Two former officials in an MBTA employees union have been indicted for larceny and related offenses for allegedly overpaying themselves from union funds, with one additionally accused of failing to pay taxes on his inflated income, Suffolk County District Attorney Daniel F. Conley announced.

The Suffolk County Grand Jury on Nov. 10 indicted JOHN HORAN (D.O.B. 7/16/64) of Spencer on two counts of larceny over $250 by scheme and BRIAN SHEEHY (D.O.B. 7/26/69) of Quincy on three counts of larceny over $250, two counts of filing a false tax return, and three counts of filing a false tax return.

The charges reflect the alleged theft and misuse of more than $78,000 by Horan and more than $250,000 by Sheehy, prosecutors say. The alleged thefts came from the union’s bank account and credit cards, not from the MBTA itself, between 2005 and 2010.

Horan was for 10 years president and business manager of Local 600 of the Office and Professional Employees International Union. The union represents more than 300 MBTA inspectors and chief inspectors and has an annual operating budget of about $300,000 accrued from members’ and retirees’ dues. Sheehy was selected by the union’s executive board to be its secretary-treasurer in 2005. Both men had signature authority over the union’s operating account.

In 2010, Horan retired as president and Sheehy ran unsuccessfully to succeed him. When the new administration took office, they found what appeared to be suspicious withdrawals from the union’s credit union account and confronted Sheehy.

In a text message to the new president following that confrontation, Sheehy allegedly stated that he “made a terrible mistake” and “breached the trust of a lot of people.” Between December 2010 and January 2011, he repaid about $93,000 and then declared bankruptcy.

A review by union officials and an investigation by State Police detectives assigned to Conley’s office indicates that Sheehy had withdrawn at least $98,000 in cash from the union’s bank account and that Horan had withdrawn at least $1,700.

Based on payroll records obtained during the course of the probe, authorities believe that both men regularly overpaid themselves, as well. Under inspector’s union rules, the union pays its president a rate 15% higher than that of a chief inspector and reimburses its secretary-treasurer for any MBTA wages lost as a result of time spent working on behalf of the union. Horan, the president, allegedly inflated his pay $77,160.82 between 2005 and 2010, and Sheehy, the secretary-treasurer, allegedly inflated his by $158,826.73 during the same time period.

Additionally, Sheehy allegedly wrote himself checks on the union’s bank account and used a union credit card to make unauthorized purchases of gasoline amounting to more than $3,000. Prosecutors say he never reported the checks he wrote himself or the cash withdrawals he made on his Massachusetts tax returns, resulting in his paying less in taxes than he should have.

Sheehy was arraigned today in Suffolk Superior Court. Clerk Magistrate Gary D. Wilson did not set monetary bail, but did order him to surrender his passport to the court and be booked by Massachusetts State Police. He was represented by attorney Paul Gannon. Horan will be arraigned on Dec. 7 and is represented by attorney Terrence Kennedy. Both men are expected to return to court on Jan. 25, 2012, to set a trial date.

The grand jury investigation was led by Assistant District Attorney Benjamin Goldberger of Conley’s Special Prosecution Unit, which handles cases of fraud, corruption, and white collar crime.