On the evening of Jan. 21, 2021, Rita Hartman called her daughter, Melissa, from the $6.5 million Muddy River Credit Union in Atchison, Kan., where she worked for more than four decades. The former CEO knew an audit ordered by state regulators would reveal her crimes. Last week, a federal judge sentenced the 70-year-old Hartman to 63 months in prison for stealing more than $700,000.
When her daughter answered the phone, Hartman’s first words were: “I just tried to kill myself.” In disbelief, Melissa rushed to the credit union to find her mom with blood running down her arms, soaking her skirt and pooling on the floor where she dropped a box cutter.
After receiving medical treatment for her wounds, Hartman was admitted to a hospital for about a week before being released with an anti-depressant. According to Melissa, her mom has never been the same.
In February, Hartman pleaded guilty to one felony count of making false entries in a federal credit institution’s records. In exchange for her plea, federal prosecutors dropped 28 charges of bank fraud, wire fraud, making false entries and embezzlement.
From 2007 to January 2021, she fraudulently credited her own and family members’ Muddy River Credit Union (MRCU) share accounts without depositing any funds, amounting to $381,434. She also stole $346,473 in cash and fraudulently reduced family members’ loan obligations by $116,254 when no payments were made.
During a sentencing hearing on Oct. 30 in Kansas City, U.S. District Court Judge Holly L. Teeter also ordered Hartman to pay $778,361 in restitution.
Hartman used her CEO position and an array of false entries in MRCU’s records to hide her tracks. Over the years, she manually kept the general ledger in hard copy, which made it easier for her to conceal her theft.
The scheme continued until 2021 when a regulator-mandated audit immediately found discrepancies in MRCU’s financial records — particularly the significant amount of cash that was listed on MRCU’s general ledger. The audit was ordered in 2019, but Hartman delayed it until January 2021, when state regulators insisted that it be completed. Later that year, the FBI initiated an investigation after the federal agency was contacted by an NCUA supervisory examiner.
During an FBI interview in March 2023, Hartman defended her actions, saying: “I didn’t look at it as giving the credit union’s money away. I looked at it as helping somebody, and I was always gonna figure out a way to get that money back.”
Hartman’s embezzlement wiped out MRCU’s capital and made it insolvent, ultimately forcing a merger into the $206 million Frontier Federal Credit Union in Leavenworth.
“The loss amount proffered by the government necessarily understates the true harm caused by the defendant. The government’s figure only covers 2007 through 2021, based on the records that were available when the defendant’s fraud was uncovered,” federal prosecutors wrote in their sentencing memo to Judge Teeter. “However, the defendant was embezzling money as early as 2002, when she recorded an inflated cash amount on MCRU’s general ledger of $211,681 but reported just $149 in cash on hand on the call report submitted to regulators. It would also be a remarkable coincidence if the beginning of the defendant’s fraud coincided with the exact moment that records were available starting in 2007.”
Because of her age and health conditions, Hartman’s lawyer, Laquisha Ross, asked Judge Teeter, to sentence her client to five years of federal supervision and two years of home confinement. Ross argued this sentence would reflect the seriousness of Hartman’s crimes, while taking into consideration her record of service to the Atchison community, her age and physical condition, her lack of criminal history, and her ability to work toward paying restitution.
“Rita pled guilty and accepted responsibility for her actions,” Ross wrote in Hartman’s sentencing memo. “The gravest, and arguably the most important, challenge Rita Hartman must overcome is the financial restoration to Frontier/MRCU. Paying back the money she stole could easily take the rest of her life. Although Rita is beyond retirement age, she understands that paying back her debt means forfeiting her ability to retire in this stage of her life.”
Ross also noted nearly 56% of similarly situated defendants nationally received a sentence of less than two years, according to federal sentencing data.
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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