Credit Union Was a 'Den of Thieves': Honolulu FBI
A FBI special agent who spent seven months investigating wrongdoing at Oahu Transit Services Employees Federal Credit Union said this week the $12.5 million cooperative was once a den of thieves.
FBI Special Agent Tom Simon, shown at left, also said the recent discovery of a $500,000 embezzlement by three employees was an expensive lesson for credit union officials about the importance of maintaining strong internal controls and oversight from an engaged board.
“In 20 years in law enforcement, I have never seen a case where three individuals working shoulder to shoulder were each embezzling from the same organization without the others knowing that they were stealing,” Simon told CU Times. “It really was a proverbial den of thieves.”
Simon shared similar comments with local media in Hawaii this week, following the sentencing hearing for one of the former employees in Honolulu’s U.S. District Court.
Nicole Cheung, 35, a former loan officer who pleaded guilty to embezzling nearly $17,000 and making 54 false entries from 2007 to 2012, was sentenced Aug. 25 to 20 days in prison, five years of supervised release and ordered to pay $21,607 in restitution, court documents said.
CUMIS Insurance Society, which covered the $993,125 loss caused by the thefts, also filed a civil lawsuit against Cheung, the other two former employees and the credit union's auditor, CU Pacific Audit Solutions, according to court documents.
In the civil case, lawyers representing CUMIS filed a memorandum Aug. 25 in opposition to the credit union’s motion to dismiss the case.
In the criminal case, the other two former employees are headed back to court next month.
Dona Takushi, 54, former CEO of OTS Employee FCU, is charged with stealing $120,000 and will be sentenced Sept. 18, according to the FBI.
Jenny Nishida, 41, a former teller, is charged with one count of embezzlement and making 122 false payments, totaling $358,685, the FBI said. She will be sentenced Sept. 8.
Although the three employees conducted similar credit card and loan schemes over numerous years, the thefts appear to be unrelated, according to the FBI.
Cheung faced up to 30 years in prison, but during her sentencing hearing this week, the judge was lenient because the mother of four young children cooperated with the FBI, Simon said.
During the hearing, Cheung’s attorney stated a legal challenge regarding the restitution payment language and the government also stated an objection, but the challenge and objection were dropped after both parties discussed the details of the repayment.
Following Cheung’s sentencing this week, Simon told local media that Cheung was the least culpable of the three defendants.
“She clearly accepted responsibility for her actions and that was a factor for the judge today in court,” he said. “An important consequence of this conviction is that she is also going to be banned from the banking industry for life. That is a privilege that she won’t be able to take advantage of in the future.”
The FBI special agent also said he hoped the credit union learned the importance of implementing better methods to deter and detect internal fraud.
“Hopefully the new management team at the credit union will take these lessons to heart,” Simon told local media.
Gloria Omandam, the new CEO/manager of OTS Employees FCU, testified in court Aug. 25 that the credit union does have new safeguards in place, according to court documents.
Omandam, who was previously a member relations officer at the Hawaii Credit Union League, said the thefts have been devastating to the small credit union, which also had to protect itself during Cheung’s recent bankruptcy case.
Although Cheung apologized in the courtroom, her husband reportedly directed offensive gestures and profane language at a news videographer as the couple left the courthouse with their children, according to local media.