Judge's gavel.
A federal judge sentenced Daniel Johnson, former president/CEO of the $6.3 million Richmond City Employees Federal Credit Union in Richmond, Ind., to 24 months in prison on Wednesday for lying on loan applications to get $300,000 in loans, according to the U.S. Attorney’s Office in Indianapolis.
U.S. District Court Judge Richard L. Young ordered Johnson to pay $285,855 in restitution and to complete two years of supervised release following his prison term.
In August and September 2021, Johnson approved two illegitimate $150,000 loans to himself. He failed to inform or seek approval from the credit union’s board for these loans. Prosecutors said Johnson falsely claimed on the applications that the loans were for purchasing two recreational vehicles.
Instead, the former executive used the funds to pay off debt, including a mortgage, to prevent his ex-wife from making a legal claim on a home, according to federal prosecutors. He also used the money to repay earlier credit union loans, converting both from secured to unsecured debts.
To hide the loans from the board, Johnson forged a document indicating false board approval of the first $150,000 loan. He also forged his ex-wife’s signature on the second loan application for an additional $150,000.
In June, Johnson pleaded guilty to two felony counts of bank fraud.
Prosecutors asked Judge Young to sentence Johnson to 41 months in prison.
“Johnson abused the trust of all of the members of the Richmond City Employees Federal Credit Union,” prosecutors wrote in their sentencing memo to Judge Young. “This was a close community because membership in the credit union was restricted to employees of the City of Richmond, the Morrison-Reeves Library, and the General Telephone Company, as well as family or household members of these employees. During his change of plea hearing, Johnson admitted to abusing the trust placed in him saying, ‘the Board of Directors were not that involved, and it was pretty much their discretion that whatever needed to be done, for me to take care of it.’”
Chartered in 1961, the credit union served nearly 800 members. It was conserved by the NCUA in December 2022 and merged with the $1.7 billion Kemba Credit Union in West Chester, Ohio during the first quarter of 2023. At the end of March of that year, Richmond City Employees FCU recorded a loss of more than $578,000, according to NCUA financial performance reports.
Peter Strozniak can be reached at peter.strozniak@arc-network.com
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