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Credit Unions Prominent in Bank Crimes

Recent activity in bank criminal cases

April 4, 2013

By SAM GARCIA Mortgage Daily


portrait of Sam Garcia

Federal and state prosecutors are prosecuting a host of alleged crimes by employees and executives of financial institutions that include of mortgage fraud, bribery and embezzlement. While customer accounts are often the target of the crimes, it's the banks that take the hit. Credit unions figure prominently into the latest spate of criminal activity.

Anthony Raguz was the chief operating officer of St. Paul Croatian Federal Credit Union. He was also co-owner of the Zlato Group with Zrino Jukic, who was sentenced to 37 months in prison and ordered to pay nearly $1.7 million in restitution, according to a Jan. 10 notice from the U.S. Attorney's Office for the Northern District of Ohio.

The government claims that Raguz and Jukic defrauded the credit union by submitting 11 fraudulent loan applications in order to generate capital for their company. Their crimes contributed to the April 2010 failure of St. Paul.

So far, 24 people have been indicted in connection with criminal activity at the credit union -- including Raguz, who last year was sentenced to 14 years in prison and ordered to repay $72.5 million.

A 90-month sentence was handed down on Jan. 25 to Ignacio Morales by a judge in the U.S. District Court for the Eastern District of Pennsylvania. A Justice Department press release indicated that Morales, who was also known as "Nacho," embezzled more than $2.3 million from his former employer, the Borinquen Federal Credit Union, to buy real estate and cocaine.

The government said that Morales admitted on Sept. 3, 2012, that he cashed hundreds of fraudulent U.S. tax refund checks through the credit union. The Philadelphia-based financial institution went belly up in June 2011.

Carol Ann Ferraro joined Chaffey Federal Credit Union in 1992 and worked her way up to executive vice president. But she started embezzling from the Upland, Calif., financial institution in 2004. She used her position to undertake the crime, and she created fake documents to cover her trail -- ultimately taking in $968,000. Following a plea agreement in October, Ferraro was sentenced on March 25 to two-and-a-half years in prison.

Another former credit union employee, Pamela Emig, was sentenced to 36 months in prison and ordered to pay $817,000 in restitution. According to a Feb. 11 news release from the U.S. Attorney for the District of Kansas, Emig kited checks -- embezzling $817,000 from her employer Enterprise Credit Union in the process.

A month before Montgomery Bank & Trust failed in July 2012, board member Aubrey Lee Price disappeared. He sent a letter to acquaintances the previous month admitting that he had lost a portion of the $40 million investors sank into his funds PFG LLC and the Montgomery Growth Fund. The letter indicated that he planned suicide.

While a criminal complaint was filed at the time in U.S. District Court for the Eastern District of New York, a Justice Department announcement on Jan. 25 indicated that Price was charged by a federal grand jury in with securities fraud and wire fraud. He is still on the lam.

Former U.S. Bank executive Wilbur Tate III was charged with conspiracy to commit bank bribery, the U.S. Attorney for the District of Connecticut announced. He appeared on Feb. 27 before a federal magistrate judge and was released on a $50,000 bond.

According to the government, Tate was an assistant vice president in charge of outsourcing collection accounts to collection agencies from January 2004 through February 2011. Beginning in August 2008, he allegedly began accepting bribes from Oxford Collection Agency. He was initially bribed with boxes of expensive cigars, the compensation turned into monthly cash payments of between $2,500 and $5,000.

Richard Thomas Gregg was the principal shareholder and director of Southwest Community Bank in Springfield, Mo., while he and his wife were majority shareholders in Glasgow Savings Bank in Glasgow, Mo. Southwest failed on May 13, 2010, while Glasgow was seized by the Missouri Division of Finance last July -- and Gregg' alleged actions contributed to both bank failures.

A 17-count indictment was announced by the U.S. Attorney's Office for the Western District of Missouri. The indictment, which was unsealed on Feb. 28, charges Gregg with four counts of bank fraud, 10 counts of money laundering, two counts of wire fraud and one count of bankruptcy fraud. He allegedly hid conflicts of interest on loan applications, misrepresented property values and allegedly cashed in stock certificates that were pledged as security on a loan. He is also accused of operating schemes on other types of loans.

In addition to his job as a commercial loan officer for BB&T, John Cooper Bolt Jr. also operated a side business known as CAK Enterprises, an announcement from the U.S. Attorney for the District of South Carolina said. When the business faltered with the economy, Bolt used a fake company, fake assets and the personal information of a family friend to obtain a $900,000 from BB&T.

Bolt hid his identity from the bank by opening up a post office box in a nearby town -- though his crime was ultimately discovered. He pled guilty on Feb. 26.

The U.S. Attorney for the Northern District of Alabama announced on March 14 that Allison McClellan was sentenced to six months in prison by U.S. District Judge R. David Proctor. The former loan operations manager at SouthPoint Bank was also ordered to pay $308,554 in restitution -- including $274,775 she stole from SouthPoint plus $33,779 for the bank's investigative and legal fees.

McClellan pled guilty in November to one count of computer fraud. She admitted that during her tenure at SouthPoint from 2005 to 2005, she used her special computer access to raise the limit on the $65,000 home-equity line of credit she took out with her husband in February 2006. In all, she increased the line 69 time -- ultimately to $328,000. A separate, personal credit line was also raised 15 times.

An eight-month sentence was handed down to Deborah Gayle Wood on Wednesday, according to the U.S. Attorney for the District of New Mexico. Wood, who was also ordered to pay $4,391 in restitution plus a $10,000 fine, admitted in late 2011 that she defrauded her employer Los Alamos National Bank while she worked as a trust officer from 2004 until 2005 by using the income from a client suffering from Alzheimer's disease for her personal benefit.

The U.S. Attorney's Office for the Western District of Washington announced that Jeffrey R. Goodell was sentenced on Feb. 25 to four years in prison and ordered to pay $917,204 in restitution. He allegedly lied about his education to get a job with Northwest Commercial Bank, where he worked until being fired in December 2010.

The Justice Department claims that Goodell fraudulently raided the line of credit belonging to Tacoma Rescue Mission, a non-profit organization. He then fraudulently authorized the disbursement of $1.3 million from the bank to friends, associates and potential bank customers.  He hid the fraud from the organization by sending fake statements. When another bank executive became suspicious, Goodell had a friend impersonate a Tacoma Rescue executive director by telephone to confirm the transactions were authorized.

In Minneapolis, Barbara Kaye Rechtzigel was sentenced by U.S. District Court Judge John R. Tunheim on Jan. 16 to 24 months in prison, according to the U.S. Attorney for the District of Minnesota. The former Minnwest Bank senior operations manager admitted in her August 2012 plea agreement that she embezzled $1,013,018 from the Marshall, Minn., financial institution by sending the bank's certificate of deposit holders false paperwork..

On Jan. 16, U.S. Attorney for the Middle District of Florida Robert E. O'Neill announced that former Citicorp Services Inc. vice president and senior business director Susan Emily Jones pled guilty to wire fraud. Her plea agreement calls for an $824,302 money judgment. Jones, who faces up to two decades in prison, misappropriated fraudulent expenditures for her personal benefit.

Gregory William Bell pled guilty on Feb. 5 to one count of false bank entries, one count of bank misapplication, one count of bank fraud, and one count of money laundering, the U.S. Attorney's Office for the District of Colorado announced. Bell, a former officer of New Frontier Bank, is accused of misapplying approximately $662,046 by submitting false forms to his employer to secure a $5.6 million loan from Frontier. The funds were used to purchase shares of the bank and artificially inflate its capital level.

More than $190,000 was stolen by Armando Ruben Aleman from his former employer, BBVA Compass Bank, according to a Department of Justice announcement from the Southern District of Texas. Aleman, who was indicted on Feb. 6, allegedly used forged checks to take the funds from a deceased client's account before the executor of the client's will could retrieve the funds.

Former Union Planters Bank teller Vonetta Jordan pled guilty to bank fraud on Feb. 19, the U.S. Attorney for the Southern District of Mississippi reported. Jordan and co-worker Debra Mitchell are accused of embezzling $117,883 from the bank, which is now known as Regions Bank. Mitchel was scheduled for sentencing on March 18.

Denise A. Lewandowski, a former auditor with Securant Bank & Trust in Milwaukee, admitted in January that she embezzled $103,578 from her employer, the Milwaukee Journal Sentinel reported. She worked at Securant from 1999 until she was fired after being questioned in May 2011.


U.S.A. v. CAROL ANN FERRARO.
Case No. 5:12-CR-00059-VAP, Aug. 12, 2012, sentenced on March 5, 2013 (U.S. District Court for the Central District of California).


Sam Garcia founded Mortgage Daily in 1998 and became its full-time publisher in 2000. Prior to his news career he worked in mortgage lending for two decades.

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