A former credit union lending manager pleaded guilty in U.S. District Court in Hartford, Conn., Thursday for embezzling more than $840,000 from the $220 million 360 Federal Credit Union in Windsor Locks.

Pamela Mallory, 42, of Enfeld, opened five different HELOCs in the name of a credit union member from 2009 to 2016. She increased the credit limit of those HELOCs on at least 15 occasions without knowledge or consent, according to federal prosecutors.

Initially, Mallory perpetrated the scheme by opening subsequent HELOCs to pay off earlier, smaller HELOCs. Later, rather than opening new HELOCs, she increased the credit limits on two of the fraudulent HELOCs to support her spending.

To evade detection, Mallory made minimum, interest-only payments on the HELOCs from her checking account, federal prosecutors said.

The credit union discovered the scheme in January 2016.

The credit union member's property, which is worth less than $150,000, supported two HELOCs, each with credit limits of $417,000, that Mallory had fully drawn down.

In total, Mallory stole approximately $840,378 from the credit union and used the funds to pay her own creditors, according to prosecutors.

“We are disappointed and saddened by this breach of trust, but want to assure our members and the community that the 360 Federal Credit Union remains financially strong and expects to be able to recover all or most of the loss through insurance and restitution,” 360 FCU President/CEO Robert L. Aresti said in a prepared statement. “The theft was an extremely complex and sophisticated scheme, carried out by an employee in a position of great responsibility and trust. Nevertheless, the system worked by identifying an irregularity and triggering an investigation.”

“Everything we now know confirms that this was an isolated event by one person,” he said. “Most important, we have put in place additional safeguards to prevent something like this from happening again.”

Mallory pleaded guilty to one count of embezzlement by a credit union employee, a charge that carries a maximum term of imprisonment of 30 years.

Mallory is scheduled to be sentenced on August 17. She was released on a $100,000 bond, federal prosecutors said.

Instant Insights /

Former Lending Manager Pleads Guilty to $840K Theft

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