Judge Orders 15 Months in Prison for Ex-Iowa Credit Union CEO

In a previous court hearing and in a sentencing memo to Judge Strand, Keim's attorney, Robert Tiefenthaler of Sioux City, successfully argued that federal prosecutors offered no evidence at sentencing that Keim's conduct was responsible for any of the $1.4 million loss, except hearsay statements, which were objected to by Tiefenthaler and sustained by Judge Strand.

"While the Defendant can be bound by her stipulation to a loss amount of $1,000, the Defendant objected to and put the government on notice to prove its burden of any loss amount above $1,000," Tiefenthaler said. "As the government has the burden to prove the loss by a preponderance of the evidence, the government has failed to so do in this case regarding any loss amount above the stipulated $1,000 amount."

Keim pleaded guilty in May 2021 to making false statements on NCUA Call Reports. Prosecutors dropped the embezzlement charge against Keim presumably in exchange for her guilty plea.

Keim's sister, Brenda Jensen, who worked at the credit union as the head vault teller, was sentenced to three years in federal prison in June 2021 after she pleaded guilty to embezzlement. Jensen was ordered to pay $1,469,470 in restitution. She is scheduled to be released in February 2024 from a minimum-security federal prison in Waseca, Minn., according to the Federal Bureau of Prisons.

Keim, who did not have a personal account at the credit union, became the CEO in 1985 and hired her sister a year later. Jensen did have an account at CCU.

During a court hearing, the government's expert witness, Steve Lillie of Lillie & Company in Sunbury, Ohio, testified that the embezzlement scheme was perpetrated by Jensen and a third employee. CU Times is not identifying the third employee because this individual has not been charged by federal prosecutors with any criminal wrongdoing.

Lillie produced a "special procedure report" based on his investigation of Keim's and Jensen's activities at the credit union. Lillie was hired by the board of directors of the $1.1 billion Cobalt Credit Union after CCU was merged into the Papillion, Neb.-based financial cooperative in 2018.

"However, Lillie testified that he had no direct evidence [outside the excluded hearsay statements of the third credit union employee] to support his conclusion that the Defendant was involved in any part of a scheme between these two individuals [Jensen and the third employee]. By his own testimony, he 'didn't need it,'" Tiefenthaler said. "Lillie's only job was to prove a loss and that someone was responsible for it. In this case, Jensen was the only person that Lillie could prove was responsible for any loss." In addition, however, Lillie's report did not implicate that the third employee was involved in the embezzlement scheme.

Nevertheless, in Janine's plea deal she admitted to stealing funds from CCU from May 2013 through March 2018. Prosecutors also noted in court documents that Janine admitted that, at minimum, she was aware of the theft and that she facilitated it. In her plea deal, she also agreed to pay restitution that was ordered by the court. But the plea deal showed that the embezzlement's loss amount attributed to her was only $1,000, which she acknowledged that she would pay. According to court documents, Keim has paid that amount to CCU.

Lillie's report alleged the former CEO took cash from the vault without recording these withdrawals in the general ledger, which resulted in a change fund general ledger balance overstatement since actual cash was removed without recording a corresponding credit to the change fund and debit to an expense or member account.

In addition to the theft of $922,480 that was concealed through the overstated change fund general ledger balance, Lillie's report showed an additional $539,000 was stolen through an internal check kiting scheme, which he claimed was devised by Keim.

However, Tiefenthaler said the government ignored the fact that no admissible evidence was presented that Keim was part of any scheme to either embezzle $922,280 or engaged in any check kiting scheme.

What's more, an expert witness for the defense, Shannon Shaw, a Cedar Falls CPA, testified that he saw no evidence that the former credit union CEO received any funds from the $1.4 million theft. Shaw testified that he reviewed the prosecutor's discovery documents, and credit accounts, tax returns and bank account statements belonging to Keim and her husband.

Prosecutors countered that Keim's admissions and conviction for false statements were directly connected to the scheme that allowed her and her sister to commit the embezzlement.

Keim filed four NCUA Call Reports in 2013, 2014 and 2017 that falsely indicated the credit union had cash on hand of more than $800,000 to $900,000 and cash deposited at another bank that ranged from $1.4 million to $2.1 million.

Prosecutors argued the fraudulent Call Reports did not merely prevent her crime from being detected.

"Rather, her false statements prevented the NCUA from properly overseeing that credit union and allowed her to keep working at the credit union," prosecutors said. "This put every single CCU member and the NCUA itself at risk."

Tiefenthaler countered that prosecutors failed to show Keim's false statements jeopardized the safety and soundness of CCU because the false statements did not cause the loss. Moreover, he also said the government did not show there was any conspiracy or joint criminal conduct between Keim and the other employees.

Some of the stolen credit union's funds were spent by Jensen on large credit card payments, Amazon purchases, home repair expenses, and to pay for farm and ranch supply costs, according to Lillie's report.

The report also noted that Jensen took money from the vault and created fictitious deposits, which were identified as cash deposits, but no actual cash was deposited. But Lillie did not specify whether Keim spent any credit union funds for her personal benefit.

The embezzlement was uncovered in January 2018, when the NCUA was conducting a joint examination with the Iowa Division of Credit Unions. The last onsite NCUA examination occurred in 1988 although the state regulator had conducted regular examinations, according to Lillie's report.