A former Fort Smith bank official should be sentenced to between 41 and 51 months in prison, according to a memorandum filed by prosecutors in U.S. District Court.
Mary Kay Newman, 45, who worked at First National Bank in Fort Smith for almost 23 years, pleaded guilty in March to embezzlement and misapplication of funds by a bank employee and is scheduled to appear before District Court Judge P.K. Holmes III on Aug. 15 for sentencing.
A memorandum, filed by Assistant U.S. Attorney Kyra Jenner, argues the court should follow the sentencing advisory guideline laid out in a pre-sentence report based on Newman’s repeated commission of fraud and deceit on multiple parties — Pharis and multiple banks — and the seriousness of the offense.
In 2009, Fort Smith resident Ruby Pharis purchased two certificates of deposit — totaling about $530,000 — at Chambers Bank in Fort Smith. When she renewed them a year later, the combined value was about $549,000.
When she required surgery and hospitalization in 2010, Pharis, 90, told federal investigators that power of attorney was necessary for Newman to pay Pharis’ bills while she was medically incapacitated, but she never remembered signing anything that gave Newman authority to cash checks, redeem the CDs or use her money for Newman’s personal benefit, according to a plea agreement.
Pharis and her late husband came to know Newman as customers of the Phoenix Village branch of First National Bank, where Newman worked from 2002 until she was fired Dec. 29, 2011.
According to court documents, on Jan. 19, 2011, Newman converted Pharis’ CDs at Chambers Bank in Fort Smith into six cashier’s checks totaling almost $560,000, kept $160,000 for her personal benefit and purchased two CDs in Pharis name for $300,000 and $100,000, according to court documents.
In March 2011, Newman converted the $100,000 to a cashier’s check, cashed it at First National and kept the funds, minus penalty for early withdrawal.
In June 2011, Newman cashed in the $300,000 CD held at Chambers and opened a savings account in Pharis’ name at First National, before withdrawing $85,000 for her own use between June and November 2011.
The missing money was discovered in December 2011, when Pharis became concerned she wasn’t receiving bank statements from First National, according to court documents.
While Newman admits embezzling more than $300,000 from Pharis, she disputes the government’s claim the amount was almost $560,000.
According to an auditor at First National Bank, all of Pharis’ funds have been recovered, minus about $8,800 in lost interest and early withdrawal penalties and about $2,500 in legal expenses, according to court documents.
In addition to requesting Holmes sentence Newman to between 41 and 51 months in prison, in the memorandum, Jenner said she will also presented evidence Newman owes a little more than $18,000 in restitution for lost interest, early withdrawal penalties, attorney’s fees and other expenses incurred by Pharis’ estate.
Pharis died March 25, less than a week after Newman pleaded guilty.
A representative of Pharis’ estate will testify Pharis never recovered from Newman’s betrayal, which caused her heartbreak and depression that severely diminished her quality of life, according to the memorandum.
Newman is free on a signature bond while she awaits sentencing.