FORT WAYNE, Ind. — A former credit union CEO's claim that he made unauthorized loans to help members stay out of financial trouble appears to be a defense that the credit union's current leadership is not buying.
David Thieme, former president of the $82-million General CU here, was recently charged with creating phony loans that allegedly helped him embezzle as much as $1.6 million from the credit union.
Leaving the actual validity of Thieme's defense to be judged by the state's investigation that's underway, Board Chairman Kim Dove told Credit Union Journal that "this is devastating to the board, the staff, and to all of General Credit Union. This is a gentleman who worked here for 20 years. He violated not only our policies, but broke Indiana law in some instances, and definitely violated the trust of us as an organization."
Dove would not comment on the alleged "Robin Hood-nature" of Thieme's defense.
Thieme is accused of: improperly using the credit union general-ledger funds to make payments on otherwise delinquent loans; engaging in numerous, undocumented, inter-account transfers, or "loans" involving unrelated parties or trusts he served as trustee; engaging in various account maintenance transactions, such as modifying obligation dates or delaying payment dates, to avoid loan review; and overpaying a member for contracted janitorial services and using the excess payments to reduce the member's loan balance.
Thieme did not return calls when contacted by Credit Union Journal.
Representatives of the privately insured credit union, which reported a $2.3-million loss for 2008, said they believe the scheme involved as much as $1.6 million, and it wrote off that amount in anticipated losses last September as a result of Thieme's alleged actions, Dove explained. Dove said that the losses have not impacted the credit union's financial viability, saying GCU remains a Camel 2, with capital near 8%. "No member funds were involved (in Thieme's alleged actions)," Dove said. "Just General Credit Union funds."
Just before Thieme's termination in April last year, three credit union employees reported concerns to their superiors about irregularities in transactions made with Thieme's loan officer number.
When confronted with irregularities, Thieme admitted to making $800,000 in unauthorized loans to "help members stay out of delinquency," according to fraud charges brought by state prosecutors. When questioned about his actions just before his termination, Thieme said some of his transactions were to help credit union members who were "down on their luck," according to court records.
Within a week after he was fired, Thieme paid back $800,000 to the credit union, the records show. Dove shared that an insurance claim has been placed by GCU for the $1.6 million.
"The key message for us is that our members' money is safe and we are putting this behind us and moving forward," Dove said. "And Dave has to be held accountable for his actions."
