Newcomb and Humphries began the fraud scheme in 2000. They originated loans in the names of LFCU members without their knowledge or consent. They also drafted and approved fictitious loans.

Newcomb and Humphries transferred funds and wrote checks on certain LFCU members' accounts without their knowledge or consent. At least three different accounts are alleged to have been used by the two defendants. Certain proceeds from the schemes were deposited to the LFCU bank accounts of Newcomb, Humphries and their family members, or were used by the two defendants to make payments to other fraudulent loans, according to court documents.

What's more, from Oct. 22, 2009 and continuing to Oct. 6, 2011, Newcomb entered into loan participation agreements with another federal credit union.

Newcomb, on behalf of LFCU, sold fraudulent loans as participations. In order to persuade the partner credit union to enter into the loan participation agreement, Newcomb made various false statements to make the loans involved appear to be authentic and legitimate. The value of the fraudulent loans this scheme was in excess of $1 million, according court documents.

The $20 million Northern Piedmont Federal Credit Union of Culpeper, Va., filed a $1.7 million civil lawsuit  in 2013 by accused Humphries, Newcomb and another Lynrocten FCU Teller, Becky Nichols, of loan participation fraud.

Court papers showed Northern Piedmont wired more than $3 million to Lynrocten from 2009 to 2011 under agreements based on fraudulent misrepresentations.

"Newcomb and Humphries concocted a scheme to originate loans, allegedly including the loans in which Northern Piedmont purchased participations, in members' names without the members' authorization," the complaint stated.

In April 2013, a judge ruled the NCUA could intervene in the Northern Piedmont lawsuit because it is premature and could potentially deplete the pool of assets available to all parties.