TAMPA, Fla. – A federal court Friday denied a bid by the former CEO of Pinellas FCU to access tens of thousands of dollars of her funds frozen by her former credit union after she was fired last November amidst an embezzlement probe.
In rejecting claims of the one-time CEO of the Year, U.S. Judge James Moody said the credit union’s freeze of Linda Reynolds’ final paycheck, her military retirement pay, which is deposited electronically with the credit union, and her savings account, does not violate the provisions of the Fair Labor Standards Act, or the Expedited Funds Availability Act of Reg CC, as the former CEO alleged in court.
The judge did agree to continue Reynolds’ claims for civil theft regarding the freezing of her funds and those charges will continue.
Reynolds charges were made in counterclaims made to a suit filed by the $85-million credit union asking the federal court for a highly unusual preliminary injunction order to allow the credit union to create “constructive trust” in which all of Reynolds’ funds would be placed and frozen until a legal disposition can be determined.
Reynolds was fired Nov. 1, just six months after the credit union under Reynolds’ direction was named NAFCU’s Credit Union of the Year under $150 million, and two years after Reynolds herself was lauded as the group’s CEO of the Year. She was told to leave the credit union’s premises that day, 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.
On Nov. 9, Reynolds’ lawyer sent the credit union a civil theft notice and demand for payment. The credit union said it froze the former CEO’s accounts because it had reasonable belief that she misappropriated credit union funds.
The credit union 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 personal accounts. The suit alleges Reynolds billed the credit union 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,” says the suit.
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 legal fight 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, “has been a valuable asset to Pinellas Federal Credit Union, demonstrating exemplary leadership skills and ardent dedication that is an inspiration to her colleagues.”
Reynolds’ lawyer did not respond to a phone call seeking comment.
