CU Manager/Treasurer Faces Embezzlement Charge
William J. Memmer, a former assistant manager and treasurer at the failed G.I.C. Federal Credit Union in Euclid, Ohio, was charged last week with embezzling nearly $2 million and falsifying records, according to the U.S. Attorney's Office.
The NCUA liquidated the 3,476-member, $15.5 million cooperative on Dec. 13, 2012, after declaring it to be insolvent.
According to a material loss review released Dec. 2, 2013, by the NCUA's Office of Inspector General, the credit union's failure was caused by fraud and resulted in an estimated loss of $7 million to the National Credit Union Share Insurance Fund.
Memmer, 63, a resident of Lakewood, Ohio, is accused of using blank G.I.C. FCU checks to pay off $1,843,007 in debt on 15 personal credit card accounts and falsifying the credit union's quarterly financial reports to hide the theft, beginning as early as 2003. He also allegedly falsified confirmations of G.I.C. FCU's assets by as much as $5.7 million, according to court documents.
“Memmer took advantage of his high-level position of trust by falsifying records and funneling money,” said Stephen Anthony, special agent in charge of the FBI's Cleveland office. “The FBI will continue efforts to see that fraudsters like Memmer are brought to justice.”
Memmer is charged with one count of embezzlement and one count of making false entries. He was charged in a criminal information, which is often filed when a suspect cooperates with prosecutors and intends to plead guilty.
“When those who hold trusted positions in financial institutions and those they work with betray the trust of the depositors, as is alleged in this matter, federal law enforcement will take all appropriate action to hold them accountable,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
According to the OIG report, the NCUA could have done more to prevent G.I.C.'s failure.
The report suggested the agency should go to Congress, if needed, to get additional authority to access credit union audit papers.
According to the report, several factors allowed the fraud to go undetected, including senior management displaying “questionable” integrity such as overstating assets by $8.1 million, the supervisory committee failing to complete audits for three consecutive fiscal years and the board of directors exhibiting lack of supervision and failing to exercise responsibilities.
To prevent similar issues in the future, the OIG recommended that the NCUA “reinforce documentation, communication, and follow up procedures required for incomplete or otherwise unacceptable external auditor reports to ensure appropriate visibility for follow up and escalation of administrative remedies if the issues are not resolved.”
NCUA management responded that corrective action had already been taken through the implementation of Chapter 5 of the National Supervision Policy Manual dealing with audits, recordkeeping and fraud, according to the OIG report. The OIG recommended requiring examiners to get audit reports directly from independent auditors rather than through credit union management. NCUA management said it “does not believe the auditor has a legal obligation to share their audit report with NCUA as a condition of share insurance.”