>   After an extensive investigation, local police have arrested the former executive director of the Prineville Hospital Foundation.
   Marta Jo Hudson, 47, was arrested on a charge of aggravated theft late last week. Booked into the county jail with bail set at $15,000, she posted security and was released. Her case is expected to be presented to a grand jury this week.
   Hudson worked for the Foundation from June, 1999 until December, 2000. Prineville Police Captain Tim Pinkston said the loss of funds first came to the attention of the Foundation last December, apparently at about the same time Hudson had been terminated by the Foundation. Two accounting firms were hired to conduct an audit of the Foundation's books and those of the Prineville Medical Clinic. Pinkston said when that accounting was completed the matter was turned over to the police.
   Discrepancies found by the auditors and the police department's Criminal Detective Andrea Vaughn indicated that the theft had been going on for about a year. Pinkston said funds for personal purchases were made on the Foundation)s credit card. "And then it was a case of smoke and mirrors. Checks were written on the medical clinic account to cover the credit card purchases."
   According to the investigation concluded by the accountant and Vaughn, $22,917.91 was missing.
   Thursday afternoon, police took Hudson into custody.
   The Prineville Hospital Foundation has provided the primary source of funding for Pioneer Memorial Hospital for more than 20 years. In a release early this week, Foundation President Kristi Steber said the Foundation expects full restoration of the missing funds once the matter is resolved.
   Steber said the Foundation board is very concerned about protecting its resources and maintaining the trust of the area's donators. She went on to reassure contributors that accounting and audit controls have been thoroughly reviewed by outside auditors.
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