Prohibition orders issued by the NCUA Oct. 30 marked the final chapter in two embezzlement cases so large, they resulted in credit union failures. In total, three individuals were banned from participating in the affairs of any federally insured financial institution.
Linda Sue Newcomb, former president/CEO of the now closed Lynrocten Federal Credit Union in Lynchburg, Va., pleaded guilty to embezzlement, bank fraud and aggravated identity theft and was sentenced to 10 years in prison and five-years supervised release. She also was ordered to pay more than $11.7 million in restitution.
From October 2009 to October 2011, Newcomb negotiated and entered into loan participation agreements with the $18.7 million Northern Piedmont FCU in Warrenton, Va. In these loan participation agreements, Newcomb included false loans, including three loans she put in the name of a deceased member, according to court documents.
“Newcomb's actions caused LFCU to be liquidated, tying up the monies of many of its members for various periods of time and a great deal of stress in dealing with the situation,” federal prosecutors argued in court documents. “Further, Newcomb's actions caused Northern Piedmont (Federal Credit Union) to be put on the financial brink. Because of Northern Piedmont's losses at the hands of Newcomb, it had to terminate employees and sell a building just to remain viable.”
Bernie D. Metz was the former CEO of Center Valley Federal Credit Union in Wheeling, W.V. The credit union was liquidated by the NCUA in 2009. Metz pleaded guilty to the charges of money laundering and embezzlement and was sentenced in 2011 to nine years in prison and five years of supervised release. She also was ordered to pay more than $4.8 million in restitution.
According to court documents, Metz used embezzled funds to launch businesses that included a restaurant and a motel.
“The prison sentence imposed today upon Bernie Metz brings an end to her sophisticated scheme to defraud the Center Valley Federal Credit Union and its members,” U.S. Attorney William Ihlenfeld said at the time of her sentencing. “She embezzled millions of dollars over the past 10 years and used the credit union as her own personal piggy bank. Due to the convictions obtained in this matter, her opulent lifestyle has ended. Things will be much different for Bernie Metz behind bars, and she will no longer enjoy the life of luxury to which she had become accustomed.”
Douglas Ratcliffe, a former employee of the $750 million InTouch Credit Union in Plano, Texas, pleaded guilty to the charge of credit union theft. Ratcliffe was sentenced to 21 months in prison and five years of supervised release. He also was ordered to pay restitution in the amount of $388,608.
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