Sarah Wondra, 35, was charged with failing to report a death at the weekend, Fruitland Police Chief JD Huff told KTVB7.
Mr Huff confirmed that the suspect was one of the occupants of a house where police dug up the backyard after receiving “credible tip”.
“Our investigation determined Sarah Wondra may have had knowledge of Michael’s death and failed to report it,” Mr Huff told KTVB7.
“We do not believe she is the only person that has knowledge of this and we will be seeking out those people who could possibly be connected.”
Ms Wondra was arraigned on Monday afternoon, where Judge Brian Lee set a $500,000 bond and ordered her to be electronically monitored ahead of her next hearing on 21 November.
Michael Vaughan vanished from his home in Fruitland on 27 July last year.
Authorities spent the weekend searching a property in the 1100 block of Redwing St, about half a mile (one km) from Michael’s family home, KTVB7 reported.
Heavy machinery including diggers and excavators, and cadaver dogs were brought in.
Mr Huff told KTVB7 that the tip that led them to search the property came from another occupant of the house.
Police have not yet said if they located a body.