Fraud Sends Former CU Manager to Prison for 30 Months

A former branch manager and loan officer was sentenced to two and half years in federal prison Tuesday by a U.S. District Court judge in Dothan, Ala.

Federal Judge Myron H. Thompson also ordered Jennifer Leigh Arnette of Enterprise, Ala., to pay $1.4 million in restitution and serve three years of supervised release after her prison term.

In July 2017, Arnette admitted to stealing from the $31.9 million IAM Community Credit Union in Enterprise.

According to federal prosecutors, Arnette admitted she stole funds from the credit union’s cash account, a dead member’s account and unilaterally increased her personal loan without authorization.

Prosecutors also showed that Arnette approved 170 car loan applications, knowing that the credit scores were manipulated by 10 points or more, including 71 applications for which the credit scores were changed by 100 points or more.

She approved auto loans by over stating their value by listing premium options that never existed such as superior engine, sport package and premium trim package. For other cars, she listed that the autos were upgraded with a new body type and wheels or had an auto theft recovery system installed.

In addition, Arnette approved 64 car loans knowing that the vehicles were overvalued by $1,000 or more, including 22 loans in which the car values were overpriced by $5,000 or more, according to court documents.

Although the car loan scheme caused the credit union to misapply funds and approve loans beyond its acceptable risk levels, court documents do not indicate whether Arnette personally benefitted from approving these car loans.

In July 2013, about three months after she was fired, Arnette declared Chapter 7 bankruptcy. Court documents show she was unemployed and posted debts of more than $86,000.

Bankruptcy records also show that Arnette was sued by an IAM Community member who claimed that the former branch manager withdrew “several thousands of dollars” from the member’s account. The lawsuit also alleged that Arnette changed the member’s account to an online-only statement accessible account so that the member would not receive monthly statements.

In February 2014, Arnette agreed to pay the member $25,000, according to court documents.

Arnette’s bankruptcy case was terminated in March 2014.