BOSTON – A federal appeals court yesterday rejected an appeal by Carol Aranjo, a one-time national spokesman for community development credit unions, of her and her husband’s 2008 conviction in the $2 million embezzlement from D. Edward Wells FCU in Springfield, Mass.
The U.S. Court of Appeals for the First Circuit ruled that Aranjo, who is serving a 54-month prison term, failed to prove that the judge’s dismissal of an African-American female juror amounted to bias in her and her husband’s case.
During jury selection, the lawyers for Aranjo, an African-American, objected to one of the prosecutor's peremptory challenges, noting that the prospective juror was "seemingly the one African American woman on the jury panel . . . which implicates both classes (race and gender)." Aranjo's counsel pointed out that – contrary to the court's suggestion – a different, male juror probably was not African-American, and that there were very few women on the jury.
But the court of appeals ruled that the judge in the case had reasonable cause to reject the proposed juror.
The appeals court also rejected the claims by Aranjo’s husband, Alphonso Smith, that the verdict that his wife engaged in the embezzlement was not sufficient to prove that he knew the $2 million she had the credit union funnel to his business was illegal.
“Proof of these transactions and their impropriety was coupled with evidence that Smith was regularly receiving cashier's checks or making withdrawals unsupported by funds in his personal account or others he controlled; that his wife was involved in giving approval for such transactions; that some payments occurred immediately after he had conferred with her at the bank; and that the negative balances were sufficiently large that he had to know that his withdrawals were misappropriating bank funds, particularly since he received and possessed information revealing those negative balances,” wrote the court.
Aranjo, who headed the one-time $9 million credit union after NCUA took it under conservatorship in 2003, emerged as the leading spokesman for CDCUs as chair of the National Federation of CDCUs. She testified several times before Congress as it was creating the Community Development Financial Institutions grant program.
Aranjo, 70, is serving a 54-month prison sentence in Arizona. Smith, now 72, has been released from prison after serving one year and one day behind bars. Their son, Douglas Smith, a local businessman, also was charged with obtaining fraudulent loans but died in a freak boating accident as the case was proceeding.
The former CDCU spokesman was convicted of having the credit union lend millions of dollars to friends and relatives through a non-profit front group called FOCUS, for Friends of the CUs. Alphonso Smith was treasurer of the group. Several Aranjo friends who were ineligible or risky borrowers eventually pleaded guilty to lesser charges and repaid loans Aranjo had arranged for them.
Aranjo went to great lengths to hide the fraud, including falsifying records. She eventually sued NCUA unsuccessfully to block the regulator’s takeover of the credit union.
NCUA liquidated D. Edward Wells FCU, chartered in 1959 in a church basement, in February 2003 at a cost of as much as $5 million to the National CU Share Insurance Fund after all the losses were totaled.
A separate civil suit brought by NCUA against Aranjo, Smith and several of the borrowers was dismissed on the day of the criminal conviction.
