Former credit union manager Debra C. Pyfrom was sentenced by a Kentucky federal judge Wednesday to six and a half years in prison for embezzling more than $600,000. Her embezzlement led to the insolvency of the $5.4 million International Brotherhood of Electrical Workers Local 816 Federal Credit Union.
U.S. District Court Judge Thomas B. Russell in Paducah, Ky. also ordered Pyfrom, 61, to pay $60,520 in restitution.
In June 2014, she admitted to Kentucky police detectives and NCUA auditors that she stole more than $100,000 over two years. At the time of her arrest and initial theft charges in July, an audit of the credit union's finances was under way.
However, it wasn't until a year later in May 2015 when federal prosecutors finally filed an indictment against Pyfrom that accused her of stealing more than $600,000. The theft occurred between February 2006 and July 2014.
Court documents do not reveal how Pyfrom's embezzlement scheme was uncovered or how she managed to conceal her fraud for more than eight years.
"Because of the small nature of operations, the Credit Union lacked sufficient internal controls to monitor Ms. Pyfrom's actions and she misappropriated monies in a variety of ways," Max Peeples, a sub-agent of the liquidating agent, the NCUA, wrote in an affidavit filed in U.S District Court. "Ms. Pyfrom's dishonest and criminal actions as an employee of this small Credit Union which only had a few employees, caused the insolvency and closing of the Credit Union."
In his affidavit, Peeples also noted that this fraud case caused net losses to the NCUSIF of more than $1.1 million as of Nov. 30.
On July 10, 2014, the NCUA liquidated the cooperative and discontinued its operations. One month later, the $201 million C-Plant Federal Credit Union in Paducah, Ky. purchased the loans of IBEW Local 816 FCU and is now serving its 900 members.
After pleading guilty to bank fraud in September 2015, Pyfrom admitted to making false deposits to pay personal bills (credit cards, utilities and mortgage payments) for herself, her boyfriend, her boyfriend's friends, her daughter and other relatives.
To prevent accounts from being overdrawn, she keyed in a computer entry showing that the money had been deposited even though no funds had actually been deposited, according to court documents.
To cover these fake deposits, she took funds out of the accounts of credit union members.
The former credit union manager also reported false loan payments to her outstanding loan balances and the outstanding loan balances of her friends and family members.
Additionally, she created fictitious loans in the names of credit union members without their knowledge and used those funds to benefit herself, friends and family members, according to court papers.
Pyfrom manipulated the credit union's books to falsely show that the loan payments were current.
The former manager also took cash from the credit union's cash drawer and replenished the stolen money using cash deposits made by members. Pyfrom would make an entry to show the member's deposit was made and then immediately delete the entry and use the cash to replenish the cash drawer, according to court documents.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
