DECATUR, Ala. – The former president of Lauderdale County Teachers CU and one of its members were found innocent by a federal court last week of a $6 million fraud surrounding a loan to the member’s business.
Melissa Killen, the former president of the $36 million credit union, and Timothy Shelton, a local businessman, were charged with structuring about 20 different member business loans in order to finance Shelton’s water bottling business by skirting the credit union’s rules on loans to one member.
During the trial, prosecutors contended Shelton and Killen devised a scheme to defraud the credit union by allowing Shelton to obtain multiple loans after reaching the $350,000 limit each member is allowed to borrow. Prosecution witnesses testified that after reaching his borrowing limit, Shelton recruited friends and family members to apply for loans and give the money to Shelton.
The credit union has since revised its lending rules and no longer makes loans for its members to use for businesses purposes. Members also are no longer allowed to co-sign loans once they have reached their maximum borrowing limit as a primary borrower or co-signer.
