An Anchorage man accused of Permanent Fund Dividend fraud pleaded guilty to second-degree forgery on Monday.

Daniel Batalona, a 64-year-old grandfather of three, flew down to Juneau to enter his plea in Juneau Superior Court.

A plea deal reached with prosecutors from the Attorney General’s Office of Special Prosecutions and Appeals calls for Batalona to serve two years of probation, as well as two years of jail time with all time suspended (meaning there’s no time to serve) and a $2,000 fine, also suspended. Additionally, Batalona will be required to serve 160 hours of community work service.

The plea deal dismisses all other counts against him.

Assistant Attorney General Anne Preston alleges Batalona received three PFD checks in October of 2010 made out to each of his grandchildren, signed the backs of the checks in his and his son’s name and then deposited the money into his bank account. Each of the three checks was for $1,281, for a total of $3,843.

Preston said in an interview an investigation conducted by the Department of Revenue’s Criminal Investigations Unit found the mother of the children filled out the PFD applications on the children’s behalf and the father, Zachary Scott Batalona, 39, filled out a PFD application for himself, while they were all living in Wahiawa, Hawaii. They moved to Hawaii in November 2009 and listed the elder Batalona’s Anchorage address as the mailing address for the checks, court records show.

Batalona’s attorney, assistant public defender Grace Lee, told the judge Batalona’s intention was to invest in his grandchildren’s future by setting up a trust fund for them.

“His intentions were not to cash it, and his intentions were not to take the state’s money,” Lee said.

Lee noted Batalona used some of the money to buy a couple of computers from himself and his girlfriend’s son and other personal items, but as soon as the state contacted him, he cooperated fully and paid restitution in full shortly thereafter.

Since the money had already been paid back, Preston did not request restitution on Monday. Preston added the plea agreement was in part a result of the fact Batalona did not have a criminal history and he could potentially raise a quasi- or pseudo-necessity defense, two things that would have worked against the state at trial.

The elder Batalona originally faced three felony counts of first-degree forgery and three felony counts of second-degree theft when he was indicted in October of last year.

Judge Philip Pallenberg scheduled a sentencing hearing for June.

The younger Batalona is still facing felony unsworn falsification charges and attempted second-degree theft charges, and the state has put out a warrant out for his arrest.

The state has not charged the mother with any criminal offense, and whether the grandchildren were eligible to receive PFD checks is still pending as an administrative matter with the Alaska Permanent Fund Dividend Division, Preston said.

• Contact reporter Emily Russo Miller at 523-2263 or at emily.miller@juneauempire.com.

• This article has been changed to reflect the Alaska Permanent Fund Dividend Division will determine the grandchildren's eligibility for Permanent Fund Dividends