Mike Alcorn, president/CEO for the $30.7 million Morehead Community Federal Credit Union in Morehead, Ky., thought his vice president of lending Brenda Rudd was a great asset because she was well known and liked by members.

But when Rudd took a vacation in July 2014 and Alcorn reviewed her loan documents, he was shocked to uncover irregularities that revealed one of his best employees was an embezzler.

On Tuesday, U.S. District Judge David L. Bunning in Ashland, Ky., sentenced Rudd, 47, to three years in federal prison for bank fraud and ordered her to pay $237,195 in restitution.

“She had been employed here for 11 years and she was very well liked by members,” Alcorn said. “I guess that is the way it goes, it's always the last person you would suspect of doing something like this. It was a complete shock and very unfortunate that someone would decide to do that.”

About eight years ago, Rudd began creating fictitious loans and used the funds to pay family bills. According to court documents, the Rudd family was deep in debt.

Rudd created 88 fake loans, including advances on existing loans on three different accounts. She also made cash withdrawals on the loans, refinanced other bogus loans and made payments with the stolen funds to keep the fake loans current, according to court documents.

Alcorn said Rudd forged documents for the fake loan approvals, which did not raise any red flags during previous audits.

The fictitious loans amounted to $342,348, but the total loss to the credit union amounted to $225,545, according to court documents.

Alcorn said the credit union installed a new core system in September 2014 that will help prevent this type of fraud from occurring again. The credit union also implemented new loan approval procedures.

In court documents, Rudd's lawyer, Michael R. Campbell of Morehead, wrote that his client's income combined with her husband's was not sufficient to cover their debts, which led to her fictitious loan scheme.

“Looking back on it now, Brenda understands that she felt that she had failed in her role as the family provider,” Campbell wrote. “She was ashamed to ask her father and her mother-in-law for financial assistance. If Brenda had only gone to her mother-in-law, things would have turned out completely different. Sometimes in life a single decision can lead to disastrous results. This case is one example of that.”