It was discovered after a car crash involving 56-year-old Father Oscar Diaz, who broke his hip in the traffic accident, when paramedics found over $18,000 cash in the Roman Catholic priest's car.
A hospital employee called the police, according to the Bishop of Santa Rosa, Rt Rev Robert Vasa.
Bags full of cash from months' worth of church collections were found in his parish office and $10,000 in notes in a desk drawer.
Where he lived, at the rectory, bags were also found containing collections going back to last September.
Bishop Robert Vasa said: "All of this is certainly horribly distressing and so I hope you can understand the anger, outrage, sadness, grief and confusion which this has created. My determination to have the police involved and to proceed with a criminal investigation, arrest and charges was secure."
Bishop Vasa said it was important for him to handle this situation "in the light of the Gospel, in prayer and in meditation."
He said: "Our journey must be a journey from anger to peace. Our journey must be a journey from shock to understanding. Our journey must be a journey from grief to acceptance. Our journey must be a journey from confusion to compassion. Our journey must be a journey of concern for the spiritual well being of Oscar despite the fact that actions must be taken which are extremely difficult."
Mr Diaz, who celebrated his 25th anniversary as a priest on July 14th has been suspended and a police investigation is ongoing.
Stay up to date with the latest news stories from a Christian perspective. Sign up to our daily newsletter and receive more stories like this straight to your inbox every morning.