LOS ANGELES — A former top executive of a now-merged California credit union was arrested and pled not guilty to 19 counts of embezzlement in a U.S. District Court here.
Jolina M.Sanchez, the former manager/CEO of Azusa City Employees FCU of Azusa, Calif., now faces trial for allegedly diverting more than $300,000 in member deposits over a 15-month span from the $2.5 million CU.
She was released on her own recognizance pending a Sept. 8 trial in federal court, according to the U.S. Attorney's Office.
Sanchez, 35, is accused of making 19 withdrawals of anywhere from $2,300 to $46,400 beginning in March 2012 through May 2013. The alleged embezzlement was discovered during a National Credit Union Administration audit in late 2013, prosecutors said.
"As a result, the credit union hired outside auditors to conduct a more detailed audit, which uncovered Sanchez's embezzlement as the source of the imbalance,"
The Backstory
In November 2013, Azusa City Employees was merged into Foothill Credit Union of Arcadia, Calif. In a statement released last week, Brian Hall, CEO of the now $335 million Foothill, said that prior to the merger the CU performed a "tremendous amount" of investigation and research to "determine the scope of the misappropriation" allegedly perpetrated by Sanchez.
Most of the investigation was performed by the accounting firm Richards & Associates, which was retained by Foothill. The firm invested more than a month tracing and documenting who benefited from the alleged fraudulent activity.
According to Hall, while several deposits made for the benefit of members of Azusa City Employees FCU allegedly were "initially diverted" by Sanchez, all member deposits, including any interest or dividends the members were entitled to, were fully re-credited to their accounts.
The loss — amounting to more than $300,000 — was covered under a fidelity bond purchased by Azusa City Employees FCU from CUNA Mutual Insurance Society, Hall said, adding all member deposits are federally insured up to a minimum of $250,000.
"Foothill continues to remain a healthy, well capitalized credit union," Hall said. "Foothill employees are held to the highest standards of integrity and accountability and Foothill will take all measures actionable to ensure the safety and security of its member's investments and information."
In its most recent call report, Foothill CU reported more than $2.4 million in net income for the period of Jan. 1 to June 30, 2015. Its net worth ratio as of June 30 was 12.18% ("well capitalized").
In 2014 Foothill CU reported more than $3.7 million in net income. Its net worth ratio as of Dec. 31, 2014, was 11.99%.
Foothill Credit Union said in 2013 it was asked by the board of directors at Azusa City Employees FCU to consider a "friendly merger" to allow Azusa City to expand the services it could offer to its approximately 600 members. In November 2013, the merger between Foothill and Azusa City was approved by NCUA.
The merger later was completed with all Azusa City members becoming part of Foothill CU.
