Former CU Employees Indicted in Hawaii Fraud Case
In less than a month, a second fraud case involving a Hawaiian credit union is being prosecuted against a former president/CEO and a former employee who allegedly embezzled more than a $1 million.
On Monday, Janell Purdy, 40, pleaded not guilty to one count of conspiracy and six counts of embezzlement in U.S. District Court in Honolulu. She worked as a customer service representative and teller at the $3.1 million First Hawaiian Homes Federal Credit Union in Hoolehua, on the island of Molokai.
Allennie Naeole, 55, was indicted on one count of conspiracy, six counts of embezzlement and one count each of making false entries and aggravated identity theft. Naeole, who was the credit union’s president/CEO, has not entered a plea as of Tuesday, according to court records.
From 2007 to 2015 when the NCUA liquidated the credit union, Naeole and Purdy allegedly wrote checks from the credit union’s financial accounts to pay for the personal expenses of Naeole and her family members, according to the indictment. They allegedly withdrew and spent more money from personal credit union accounts in their names and in the names of family members than was available in deposits, which created negative balances.
They concealed the negative balances by altering the books and records that showed fake deposits. They also covered up the negative balances by making it appear in the books that the balances were part of an outstanding loan in another person’s name that was payable to the credit union even though there was no loan authorized or issued. Naeole and Purdy also allegedly cooked the books to make it appear as if the loan was being paid off, but in reality there were no loan payments being made, according to federal prosecutors.
Naeole allegedly made false statements, prepared bogus documents and delayed production of documents to the board of directors, including quarterly financial reports to the NCUA from September 2012 to September 2015, according to court documents.
She also allegedly submitted a false financial report to an NCUA examiner in September 2014.
What’s more, in September 2015, the former CEO registered, created and used an email account that falsely purported to be from the credit union’s third-party processor to communicate with herself and the NCUA examiner, federal prosecutors alleged.
From 2012 to September 2015, the credit union reported zero delinquent loans and zero net charge offs, according to its NCUA financial performance reports.
This First Hawaiian Home FCU case is the second alleged fraud scheme that involved Hawaiian credit unions.
In October, federal prosecutors indicted former Honolulu Police Chief Louis Kealoha and his wife, Katherine Kealoha, a former supervisor attorney for the Honolulu prosecutor’s office, who allegedly carried out a $4 million fraudulent mortgage, refinancing and line of credit scheme that victimized two credit unions and three banks. The couple was charged with 20 counts of bank fraud, criminal conspiracy, obstruction of justice, making false statements to a federal officer and aggravated ID theft.