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Saturday, March 1, 2014

Former credit union employees plead guilty to embezzlement

Two former employees of Milledgeville Community Credit Union have pleaded guilty to embezzling money in separate cases.
As part of a plea agreement, Kim Kent, 53, the credit union’s former manager, pleaded guilty Monday in federal court in Rockford to embezzling $219,600 from October 2005 to February 2012.
And former credit union teller Kelsey Selman, 37, admitted that she embezzled $100,975 from the credit union, according to a news release from Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
Each woman faces a maximum penalty of up to 30 years in prison, followed by five years of supervised release, and a fine of up to $1 million.
Kent’s sentencing is set for June 2; Selman’s will be May 7.
To conceal her embezzlement, Kent created fictitious loans using names of family members and fictitious certificates of deposit, according to the news release.
In 2009, she was elected supervisor of the Milledgeville-based Wysox Township. She used money from the township’s credit union account to cover her embezzlement, the release said.
Selman, 37, used the credit union’s computer system to apply credits to her personal account that did not have a corresponding deposit, the release said. As a result, the credit union’s records falsely reflected that Selman’s cash drawer increased by an amount to offset the deposit into her account.
Wysox Clerk Laurie Byvick said Monday that she wasn’t aware that the women had pleaded guilty.
“I knew it would happen eventually, but didn’t know when,” Byvick said in an interview.
Todd Ewers, chairman of the credit union’s board, said the two women “totally” repaid the institution.
“This was well thought-out. This wasn’t simply taking money,” he said, adding that the women’s crimes were not connected.
Ewers, who was the supervisory committee chairman when the women committed the crimes, said the credit union was glad “that justice is finally being served.”
In March 2012, the Wysox board voted unanimously to accept Kent’s immediate resignation. The board then voided all checks issued by Kent.
In a December 2012 interview, Milledgeville Police Chief Jim Haag said he started looking into the problems in the township and credit union in March of that year. He said he identified misuse of funds at both places.
In August 2012, he said, he got a call from an FBI agent who was investigating. At the time, the FBI wouldn’t confirm the investigation with Sauk Valley Media.
The credit union, chartered in 1957, had $3.8 million in assets as of late 2012, according to the state. It has about 900 members.

Lenox National Bank is awaiting an FBI update on its embezzlement probe

Three months after the discovery of up to $400,000 in reserve funds missing from the Lenox National Bank, bank officials are still in the dark on the progress of an extensive FBI investigation.

Two long-serving employees who were terminated last November remain potential suspects in the federal case of embezzlement and fraud, but have not yet been charged or arrested.

The joint investigation is being handled by the FBI's Springfield office and Lenox Police.

Police Chief Stephen O'Brien said on Monday that he has been in contact with the bureau, but the status of the case remains unchanged since November. "This is still a very active investigation," he stated.

Bank President Paul Merlino, an executive at Lenox National since 1975, told The Eagle that, following what he has called "a shocking betrayal by two trusted employees," tighter internal security procedures have been deployed.

"We've done everything we can," he asserted. "We're doing more than we did before, we thought we had adequate procedures. They say it's a very difficult situation when there's collusion" involving two employees.

"I'm told the FBI is very, very thorough but works very slowly," said Merlino. He has had no further contact with FBI agents since the investigation began.

"I wish we knew; we're anxious to have it resolved," he added. "It's frustrating, not knowing. I'd like to have their names out there, but it's not my position. It seems unfair to us."

The bank has submitted claims to its insurer to recover the funds stolen from the cash vault, which Merlino described as ranging from $300,000 to $400,000. The missing funds will be replaced through an insurance bond arranged via the Toole Agency, based in Lee and Lenox.

No depositors' funds were affected by the embezzlement, which involved the bank's working capital, Merlino emphasized.

FBI officials did not immediately return a call for comment.

At the time the probe was launched, Mark Karangikis, supervisor of the FBI's Springfield office, said that when completed, the findings will be relayed to the U.S. Attorney's office in Massachusetts.

In terms of the bank's reputation and customer confidence, Merlino commented that "the public has been extremely supportive." On his desk was a pile of cards and letters from customers and well-wishers, including one from state Rep. William "Smitty" Pignatelli, D-Lenox, augmenting personal visits from residents.

The bank president described "a very touching call" he received at home from Josephine Pignatelli, 101, an aunt of the state lawmaker who lives at the Cameron House assisted-living facility and is the town's oldest native resident, according to Town Hall records. Ms. Pignatelli, a former banker, was a Merlino colleague when he broke into the industry in Pittsfield during the early 1970s.

"Some customers were upset at the individuals who were involved," Merlino acknowledged, "but they were not upset at the bank."

"Our big concern right from the beginning was the reputation of the bank," he noted. "It's been built up over years. We've gotten over what's called the ‘reputation risk.' Apparently, we've overcome that. We were trying to be transparent about the situation, we didn't attempt in any way to cover it up."

Maintaining a small-scale bank is challenging, according to Merlino, because of current industry rules and regulations, which he described as "onerous."

"It's not like it was 25 or 30 years ago," he recalled, "when you could make ‘character loans' to somebody you knew. They signed their name and they paid you back." Now, extensive documentation and procedures are required to obtain a loan or open an account.

"The easy thing is to sell out and merge," he added.

Fifth Third Bank VP admits to embezzling $10 million largely and oddly to help Jacksonville customers

Federal authorities have charged a former Jacksonville bank vice president with embezzling $10.5 million for himself and customers, oddly using the money to help them with loans and other banking favors, court records show.
Christopher David Boston, 40, entered into a plea agreement with prosecutors last week in which he admitted to the thefts from Fifth Third Bank over a 3½-year period, records show. The thefts occurred while Boston was working as a vice president and a private banker at the bank’s Mandarin branch at 9716 San Jose Blvd. just south of Old St. Augustine Road. A private banker handles high dollar accounts, of which Boston had dozens.
Boston has not been arrested and is set to be in court next week to formally enter the plea to bank fraud, which carries a sentence of up to 30 years in prison and a $1 million fine. Boston could not be reached to comment and his defense attorney, former State Attorney Harry Shorstein, declined to comment, as did prosecutors.
A one-count information, which is a charging document prepared by federal prosecutors in lieu of an indictment, and the plea agreement initialed by Boston were filed in the federal clerk’s office in Jacksonville Feb. 19.
Boston, a bank employee since about 2007, admitted embezzling the money from one large commercial corporate account and two individual customer accounts, falsifying bank records and illegally laundered funds between November 2009 and April 2013.
About $8.3 million was taken from the individual accounts, while about $2.2 million came from the corporate account. The account holders were not identified in court records.
Boston electronically transferred the $8.3 million to the corporate account to help conceal a theft from that account, according to the records. It’s unclear if  the individual account holders noticed the money was missing. The records do not say what triggered the investigation.
Boston used about $210,000 of the stolen money to pay down mortgage payments of about $2,000 for a Mandarin home on Emily’s Crossing Court just off Losco Road. That money also went toward installing a backyard swimming pool, court records show.
The home was given to his wife after she was granted a divorce in September, several months after her husband lost his job during the investigation, the couple's divorce file said. Records show about $250,000 was owed on the two-story home at the time of the divorce.
Court records said Boston used the bulk of the stolen money to:
■ Pay off the troubled loans in his customer portfolio.
■ Make “off-book” loans to customers whose loan applications had previously been denied and then making off-book interest payments on those loans. The records said many of those customers unknowingly received the benefit, though a further explanation was not provided.
■ Deposit the money into other customer accounts to fraudulently bolster their creditworthiness.
■ Provide customers “enhanced” interest returns on deposit accounts.
It’s unclear how Boston benefited, if at all, by helping the other customers. None of those customers are named in the information or plea agreement.
After discovering the theft, the bank “took corrective action in order to make their victimized clients whole and then to attempt to recover bank funds embezzled by the defendant,” the plea agreement said.
The records said the bank replenished the three accounts, then attempted to issue legitimate loans to customers who received about $8.4 million in “off-the-book and non-conforming” loans from Boston.
“Fortunately, the majority of the individuals that had unknowingly received the benefit ... voluntarily agreed to sign new bank-approved and legitimate loan documents,” the plea agreement said.
About $6.4 million in new loans were made, leaving about $2 million likely never to be recovered by the bank. The money is insured by the Federal Deposit Insurance Corp. About $2.2 million in restitution is being sought from Boston, the records said.
Fifth Third Bancorp, headquartered in Cincinnati, has about 10 branches in the Jacksonville area and 1,320 full-service banking centers in 12 states, according to the company’s website. Bank branch officials declined to comment on the case, instead referring all inquiries to the bank’s corporate office. An email from that office said that all affected customers have been contacted and that none would suffer a loss.
Boston and his ex-wife have one child, records show. At the time of the divorce, the wife worked at another branch of Fifth Third Bank. Records do not connect her to the case in any way and she has not been charged.

Former bank teller sentenced to 5 year diversion in fraud case

 A former Capital Bank head teller was sentenced to a five-year judicial diversion for stealing more than $60,000 from a local bank.

Kristy Hodges, 31, of Cunningham, Tenn., was charged with theft and 43 counts of false bookkeeping.

In September of 2012, the 19th Judicial District Attorney General requested TBI investigate allegations of embezzlement by Hodges, who was head teller at Capital Bank located at 25 Jefferson St. Hodges allegedly stole approximately $64,000 between 2008 and 2012, according to a previous report.

On Jan. 3, Hodges entered an open guilty plea to theft over $10,000 in Judge John H. Gasaway’s court. The 43 charges of false bookkeeping were dismissed in settlement.

Thursday, she was sentenced to a five-year judicial diversion to be served on state probation. She must also pay restitution to the bank in a civil agreement, according to court records.

She must also disclose her conviction if she seeks employment at any type of financial institution.

Ex-UMB Employee Pleads Guilty to Embezzlement

A former employee of UMB Financial (UMBF) in Kansas City, Mo., has pleaded guilty to embezzling more than $650,000 from the company.

Lisa Taylor used her position as a closing account specialist at UMB Bank to create 377 fraudulent checks between May 2006 and October 2010, according to a press release Thursday from the U.S. Attorney's Office in the Western District of Missouri. She admitted to her role in the bank fraud conspiracy in a Kansas City federal court, the release said.

Taylor's job at UMB required her to request refund checks for customers with closed accounts. When a deposit earmarked for a closed account arrived, the money would be deposited into a general account at UMB. Taylor would then request that a refund check be issued from the UMB account and sent to the customer's last known address.

Taylor took advantage of her position by making fraudulent refund requests for checks payable to friends and family members, with whom she split the proceeds, according to the release. She also requested checks payable to names she made up, forged the signatures and deposited the money in her own account, according to the release.

Eleven of Taylor's friends and family members have also pleaded guilty to their roles in the scheme, according to the release.

Taylor is required to pay the United States government $650,659 as part of her plea agreement. She faces up to 30 years in federal prison without parole, a fine of up to $1 million and an order of restitution, according to the release. Her sentencing date has not yet been scheduled.

Saturday, February 22, 2014

Credit Union CEO Sentenced in Embezzlement Plea Deal

Anne Schaal, the former president/CEO of the $1.9 million, 492-member Aurora Firefighters Credit Union, will spend 30 days in jail for embezzling more than $36,000 from the Aurora, Ill.-based institution.

Schaal was also sentenced to 150 days in electronically-monitored home detention and three years on probation for the criminal activity that took place between January 2006 and November 2011, according the Kane County Attorney’s office in St. Charles, Ill.

As part of a plea deal with the Kane County prosecutors, the 67-year-old Schaal pleaded guilty to one felony count of theft on Feb. 14 in Kane County Court.

A gambling addiction led Schaal to steal from the credit union as well as lose more than $580,000 that belonged to her and her husband, according to The Daily Herald, a Chicago suburban newspaper. In court documents, according to the newspaper, Schaal acknowledged that she became addicted to gambling.

The former CEO also was ordered to pay more than $4,000 in fines, to undergo a psychological evaluation and to have no contact with the credit union, according to the Kane County State’s Attorney office and local media reports.

Schaal was arrested September 2012 on theft and misuse of credit card charges. At that time, she denied the charges and was scheduled to stand trial in March.

The Aurora Firefighters CU also filed a civil lawsuit against Schaal, claiming she stole the money and posted “phantom payments” to the credit union’s ledger, according to The Daily Herald, a suburban Chicago newspaper.

The lawsuit was dismissed in September 2013 after the credit union and Schaal agreed to an out-of-court settlement.

Though Schaal made a payment to the credit union to settle its claims for damages, a lawyer representing Aurora Firefighters CU declined to say how much Schaal has paid, The Daily Herald reported.

Ex-Merrill banker pleads guilty to embezzlement

A former investment banker for Merrill Merchants Bank and People's United Bank pleaded guilty Wednesday to charges of embezzling nearly $3 million and evading income taxes.
U.S. Attorney Thomas Delahanty said in a press release that an investigation found Lynn Bowden, 62, of Bucksport had transferred around $2,990,000 to her personal accounts through 108 deposits and transfers of customer funds.
Investigators said the embezzlement took place between April 2005 and September 2012. Bowden began working for Merrill Merchants Bank in 2004. She continued to work with Merrill through its acquisition by the Chittenden Corp. in 2007 and its acquisition in 2008 by People's United Bank. Prosecutors said the bank discovered Bowden's illicit transfers in October 2012 and fired her shortly thereafter. At the time, she managed more than 200 trust and investment management accounts. Investigators charged her with evading around $750,000 in federal income tax between 2007 to 2011.
She faces a maximum sentence of up to 30 years in prison and a fine of up to twice the amount taken on the embezzlement charge. She faces up to five years and a $250,000 fine on the tax evasion charge.