BEAUMONT, Texas – The former president of Orange County Employees FCU was charged last week with stealing $1.2 million from credit union, causing the failure of the one-time $4 million credit union earlier this year, the latest in a growing list of fraud-related failures.
Sandra Cooper, 56, was indicted by a federal grand jury on 14 counts of embezzlement and seven counts of money laundering for allegedly writing out credit union checks over a two-and-a-half year period, eventually forcing NCUA to take over the failed institution and assign its remnants to nearby Sabine FCU. Cooper allegedly made checks out to herself from the tiny credit union, which was housed in the county’s administrative buildings adjacent to the Orange County courthouse.
NCUA liquidated the tiny failure on June 9 after the agency discovered as much as $2 million of funds missing.
The failure is the latest tied to alleged fraud by credit union management. A recent report by NCUA’s Office of Inspector General attributed management fraud to many of the biggest failures of the past three years, including St. Paul Croatian, which is projected to cost the NCUSIF a $170 million loss; Center Valley, a $16.4 million loss; and New London Security, a $12 million loss. But it also attributed fraud to several small failures, like Lawrence (Massachusetts) County School Employees FCU, Fairfield County (Ohio) School Employees FCU, Alabama Bratcher FCU, First Service CU, Certified CU, Allied Tube Employees CU, Second Baptist Church CU, Mutual Diversified Employees FCU and Norbel CU.
William DeSarno, NCUA’s Inspector General, said the growing number of fraud-related failures appears to be caused by the economic downturn which has uncovered more cases of malfeasance. “It seems when times are good these kinds of things get covered over, but when times get bad sometimes they get uncovered," he said. "When we started doing these material loss reviews we didn't see so much fraud show up out there. Now it seems to be more prevalent."
The failure of Orange County Employees FCU is estimated to cost the National CU Share Insurance Fund $1.4 million to resolve.
