A Philadelphia-area credit union manager’s retrial on theft charges, originally scheduled for June 3, was postponed to June 27, according to the Montgomery County Deputy District Attorney Steven Latzer.
Latzer also told Credit Union Times the trial of United Food and Commercial Workers Local 1776 Federal Credit Union’s former CEO Anne L. Clyburn will be heard by a jury rather than just a judge as was the plan for the original June 3 court date.
Clyburn’s 2010 conviction was overturned last year on a technicality because the court failed to properly inform her of her right to waive legal representation. She was convicted of allegedly stealing $32,469 by giving herself unauthorized raises and using credit union funds to pay personal expenses. Clyburn represented herself at the original trial, Latzer said, but retained prominent local attorney Samuel Stretton for the appeal and retrial.
Latzer said the DA’s office will bring the same 45 charges against Clyburn it alleged in the original trial. Clyburn’s husband, Stephan, who teaches political science at West Chester University, told Credit Union Times that Latzer said during a May 22 court date the prosecution would drop most of the charges. Latzer confirmed Stephan Clyburn’s statement, saying he had various conversations with Stretton regarding how the case would be presented.
“Last week, the tentative understand was that we would proceed on some but not all charges and would do that before a judge, not a jury,” Latzer said. “That has changed, and as of right now, we are scheduled for a jury trial, and the commonwealth will proceed on all charges.”
Clyburn said Latzer offered his wife a misdemeanor plea deal during a May 31 hearing, but she rejected the offer because “she would not confess to a crime she did not commit.”
Latzer also told Judge William Carpenter that he was going to drop the additional charges because the $6.5 million credit union did not provide documents requested by the court, Clyburn said. Latzer called that statement inaccurate and said the documents in question were not presented because the DA’s office believes Clyburn has them in her possession.
“Ninety-nine percent of the records have been produced,” Latzer said.
Both Latzer and Stephan Clyburn agree the charges center around three incidents: the unauthorized raises, the use of a credit union credit card to pay a hotel bill, and the use of credit union checks to pay an outstanding dental bill.
The Plymouth Meeting, Pa.-based credit union experienced a prolonged power outage in 2006, Clyburn said, and the board chairman at the time gave his wife permission to check into a hotel, on the credit union’s dime, so she could work remotely. Regarding the dental bill, Clyburn said his wife suspects another former employee who had access to the credit union’s checking account could have mistakenly paid the dental bill on her behalf.
Clyburn said the charges are an attempt to frame his wife after she reported in 2006 that members deposited money given to them by a union official and immediately withdrew it to illegally donate the funds to the campaign of former Democratic U.S. Congressman Joe Sestak. Anne Clyburn was fired from the credit union in February 2007.
Ed Chew, legal director at UFCW Local 1776, said Anne Clyburn’s claims are totally false, and the union has threatened to take legal action against her and her husband for making false claims. Chew also said Anne Clyburn’s reports of campaign violations to authorities were “shut down and ignored.”
The NCUA didn’t ignore Clyburn’s report, however. Mr. Clyburn said NCUA Staff Attorney Kevin Johnson set up a February 2012 meeting between the Clyburns and three NCUA employees in a Philadelphia train station to discuss the deposits. NCUA Public Affairs Specialist John Fairbanks confirmed that meeting.
“Per common practice, NCUA was looking into matters pertaining to the credit union, and a staff attorney and two regional staff met with Ms. Clyburn and her husband,” he said.
However, no charges have been filed by authorities in connection with Clyburn’s claims.
Joette Colletts, regional manager of risk management for CUNA Mutual said in the nearly 30 years she’s assessed credit union risk, she’s seen a lot of charges similar to the ones Anne Clyburn faces.
“Unfortunately, these things happen all over the country, and similar losses have occurred in other credit unions,” she said.
While stressing that she is not familiar with the details of the Clyburn case, Colletts said most employee dishonesty situations, particularly in small credit unions, begin with a lack of board and supervisory committee oversight and poor internal controls. Additionally, volunteers tend to place too much trust in long-time employees, she said.
Regarding UFCW Local 1776’s claim that Clyburn gave herself unauthorized raises, Colletts said whenever executive raises are given, boards need to discuss the matter, approve it with a vote and record it in detail in the board meeting minutes.
“Board members should receive financials in the board package that would show an increase in payroll,” she said. “Were they looking at that? Maybe not. Or maybe they did but didn’t ask any questions. Or she could have given them misinformation.”
However, adequate internal controls will not only ferret out fraud, she said, it can also deter it because employees know someone else is minding the shop. In fact, she suggested credit unions have an employee policy and require employees to read and sign it, to not only deter fraud, but to make it easier to fire an employee should they commit it.
“Volunteers must go in quarterly and look at payroll, to see who is getting paid and if it’s the right amount,” she said. “And, within credit union, was [Clyburn] writing out her own paycheck?”
Small credit unions that lack an internal auditor who can verify recordkeeping could assign the task to the supervisory committee, she said, or hire an outside payroll firm.
Regarding the charge of unauthorized expenses, Colletts said credit unions should have an expense policy that explicitly states what charges are permitted. The policy should be so detailed it includes information like how much and what charges the credit union would pay for each executive’s company cell phone bill, and should require receipts to be submitted in a report that is reviewed by the supervisory committee.
“At a credit union that size, there should have been an itemized expense list reported to board each much, and someone should approved her corporate Visa card charges,” she said.
Colletts and her CUNA Mutual team are participating in the NCUA’s free small credit union training workshops this year, conducting a participatory session in which attendees review case studies. In previous years, CUNA Mutual provided training on all kinds of fraud, but Colletts said credit union employee dishonesty has grabbed so many headlines recently, the CUNA Mutual experts have pared down their presentation to focus only on internal fraud this year.