1999, and investigators said the thefts began in 2000. According to police documents, the Hazelwoods used the stolen funds on vacations, furniture, clothing and gifts. Melissa Hazelwood told the company’s owners she took the money because she had a shopping problem.

MDSC President Daniel Neuendorf said he was told Melissa Hazelwood’s sentence was the maximum the judge could give her.

“That seems rather unfortunate to me,” he said. “The perception of this kind of crime is that it doesn’t hurt any individual, but the matter of fact in this case is it hurt a lot of individuals more so than if it were someone stealing cash from a single person. Seven-hundred thousand dollars is a lot of business and a lot of employment.”

Neuendorf, who attended Monday’s sentencing, said his business was holding its own after the theft and during the economic recession, but the Hazelwoods’ actions had severely harmed MDSC.

“We would be in much better shape if we weren’t running everything on borrowed money,” he said. “I’ve had to borrow everything I could from family in order to pay the bank off so that we wouldn’t have this interest that sucks up every bit of profit we have.

“The timing couldn’t have been worse.”

Neuendorf and MDSC General Manager Bob Davis had wanted to improve the company’s equipment and invest in other manufacturing opportunities, but they haven’t been able to because of the stolen money, Neuendorf said.

“I haven’t given up on that, but I have to wait until there’s some cash to be able to work with,” he said.

The company filed a civil lawsuit in Grant County in March 2007 to recoup the stolen money. The case was settled with the Hazelwoods agreeing to pay $500,000.

Neuendorf said the company has gotten about $60,000 from auctioning off the couple’s property and $90,000 from a stock option plan that was a result of the agreement. They used the money to pay their attorneys and debts to vendors.

“Our vendors have been very patient with us through all that,” Neuendorf said.

Since the theft, MDSC has been working with a skeleton crew, and both Neuendorf and Davis have taken 38 percent pay cuts. The two were in the midst of purchasing the business from Neuendorf’s mother, and they have had to forgo payments to her.

“We tightened the belt on everything we can think of,” Neuendorf’s mother said. “The judge tried to stress how serious of a crime this is and it really had an effect on a lot of people. When you start costing people their jobs, you’re costing their spouses and their children.”

MDSC still has good relationships with its customers in the metal stamping industry, and Neuendorf said after Monday’s sentencing he hoped he could move on and focus on getting the business back on track.

“I’m just stubborn enough to do that,” he said. “I’m not going to give up until I run into a brick wall and just can’t go any further.”

Contact Aleasha Sandley: 640-4805, aleasha.sandley@heraldbulletin.com.