Ex-WMECO credit union chief pleads guilty to theft in Massachusetts

The former director of the Western Mass. Electric Co. Credit Union pleaded guilty Tuesday to bilking $225,000 from his employer by falsifying expense reports for several years before his retirement in 2006.

Appearing in a wheelchair in U.S. District Court, Robert Koss, of Ludlow, pleaded guilty to embezzlement and filing a false tax return while running the Springfield-based credit union for the utility's employees, family members and retirees. Under federal guidelines, Koss could receive up to 33 months in prison at his sentencing, set for Jan. 21. Koss' scheme began in the late 1990s and continued through 2006, according to Assistant U.S. Attorney William M. Welch II, who said the credit union director collected about $225,000 from invented or inflated expense reimbursements. He also falsified his income on a 2005 tax return, reporting between $20,000 and $30,000 less than he earned, Welch said. As part of a plea deal, Koss agreed to pay about $130,000 in restitution to the credit union; he already paid $80,000 to the union's insurer in a civil suit, and has placed $50,000 in escrow for further repayments, Welch said. Wendy J. Tariff, the credit union's CEO, said accounts at the federally guaranteed institution were never threatened by the scheme. "This is the end of a very sad chapter in our credit union's 88-year history. The staff worked hard throughout the past three-plus years to document and substantiate these losses," she said. "This news will certainly come as a shock to our members and the Massachusetts credit union community," Tarriff said, adding the "credit union remains a safe and sound institution." The deal allowed Koss, who ran the credit union for 30 years, to plead guilty Tuesday without being indicted by a grand jury or arraigned on the charges. Before pleading guilty, Koss was reminded by Judge Michael A. Ponsor that he faced a possible two-year prison sentence. When the judge quizzed the defendant about his health, Koss responded that he needed the wheelchair "because I can't walk long distances." Springfield defense lawyer Jack F. St. Clair said his client had briefed him on physical liabilities before agreeing to the plea.

New Jersey Man Charged in $1.8 Million Bank Fraud Scheme

An indictment was unsealed today against Brian Geller charging a multi-year bank fraud scheme that netted him over $1.8 million between the summer of 2005 and the summer of 2009, announced United States Attorney Zane David Memeger. Geller was also charged with engaging in transactions over $10,000 with the proceeds of the fraud.The 22-count indictment charges that Geller, while an employee of JPMorgan Chase Services, manipulated JPMorgan Chase Bank’s internal books and records and caused the Bank to wire transfer to his account, to accounts of his family, and to accounts in which his life partner had right, title, interest or control. The indictment claims that among the wire transfers of funds was one in 2005 for over $499,500, one in 2008 for $583,444.99, and one in 2009 for another $583,444.99.

Georgia credit union teller pleads guilty to embezzling more than $624,000

A 48-year-old former head bank teller at MidSouth Community Federal Credit Union in Macon pleaded guilty to embezzlement and falsifying credit union records.Lisa R. Cox pleaded guilty in U.S. District Court on Monday to embezzling $624,608 from the credit union from 2001 to 2007 and using the money to gamble, take European vacations and make car payments, among other expenses.The Telegraph newspaper reports that prosecutors say Cox took money from teller drawers and the vault and made false entries to cover her tracks. A surprise audit in 2007 uncovered the deficit.Cox’s attorney, Catherine Leek, says she’s reserving her comments until sentencing, expected within 90 days.

Utah man pleads guilty to St. George bank fraud

A St. George man has pleaded guilty to embezzling $200,000 from a bank.Gavin Larkin, 35,faces up to 30 years in federal prison and a $1 million fine for stealing funds from U.S. Bank in St. George.He pleaded guilty Monday to one count of embezzlement and misapplication of bank funds.Larkin admitted that he approved a line of credit and a checking account under the name St. George Legal Documents, then drew funds from its line of credit, transferred them to a checking account and used them for personal expenses.U.S. Magistrate Judge Robert T. Braithwaite set sentencing for Dec. 7.

Former Tulare, California bank manager arrested

The former bank manager in Tulare accused of taking money from customers was arrested this morning, the state Department of Justice said.Jeri Sell, 56, was taken into custody about 7 a.m. at her Tulare home. She was being held in the Tulare County Jail on $679,000 bail.She was arrested on suspicion of embezzlement, said Jim Finefrock, director of communications at the Department of Justice.Sell, took money from night deposits to support a gambling habit, according to a search warrant issued in May in which authorities searched her home and the bank.Sell was vice president and manager of Citizens Business Bank in Tulare.

Former West Virginia Credit Union Employee Admits Role in Fraud Scheme

A former employee of a federal credit union pleaded guilty Monday to charges stemming from her role in a multi-million fraud schema that led to the failure of a credit union. Pamela Mullins, 47, of Bluefield pleaded guilty to a one-count information charging her with bank fraud. Mullins faces up to 30 years in prison and a $1 million fine when sentenced in January.In August, a federal grand jury in Beckley returned an indictment against Mullins’ co-worker, Rebecca Poe, 35, of Falls Mills, Virginia.According to the U.S. Attorney Mullins was named but not charged in the indictment. The indictment alleges that Poe, aided and abetted by Mullins, stole money from the N&W Poca Division Federal Credit Union located in Bluefield from 2003 to August 2008 through various schemes. The scheme resulted in the loss of $2.4 million dollars to the credit union contributing to its failure. Poe is scheduled to stand trial next month.

Henry County, Ohio woman sentenced for bank embezzlement

A Liberty Center woman has been sentenced to 45 days in jail and three years of community control for embezzling almost 30-thousand dollars from her former employer.Carly Zeiter was charged with deliberately inflating the Henry County Bank's internal vehicle inventory lists of two local car dealers by creating entries for vehicles that did not exist. Zeiter then withdrew funds equal to the value of those false entries from the auto dealers' commercial credit accounts and deposited the money into her own personal checking accounts.
Zeiter pleaded guilty in July to forgery and grand theft. In addition to jail time, visiting Putnam County Judge Randall Basinger ordered Zeiter to perform 200 hours of community service as part of her community control sanctions. Zeiter has already paid back the full amount of the theft.

Greenwood, Indiana Man Sentenced for Bank Fraud

Robert E. Tolle, 40, Greenwood, Indiana, was sentenced to 22 months in prison today by U.S. District Judge Tonya Walton Pratt after pleading guilty to charges of making fraudulent bank entries. This case was the result of an investigation by the FBI.Tolle, a former Old National Bank (ONB) senior vice-president of commercial lending, was hired by ONB on November 17, 2003, as a commercial relationship manager. While at ONB, Tolle was in charge of handling some of the larger credit relationships of ONB and supervised commercial relationship managers. Tolle had a credit lending authority up to $350,000. In early spring, 2007, ONB started to notice some negative trends with loans in Tolle's loan portfolio. Shortly thereafter, ONB also discovered that ONB loaned $2,778,000 to a real estate investment organization consisting of prior ONB customers for a real estate development. The development project was located in Marion County and was approved for the construction and the development of approximately 180 single family homes and a 20-acre apartment complex. Documents contained in Tolle's loan file indicated that a site inspection was performed on the construction project on August 22, 2007, by an engineering consultant firm. Documents in Tolle's loan file also indicated that the firm provided a construction progress inspection report to ONB for their work, however, the firm stated they did not prepare or submit any such report.Based upon ONB's discovery of these falsified loan documents, Tolle was interviewed by the ONB security manager and admitted that he fabricated the report. Tolle also stated that he fabricated the report because he did not want the loan to be reviewed and/or downgraded by his superiors at the bank.By committing these acts, Tolle enhanced his financial position and compensation potential at ONB. Tolle's act delayed or prevented the reclassification of the loan to a higher risk category and prevented ONB officials from downgrading the classification of the loan in Tolle's portfolio. ONB ultimately charged off this loan. Tolle's creation of false entries in the books and records of ONB were a contributing factor in ONB's loss.According to Assistant U.S. Attorney James Warden, who prosecuted the case for the government, Judge Walton Pratt also imposed restitution in the amount of $120,001 and three years’ supervised release following Tolle's release from prison.

Former United Bank Employee in Virginia Sentenced to 30 Months for Helping Conspirator Steal $17 Million from Bank

Sissaye Gezachew, 32, of Springfield, Va., was sentenced today to 30 months in prison for his role in a multi-million-dollar bank fraud conspiracy.Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office; and Rebecca Sparkman, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C., Field Office, made the announcement after sentencing by United States District Judge Leonie M. Brinkema.Gezachew, who worked as an assistant vice president-senior credit analyst at United Bank during the time frame of the scheme, assisted Osama El-Atari, 31, of Ashburn, Va., to defraud United Bank of more than $17 million from 2007 to 2009. Gezachew aided El-Atari in his fraudulent scheme by supplying him with fraudulent documents, including a fraudulent tax return, and setting up fake domain names and e-mail accounts for El-Atari to submit to the bank in support of the fraudulently obtained loans. As part of his sentence, Gezachew was also ordered to pay $18 million in restitution to United Bank.On Aug. 27, 2010, El-Atari was sentenced to 144 months in prison for operating the fraud scheme that stole more than $53 million from banks throughout the United States.This case was investigated by the FBI Washington Field Office and the Internal Revenue Service Criminal Investigation Division. Assistant United States Attorneys Jonathan Fahey and Jack Hanly are prosecuting the case on behalf of the United States.

Former bank teller in Trenton, Tennessee indicted on theft charge by federal grand jury

A federal grand jury in Jackson has indicted a former Trenton bank teller accused of stealing funds.The Jackson Sun reported that Megan N. Barron is accused of taking $2,700 from Farmer's and Merchants Bank in Trenton while working as a teller from April through November of 2009.The U.S. District Court Clerk's Office said Barron is charged with theft, embezzlement or misapplication by a bank officer.Reached by telephone in Jackson on Wednesday, Barron's attorney Mark Donahoe said he is working with prosecutors and he anticipates the case will be resolved to the satisfaction of the government and his client.

Court date set for former Oregon, Illinois banker

A Sept. 8 court date has been set for an Oregon woman accused of embezzling $32,000 from an Oregon bank.Lynn Wilsie, 38, appeared in federal court in Rockford Wednesday morning before District Judge Philip G. Reinhard.In a brief hearing, Reinhard set Wilsie’s next “status/change of plea hearing” for Sept. 8.
“By that time we hope to have a plea, but if not then we’re looking at a trial date,” said U.S. Attorney John McKenzie, lead prosecutor.Wilsie’s attorney for Wednesday’s hearing, Nick Zimmerman, of Sreenan & Cain, P.C., Rockford, agreed to the Sept. 8 date.“By agreement we will set the status hearing for that date,” said Reinhard. “If there’s going to be a plea let’s try and get all the documents out...otherwise if it is going to be tried we’ll set a trial date.”Wilsie, a former vice-president and marketing director for the now defunct Rock River Bank, pleaded not guilty April 27 to 12 counts of embezzlement. She is accused of taking a total of $32,904.98 during a three-year period.She was indicted by a federal grand jury on April 20. The indictment alleges her responsibilities as marketing director included approving the payment of invoices related to advertising and public relations.She is accused of preparing accounts payable tickets to support payments to the bank’s vendors, but then using those tickets to cause the bank to issue cashier’s checks payable to others.The indictment alleges Wilsie took the cashier’s checks and used them to pay her personal expenses, including rent, credit card bills, and a personal loan.The indictment lists 12 separate embezzlements from July 18, 2006 to May 8, 2009. Six counts charge separate embezzlements of more than $1,000. All amounts are listed in the indictment as “approximately” with “on or about” before each of the dates.If convicted of those crimes, Wilsie faces up to 30 years of imprisonment and a fine of up to $1 million for each count, prosecutors say.The remaining six counts charge separate embezzlements of $1,000 or less. If convicted of those crimes, Wilsie faces up to a year in prison for each count, prosecutors say. She remains free on a recognizance bond.
Rock River Bank was closed July 2, 2009 by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. It is now Community Bank of Oregon.

U.S. sues former execs of failed credit union WesCorp, alleging fraud

A federal agency is accusing two former executives of a giant failed credit union in Los Angeles County of fraud for their roles in adding millions of dollars to retirement payouts for themselves and other top brass at the financial institution.A lawsuit by the regulators also alleges breach of fiduciary duty and negligence by the two executives and 14 other officers and directors of Western Corporate Federal Credit Union in San Dimas.WesCorp, as it was known, was seized by the government in March 2009 after incurring nearly $7 billion in losses, largely because of bad investments in mortgage-backed bonds.The suit, filed this week in federal court in Los Angeles by the National Credit Union Administration, a government agency, seeks at least $1 billion from the defendants or their insurers. Among the defendants is the current head of the national trade group of credit unions.WesCorp had $23 billion in assets when it failed. It had grown rapidly starting in 2002, ultimately borrowing heavily to invest in securities backed by subprime and pay-option mortgages. Such loans, popular during the housing boom, had exceptionally high rates of default after the market turned.
Although the Federal Deposit Insurance Corp. has frequently pursued damages from officials at failed banks, such actions in the traditionally conservative, not-for-profit credit union sector are unusual to say the least.
But the suit over WesCorp is not surprising because it and U.S. Central Federal Credit Union of Lenexa, Kan., which had $34 billion in assets when it was seized along with WesCorp, were so enormous, said Bert Ely, a financial industry consultant in Alexandria, Va."These failures have been very, very expensive," he said.
One of the defendants is former WesCorp director William Cheney, who was president of an association of California and Nevada credit unions before he moved to Washington this year to head the Credit Union National Assn.Cheney, a former Rancho Palos Verdes resident, issued a statement saying he left WesCorp's board before the credit union bought the securities that caused most of its losses, Credit Union Times reported.The defendants accused of fraud are Robert A. Siravo, who was WesCorp's chief executive, and Thomas E. Swedberg, who was vice president of human relations. Reached by phone Wednesday, they declined to comment on the case.The lawsuit says improper changes were made to WesCorp's retirement plan for executives, causing the credit union to pay Siravo $6.8 million in May 2008 instead of the $4.5 million he would have received under the original terms of the plan.Swedberg received more than $1.2 million in January 2009 rather than the $535,000 he would have received if the plan had not been changed, the lawsuit alleged.The suit seeks to recover the additional compensation from Siravo and Swedberg. The complaint also seeks damages from other former WesCorp officials who benefited from the changes in the retirement plan.WesCorp was what's known as a wholesale or corporate credit union, providing back-office services such as check and credit card processing for retail credit unions. Retail institutions with extra funds on hand often entrust them to corporate credit unions for investment.Corporate credit unions are owned by the retail credit unions they serve, which in turn are owned by their own depositors.The WesCorp case initially was brought in Los Angeles County Superior Court by seven retail credit unions complaining that they suffered losses when WesCorp failed.The National Credit Union Administration, which is running WesCorp under a conservatorship, intervened in the litigation last December, contending it was the appropriate plaintiff and transferring the suit to U.S. District Court in Los Angeles. It filed its own complaint Tuesday, dropping some of the original defendants and adding others, along with the fraud allegations involving Siravo and Swedberg.WesCorp was the largest of 27 corporate credit unions at the time of the seizure, with 1,100 member retail credit unions, the NCUA said.Charles W. "Chip" Filson, a credit union consultant, said that in filing suit the NCUA was trying to cover the fact that it had failed to detect WesCorp's problems."There were examiners in there every day," Filson said. "This is just a public relations gesture. They're trying to rewrite history."He also said the defendants were unlikely to have anywhere near the personal resources or insurance that would allow for a recovery of $1 billion.