Two Ohio business partners who used their corporate and personal accounts to embezzle $1.8 million from the failed Taupa Lithuanian Credit Union were sentenced to federal prison Friday in U.S. District Court in Cleveland.
Gary Chaney of Streetsboro and Patrick Bruckman of Chester Township were sentenced to three years and two years, respectively. U.S. District Judge James S. Gwin also ordered the men to pay $1.8 million in restitution.
They pleaded guilty in October 2014 to one count of conspiracy to commit theft or embezzlement from a credit union.
Chaney withdrew approximately $241,000 from his personal account. Bruckman withdrew approximately $63,000 from his personal account. In addition, they withdrew $1.5 million from their corporate accounts for which there were insufficient funds.
Chaney and Bruckman operated an IT company since the mid 1990s and provided hardware and software services to Taupa Lithuanian CU. By the late 1990s, however, an economic slowdown hurt the company's sales and profits, Bruckman's lawyer Jason L. Carter of Mentor, wrote in a sentencing memorandum.
While Chaney and Bruckman were trying to rebuild their business, they neglected to invoice the credit union for products and services and Spirikaitis allowed them to overdraw their accounts over several years, according to Carter.
"Mr. Bruckman and Mr. Chaney became further negligent in their bookkeeping and invoicing efforts to customers, knowing they were more than likely getting more financial benefit from Mr. Spirikaitis' actions than they were providing in products and services to the credit union," Carter wrote. "When Mr. Bruckman and Mr. Chaney were informed of the extent of financial support Mr. Spirikaitis had provided over the years, they were shocked."
In addition to Chaney and Bruckman, four other people were convicted and sentenced since December 2013 for stealing a total of $15 million from the Cleveland cooperative that had only $23.6 million in assets. The NCUA and the Ohio Department of Commerce took possession of Taupa Lithuanian in July 2013 and placed it into receivership because of insolvency.
The fraud case caused a $33.5 million loss to NCUSIF, according to the NCUA material loss report.
Alex R. Spirikaitis, the former president/CEO of Taupa Lithuanian CU, was the central figure of the multi-million dollar fraud scheme. Over several years, he allowed members to withdraw funds from their accounts even though they did not have sufficient balances to cover those withdrawals.
Spirikaitis was sentenced to more than 10 years in federal prison in December 2014.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
