Couple Who Managed CU Sentenced for $2 Million Embezzlement
A Minnesota couple, who managed a credit union, were each sentenced Tuesday for embezzling $2 million from it to support three successful businesses.
Nkajlo Vangh, 61, was sentenced to seven and a half years in federal prison, and his wife, True Yang Vangh, 52, was sentenced six years by U.S. District Court Judge Franklin Noel in Minneapolis. They were also ordered to pay restitution of $1.7 million and four years of supervised release after serving their prison sentences. They both pleaded guilty in May to one felony count of aiding and abetting bank fraud.
The Vanghs were Laotian refugees who fled their war-torn nation in the 1970s and eventually made their way to the U.S. and settled in Rosemount, Minn.
Mr. Vangh was the president and board chair for the Hmong American Federal Credit Union since it opened in 1984, which served the Laotian community in Minneapolis. Mrs. Vangh worked as the manager of the credit union from 2001 to 2011 when it was liquidated by the NCUA.
According to court documents, the Vanghs diverted credit union funds to themselves and businesses they operated by fraudulently issuing loans from the Hmong American FCU and then transferred money to accounts they controlled from 2005 to 2010.
As part of the scheme, they submitted loan applications using fictitious names and falsified personal, employment and income information. In their respective capacities, they also approved the loans despite knowing that the information provided in the loan applications was false.
They used the stolen funds to pay pre-existing, bogus loans that had also been disbursed by the Hmong American FCU to personal and business accounts the Vanghs controlled. During the course of the scheme, the defendants approved and disbursed fraudulent loans totaling $2,075,000 from the credit union.
In April 2011, an NCUA examiner questioned Mr. Vangh about the loans. Instead of responding to the examiners questions, Mr. Vangh forced the examiner to leave the credit union office and resisted subsequent attempts by the NCUA to re-enter the credit union, federal prosecutors said.
When the NCUA examiners eventually regained access to the credit union’s office, Mr. Vangh told them that some of the credit unions documents had been inadvertently shredded, including the documents pertaining to the suspicious loans. Few documents prior to 2008 were recovered.
“By 2011, True Vangh and Nkajlo Vangh had stolen at least two-thirds of the Hmong American FCU’s funds and spent years churning fraudulent loans, accounts and credit union reports to keep their theft from being discovered,” federal prosecutors wrote in court documents. “The Vanghs’ scheme essentially converted the credit union from a financial institution intended to assist members of the local Hmong community to a fraud operation.”
The couple owned and operated three successful businesses, one that was a deli and restaurant and the other two companies delivered home health care services and operated an adult day care center.
Federal prosecutors said they have identified significant resources owned by the Vanghs including cash assets in the hundreds of thousands of dollars, valuable real estate and multiple vehicles.