LARGO, Fla.-Pinellas FCU has fired its highly regarded CEO, Linda Reynolds, and frozen hundreds of thousands of dollars in her accounts along with her pending military pension amid allegations she embezzled funds from the $85-million credit union.
In a countersuit, Reynolds strongly denies the allegations.
The Nov. 1 firing came just six months after the credit union, under Reynolds' direction, was named NAFCU's Credit Union of the Year under $150-million in assets, and two years after Reynolds herself was lauded as the group's CEO of the Year.
Court documents filed in relation to the dismissal show Reynolds was terminated and told to leave the credit union's premises on Nov. 1 after 15 years as CEO, and all of her accounts were frozen, including wages owed, military retirement pay, savings, and the several accounts Reynolds holds jointly with her grandchildren.
A suit filed by the credit union is asking the federal court for a highly unusual preliminary injunction in order to allow it to create a "constructive trust" in which all of Reynolds' funds would be placed and frozen until a legal disposition can be determined.
Reynolds has filed a countersuit in federal court against the members of the Pinellas FCU board claiming violations of the Fair Labor Standards Act and asking the court to reverse the freeze, which she says has caused her to miss bill payments and to incur overdraft fees.
PFCU claims Reynolds embezzled hundreds of thousands of dollars over the years by hiring family members and friends as contractors at inflated rates, often for services that were never provided, then diverted some of the payments to her own accounts. The suit alleges Reynolds billed PFCU for commissions on many of these contracts. The credit union also alleges Reynolds used the company credit card for personal expenses that were never reimbursed. "Once the credit union became aware of Reynolds' unlawful and disloyal activities, the Credit Union terminated her employment," the suit states.
PFCU said it believes Reynolds is currently using the proceeds from the alleged embezzlement, and therefore has frozen her accounts while it is investigating the case.
Reynolds denies all of the allegations of improper payments in her countersuit. "Defendant never engaged in any such conduct or received any commission payment from (the credit union)," states her countersuit, which names Pinellas FCU Chairman Fred Petty and the other directors as defendants.
The punch-up comes just two years after Petty was publicly praising Reynolds upon her award as NAFCU CEO of the Year for credit unions under $150 million in assets. "Linda Reynolds," said Petty at the time, "has been a valuable asset to Pinellas Federal Credit Union, demonstrating exemplary leadership skills and ardent dedication that is an inspiration to her colleagues."
In her countersuit Reynolds conceded she sometimes used her corporate credit card for personal expenses, but insisted she always reimbursed the CU in such cases, and further said PFCU's supervisory committee routinely reviewed her expense reports and never questioned how the card was used.
Lawyers for both sides did not respond to requests for comment at presstime.
