CEO of Award-Winning CU Accused of Fraud
Linda Reynolds, CEO of the NAFCU Federal Credit Union of the Year for 2011, has been accused of fraud and misappropriation of funds.
Reynolds had been CEO at Pinellas Federal Credit Union since 1996 until she was recently fired. The 13,000-member, $84 million credit union in Largo, Florida, won NAFCU's award as Credit Union of the Year for CUs under $150 million in assets last year and Reynolds had been named CEO of the Year in 2009.
“Linda Reynolds has been a valuable asset to Pinellas Federal Credit Union, demonstrating exemplary leadership skills and ardent dedication that is an inspiration to her colleagues,” said Fred Petty, PFCU board chairman in a credit union newsletter announcing the award in 2009.“This award is a testament to her outstanding services on behalf of our members.”
In documents filed Jan. 5 in federal court, the credit union alleged that Reynolds had misappropriated CU funds by hiring family members and friends as contractors and paying far higher than market rates.
She also was charged with fraud, constructive fraud, breach of fiduciary duty and unjust enrichment. The filings also asked the court to permit it to freeze the accounts of Reynolds and relatives at the credit union.
In her formal reply, Reynolds denied the charges and counter sued credit union board members charging that the failure to release the funds is civil theft. She also claimed in her denial that the credit union leadership knew and approved of her choices for contractors.
“Plaintiff, acting through its operations director and/or IT technician, hired Defendant's son to perform cabling work for it, knowing he was Defendant's son and after approving a proposal he submitted to do the work at below market rates,” Reynolds wrote in the reply. “In addition, the Chairman of Plaintiff's Board of Directors, Jack Bowman, was aware of and never objected to the arrangement,” she added in the filing.