The attorney general says several checks were sent to a former inmate at a Chester halfway house, where Wilson worked part-time on weekends.
The investigation began in January 2008 after the Department of Treasury was notified that several SWIF checks, which had been issued from June 2007 through December 2007, were never received by the intended recipient.
Chief Wilson allegedly forged the name of former inmate Vaughn Moore on one of the checks worth more than $6,600.
"We all take oaths to uphold the law and enforce the law fairly and squarely. If somebody in the law enforcement community steps out of line, we have no choice but to act accordingly," said Deputy Attorney General Richard Flannery.
Wilson's attorney says his client is not guilty of committing any crimes here and is, in fact, a victim himself.
"Quite frankly, he was duped. Plain and simple, he was duped," said attorney John List. "That will come out through testimony in proceedings here."
Bail for Chief Wilson was set at $5,000 unsecured.
The magistrate was Judge James Charley, the former police chief in Chester Township. He also supervised Wilson for 12 years.
Judge Charley has recused himself from any further involvement in this case. Late Wednesday, township officials placed Wilson on administrative leave without pay as this case moves forward through the court system.
Wilson is charged with one count of forgery, one count of theft by unlawful taking or disposition, one count of theft by deception, one count of theft of property lost, mislaid or delivered by mistake, one count of receiving stolen property and one count of theft by failure to make required disposition of funds received.
Wilson faces a maximum penalty of 51 years in prison and a $120,000 fine.