A former CEO and an ex-member service representative who collectively stole more than $600,000 from Indiana and Texas credit unions were permanently banned from working at any federally insured financial institution, the NCUA said Tuesday.
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 in December for lying on loan applications to get nearly $300,000 in loans, according to the U.S. Attorney's Office in Indianapolis.
Johnson was ordered to pay $285,855 in restitution and complete two years of supervised release following his prison term.
In August and September 2021, Johnson approved two $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, he 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.
The credit union 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.
Jacqueline Marie Burns, a former member service representative of the $6.9 million Galveston Government Employees Credit union in La Marque, Texas, received a 10-year deferred prison sentence after she pleaded guilty in December to stealing more than $300,000 from members accounts.
If she successfully completes 320 hours of community service and follows multiple supervision conditions, a final conviction will not be entered on her record. However, if she violates them, a judge could impose a prison sentence under Texas law.
A Galveston court judge ordered the former credit union staffer to pay $336,250 in restitution.
The theft came to light after a member complained that her account had been closed without her knowledge. The member had deposited $10,000 inherited from her father, never touched the balance and was no longer receiving bank statements.
An internal investigation and third-party audits revealed Burns stole funds from 26 accounts, most belonging to elderly members, some of whom were deceased, between October 2018 and July 2020. Burns concealed her theft by discarding cash withdrawal receipts, withholding member statements and targeting dormant accounts.
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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