SAN BERNARDINO, Calif. The former executive vice president of Chaffey FCU was sentenced yesterday to 30 months in prison for a fraud scheme that drained almost $1.1 million from the $100 million credit union.
Carol Ferraro, 66, who worked for the Ontario, Calif., credit union for more than two decades, was also ordered to pay a fine of $1,052,790, which will cover the $968,000 Ferraro was ordered to pay to CUNA Mutual Group’s CUMIS Insurance last year as part of a civil claim in the case. She pleaded guilty to criminal fraud charges in October.
Ferraro began her embezzlement scheme in Oct. 2006 when she started writing checks on the credit union to pay her mortgage, her income taxes and travel expenses. The scheme ran through April 2011 when she was fired. During that time she used credit union money to pay her mortgage with Wells Fargo, her income taxes owed the IRS, credit cards with Capital One, Target, Bank of America and Bank of West, bills at Thousand Trails Campgrounds and All American Trailers, and debts owed Verizon Wireless, Sears, Lowes and Allstate. One check for $29,355.50 went to pay for a recreational trailer.
The credit union exec used her high-level clearance with the credit union to issue credit union checks drawn on members’ accounts and manipulating those members’ accounts to hide the scheme. She would allocate the debits to individual member’s accounts, then reverse the debits after the reporting dates passed.
The $100 million credit union discovered the embezzlement during its annual audit in July 2011.
