$1M Vault Pinch Hits Priority One
A long-time employee of the $146 million Priority One Credit Union allegedly stole more than $1 million, according to a legal complaint filed by the CUMIS Insurance Society against the credit union’s former accounting firm.
The complaint alleged the credit union’s manager of its Los Angeles branch, Pearl Lynette Fortson, began to remove cash from the branch’s vault in late 2010 and allegedly falsified daily reports to hide loss.
Fortson was hired by the credit union on Aug. 1, 1974, the complaint said, and Priority One fired her on Feb. 26, 2013.
The complaint said the credit union discovered the embezzlement in February 2013 and claimed that other people may have been involved. CUMIS said it reported Fortson to law enforcement, but did not say how law enforcement had responded. The credit union had not yet responded to calls for information on the Fortson case and CUNA Mutual said it had no further information.
Priority One filed a dishonest employee loss claim with CUMIS, for which the insurer paid just a little more than $980,000 after the credit union’s deductible, and settled the claim. CUMIS then sued Turner, Warren, Hwang and Conrad Accountancy, the Burbank, Calif., firm that had audited Priority One’s books since 2008.
CUMIS charged the accounting firm with negligence in its auditing the credit union’s books and operations.
“Defendant TWHC knew or should have known that Fortson was employed at the Priority One Los Angeles County Branch and that one of her duties was to perform reconciliations for that branch,” CUMIS argued in its complaint.
“Defendant TWHC knew or should have known that Fortson maintained singular control over the vault and vault balancing sheets for Priority One’s Los Angeles Branch,” CUMIS added.
“If defendants had ever opened the vault, counted the vault cash, reconciled the counted vault cash to the general ledger account or reviewed the balancing sheets prepared by Fortson during the course of their reconciliation of cash accounts, the fraud and embezzlement scheme would have been discovered by defendants,” CUMIS added.
Turner Warren referred calls about the case to its attorney, Randall Dean of the Los Angeles firm of Chapman, Glucksman, Dean, Roeb and Barger.
Dean declined to comment at length on the case but said the firm considered it entirely without merit, adding that Turner Warren planned to fight it at trial in June of this year. He also noted that Priority One had not brought the suit and had not expessed any disappointment with the firm's actions.