"I had complete faith and trust in her as a teller, assistant manager and manager and I still can't believe that she stole all that money from all of us!" Shoreline Board Member Eileen Porter wrote in her impact statement. "I have been on the board of directors for approximately 24 years and when this allegation was presented to the board, I cried and hugged her and said, 'it has to be an accounting error. You will be proven innocent.'"

Simmerman kept telling employees and board members that it was an accounting error.

Stephanie L. Kuziak, who served as an assistant manager under Simmerman and is now the credit union's manager, also said she initially refused to believe her boss stole all of that money. She even sent Simmerman flowers with a card that read: "It will be OK. I got your back!"

But Kuziak and four NCUA examiners proved that Simmerman's claim was a lie.

"I was completely destroyed. I could not comprehend what was in front of me," Kuziak wrote in her impact statement. "When I got home that night, I literally fell in my husband's arms and cried, 'she did it.' To be honest, I am still crying. I can honestly say I have cried every day because of this."

What made matters worse for the credit union is that five years before the embezzlement was uncovered, the board voted to convert to a community charter to attract new members for growth, according to Porter.

"She would apply and then tell us either (the) NCUA lost the paperwork or we didn't have the correct form or some other reason," Porter wrote in her impact statement. "We've been asking and trying for about five years. She knew a full and true audit would have uncovered her theft!"

Shoreline Board Chair Pamela Patterson said the embezzlement left her totally devastated.

"My 16 years on the board of directors has been a complete sham," she wrote in an impact statement. "Kathy has been stealing money for 17 years and could look us all in the face month after month knowing what she was doing."

Additionally, Simmerman's actions forced the credit union's 2,812 members to go without services that Shoreline cannot afford, according to Patterson.

"Examples are: Mobile banking, change counting machine, new ATM plus other services offered by other credit union(s)," Patterson wrote in her impact statement. "We are constantly trying to get new members, but bigger credit unions with more services, better rates and longer hours have lured members away."

Simmerman's lawyer, Gary K. Springstead of Fremont, Mich., explained in court documents that his client began stealing the money "out of a perceived financial need when her husband was laid off from work."

"From the first time she did it, (in 1998), Ms. Simmerman recognized that she had done something wrong and certainly illegal and initially intended to 'put the money back,'" Springstead wrote. "However, due to the fact that she had already stolen a couple of thousand dollars and had a limited income (approximately $18,000 a year at the time), she never put the money back. Figuring that she was sure to get caught eventually and instead of stopping altogether, she continued to steal cash from the bank."

How Simmerman got away with it for so long appeared to result from many factors, according to Springstead. No red flags were raised when Simmerman repeatedly made large cash deposits into her own bank account, and the bank accounts of her husband and two sons, despite her low to moderate income. Her husband and two sons were not involved in the embezzlement.

Because credit union employees were not allowed to deposit funds into their own accounts, Simmerman asked other employees to make the deposits for her. She explained the extra cash came from her husband working a lot of overtime.

When investigators asked employees, who were not involved in the embezzlement, whether they thought it was strange or suspicious that Simmerman had been giving them so much cash to deposit, they said no. Employees said they had been making deposits for Simmerman for years, and that they trusted her and assumed there was nothing wrong with it.

Springstead also wrote in court documents that the credit union's accounting controls were minimal.

"There were no true 'surprise' audits, which gave Ms. Simmerman ample time to try and avoid detection," Springtead wrote. "Third, and perhaps most importantly, the credit union's original auditors never actually verified that the money she claimed to have transferred to/from the parent credit union (correspondent bank) was actually where she claimed it to be. Indeed, Ms. Simmerman's crime was discovered shortly after Shoreline hired a new auditor who did not simply take Ms. Simmerman's word that the 'transfers' she made to the parent credit union were legitimate."

In regard to this claim, Shoreline Manager Kuziak did not return CU Times' emails or phone call seeking comment Monday.

Simmerman has accepted responsibility for her actions, feels shame and guilt, and knows she betrayed her friends and co-workers at the credit union as well as her husband and family, according to her lawyer.

"She wants to personally apologize to all of these people and the victims, and understands why all the people affected by her actions may be angry at her," Springstead wrote. "She simply hopes that someday they might forgive her."

To avoid anyone seeing her taking cash from the vault, Simmerman arrived at the credit union before employees reported to work.

She managed to hide her theft from auditors and the credit union's supervisory committee by manipulating Shoreline's financial statements to make it look like the missing cash was on deposit with Shoreline's correspondent bank, the $3 billion Alloya Corporate Federal Credit Union in Warrensville, Ill.

According to an auditor's report conducted by Lillie & Co. of Sunbury, Ohio, Simmerman found that she could record a withdrawal from the vault in the teller module to reflect the money she was removing from the vault. The teller module was the teller balancing function built into the credit union's IT system.

However, instead of recording the vault withdrawal as a transfer to another teller drawer, she used a code in the system that recorded the transfer to a drawer that did not exist in the system.

When she recorded the cash withdrawal as going to the non-existent teller drawer, the vault balance reflected a reduction in the actual cash on hand while the corresponding deposit transfer could not be recorded because there was no such drawer; rather it was recorded in a general ledger suspense account as a default entry, according to the auditor's report.

To avoid this suspense general ledger account from growing, Simmerman made a manual journal entry to increase the vault amount and reduce the suspense account at the end of the day each time she stole cash from the vault. Using this method, the amount reflected in the teller module for the vault accurately represented the cash on hand after she removed cash.

The auditor's report noted that even if another employee were to count the actual cash in the vault and compare it to the teller module total, the balance would be accurate, but the vault general ledger balance would be overstated by the amount of cash she had taken. 

To conceal the overstatement in the general ledger, Simmerman would make a journal entry to reduce the change fund balance and record a corresponding increase in the credit union's Alloya Corporate settlement general ledger account.

Since Simmerman did not perform the monthly corporate reconciliation, she reversed the journal entries after the reconciliation had been prepared but before the monthly financial statements were generated.

Through this method, the individual performing the reconciliation would not notice the corporate general ledger balance being overstated, and the financial statements presented to the board and used to prepare the quarterly 5300 reports for the NCUA would not show an abnormally high vault general ledger balance, according to the auditor's report.