Excerpt: "The Rev. John McCarthy, chancellor of the archdiocese, said when church officials arrived for reviews, Gray was absent. Church officials believed he was seriously ill. "He had a terrific reputation," McCarthy said. "We probably cut him some slack.""

NEW HAVEN, Conn. — The Rev. Kevin J. Gray was a popular priest who appeared to live humbly, forgoing a car and walking to Mass from another parish where he lived so that a Catholic charity could use his space at the rectory. Parishioners thought he had cancer and admired how he helped immigrants in his largely poor parish in Connecticut.

But after a routine audit of the church's finances turned up discrepancies, authorities began a criminal investigation that they say unraveled a secret double life of male escorts, strip bars and lavish spending on the finest restaurants, luxury hotels and expensive clothing, financed with money stolen from the parish.

"About a million," Gray told authorities without hesitation when asked how much he took from the church account, according to his arrest affidavit.

Gray, former pastor at Sacred Heart/Sagrado Corazon Parish in Waterbury, was arrested and charged with first-degree larceny, accused of stealing $1.3 million over seven years from the church, police said. He was arraigned Tuesday in Waterbury Superior Court and was being held on $750,000 bond, court officials said.

"Up until this investigation he had an excellent reputation," police Capt. Christopher Corbett said. "The life he was leading in New York City was much different than the life he was leading in Waterbury as a priest. He's certainly an example of someone who was leading a double life."

Gray told church officials and others that he had cancer, but police found no evidence of that, Corbett said. Saying he was undergoing treatments in New York may have been an excuse to explain his absense from the parish, he said.

Gray, 64, used the money to stay at such hotels as the Waldorf-Astoria, New York Palace Hotel and Copley Square in Boston, and on expensive clothing labels including Armani, Saks 5th Avenue and Brooks Brothers, police said. He dined at Tavern on the Green and Arturo's restaurants in New York, Union League Cafe in New Haven and Abe & Louie's Restaurant in Boston.

One man Gray met in New York's Central Park told police that Gray paid for him to attend Harvard University, bought a piano and dogs, and paid for his piano lessons and veterinarian bills. When the man asked why he always paid him with checks from Sacred Heart, Gray told him he had won big cases as an attorney and placed his life savings into the church account, according to the arrest affidavit.

As police interviewed the man, Gray arrived at his apartment. Gray admitted he was not an attorney and did not have colon cancer, police said.

Telephone messages left at Sacred Heart and the public defender's office were not immediately returned.

Police said Gray told them he grew to hate being a priest and was upset with the archdiocese, believing he received the worst church assignments. He said he made checks payable to himself in excess of his salary over the years and admitted to having a secret phone deal in which an antenna was placed in the church steeple to generate cash.

"We are deeply saddened by the events which have recently had such a profound affect on Sacred Heart/Sagrado Corazon parish," the Archdiocese of Hartford said in a statement.

Archdiocese officials said they are working with the parish to improve its financial controls and deal with its debts.

"At the spiritual level, we continue to pray for healing and consolation for the parish family as it moves forward and for guidance and reconciliation for Father Gray as he encounters the legal proceedings that await him," they said in the statement.

The archdiocese asked police to investigate after it discovered during a financial review that Gray may have taken more than $1 million dollars for personal use. It involved a combination of parish savings and money that should have been used to pay certain debts, such as insurance premiums, church officials have said.

When church officials announced those findings last month, Hispanic parishioners rallied to Gray's side.

"He is not what the superiors are saying about him," parishioner Juan Marrero told The Waterbury Republican-American. "This good friend of mine did not have a car, did not have good clothes to be parading around in. He was a very humble person."

Gray was Sacred Heart's pastor from 2003 until April 15, when he was granted a medical leave. He was later suspended.

David Clohessy, executive director of the Survivors Network of those Abused by Priests, said he was skeptical a priest could steal so much money over many years without raising suspicions.

Gray, whose salary was less than $28,000 last year, was the only one with computer access to parish financial records, and there was no parish council or finance committee at the church, according to the arrest affidavit.

The Rev. John McCarthy, chancellor of the archdiocese, said when church officials arrived for reviews, Gray was absent. Church officials believed he was seriously ill.

"He had a terrific reputation," McCarthy said. "We probably cut him some slack."