Former CEO of North Carolina Credit Union Charged With Embezzlement

A North Carolina federal grand jury on Friday indicted Saundra Torrence, a 27-year president/CEO of the $32 million First Legacy Community Credit Union, for allegedly embezzling more than $375,000 from the Charlotte-based cooperative.

The indictment alleges that Torrence, who served as CEO from 1985 to August 2012, made false entries in the credit union’s books and records, stole funds, and used the identity of at least one third party victim to obtain a FLCCU loan.

Torrence’s  alleged fraud caused FLCCU to suffer significant financial losses while she personally received more than $110,000 from her misconduct, exposed the credit union to the risk of additional losses, and caused regulatory action against credit union, said R. Andrew Murray U.S. Attorney for the western district of North Carolina.

At the end of 2012, the credit union posted a net income loss of $5.4 million and a net income loss of $424,176 by December 2013, according to NCUA financial performance reports.  Although FLCCU rebounded in 2014 with a net income gain of $1.3 million and $432,760 in 2015, the credit union recorded a net income loss of $342,464 in 2016 and a net income loss of $1.2 million by December 2017, NCUA financial reports show.

According to the indictment, the former CEO, who is now 61 and lives in Charlotte, approved the payment of compensation to herself and others without authorization and contrary to the credit union’s policies. This included compensation for unused sick leave, compensation for the sale of GAP insurance in connection with automobile loans, and other uncategorized compensation. The indictment also charges that much of this compensation was not reported as taxable income, which caused underreporting and underpayment of federal and state income and/or employment taxes.

What’s more, Torrence allegedly obtained a loan from FLCCU in the name of at least one third-party victim. She allegedly falsified documents and circumvented the credit union’s policies and reporting requirements to secure the loan.

According to the indictment, Torrence improperly transferred funds between and among various third party accounts at the credit union and her own accounts. On certain occasions, she also improperly transferred the proceeds of loans given by FLCCU to third parties into her own accounts.

To conceal her alleged fraud, Torrence falsified documents and made bogus entries in the books and records of FLCCU, which caused the credit union to report inaccurate financial results.

The indictment charges the former executive with 13 felony counts of theft and embezzlement, 19 felony counts of making false entries, and one felony count of fraudulent participation.

Each felony count carries a maximum penalty of 30 years in prison, a $1 million fine, or both.

Although federal authorities stated in a release announcing the indictment that FLCCU received $1 million as part of a program under the U.S. Department of Treasury’s Troubled Asset Relief Program (TARP) in the fall of 2010, they did not say whether any of the TARP funds were embezzled. The federal funds were supposed to be earmarked to provide credit and financial services to underserved populations and communities.

This case was investigated by the FBI and the office of the special inspector general for the Troubled Asset Relief Program.