A Washington State banking company restated 1996 earnings downward and blames a former senior officer who it says embezzled almost $700,000.
Spokane-based United Security Bancorp. announced late last week that it was cutting after-tax earnings by $525,000, to $3.2 million, but expects its insurer to cover most of the loss.
In interviews this week, officials of the $230 million-asset company declined to name the ex-employee. But late last fall, United Security said, it filed a civil suit in Yakima County Court accusing Vivian Garcia, a former senior operations officer at its Home Security Bank subsidiary in Sunnyside, Wash., of embezzlement.
The suit, which is pending, sought more than $180,000 in damages; the company says it had then not tallied up the entire loss.
The Federal Bureau of Investigation is investigating the case.
"This is an extremely frustrating situation," president and chief executive officer William C. Dashiell said in a press release. "We have prided ourselves on our tight internal controls and strict policy and procedures guidelines."
He said the person responsible, whom he did not name in the statement, "circumvented the internal control procedures in a highly skilled manner."
"Our policies and controls were always in place," Mr. Dashiell said. "If people are going to break it down, there isn't much you can do about it."
United Security said the embezzlement took place over eight years and its discovery was triggered by a customer who came in seeking information on his account.
All customers' accounts have since been reimbursed for principal plus interest, the company said.
The announcement came the same day that a federal court in Tacoma, Wash., across the state, sentenced a former Washington Mutual branch official to 27 months in prison for embezzlement.
Angela Medley, who had been a new account representative, was also ordered to repay more than $1.6 million stolen from the thrift from 1987 to 1994. She had pleaded guilty to bank fraud and admitted spending almost $500,000 on jewelry.
Ms. Medley's offenses involved timed customer deposits and manipulation of records. United Security says its own case also involves those elements.
