Former Credit Union CEO Facing 20 Years in Prison

Michigan judge last week sentenced former Valley State Credit Union President/CEO Stanley Hayes to serve up to 20 years in prison for embezzling $710,000.

He pleaded guilty in a state court in February to 13 felonies, which included embezzlement, computer crime and racketeering.

Judge Andre Borello in Saginaw County Circuit Court also ordered Hayes to pay $709,000 in restitution and $1,014 in state costs and fees.

Hayes, 45, was CEO of VSCU in Saginaw from 2005 until he was fired in 2016.

In order to make the financial position of VSCU appear better than it was to auditors, Hayes used embezzled funds to pay loans, including loans held by dead persons. Most of the money was siphoned from the credit union via computer transactions, but nearly $200,000 in cash was taken from Hayes’ teller drawer over several years, according to state prosecutors.

Hayes used the stolen funds to pay for his insurance, property taxes, travel and other personal expenses.

In addition to stealing from the small credit union with only $19.8 million in assets, the former CEO was paid $142,864 in 2015, according to the credit union’s 990 financial documents filed with the IRS.

The embezzlement was uncovered after an investigation by the Michigan Department of Insurance and Financial Services found several financial irregularities, including overly high risk in its loan portfolio, lack of internal controls, inaccurate reporting and failure of management and the board of directors to address these problems,

In April 2017, the state regulator liquidated the credit union.

The $595 million ELGA Credit Union in Burton, Mich. assumed VSCUs assets, shares, and loans and continued to serve its 2,715 members.