Image: Shutterstock. Former credit union CEO Susan Margaret Garza was sentenced by a federal judge in Galveston, Texas Thursday to 36 months in prison for bank fraud that was uncovered more than five years ago.
There was a good reason it took so long for federal investigators to finally bring Garza to justice for stealing nearly a half million dollars from a Texas credit union.
When she resigned in April 2013 from the Electrical Workers 527 Federal Credit Union in Texas City, financial discrepancies were uncovered, and NCUA examiners also found the credit union's computer system had been purged, according to court documents. What's more, the credit union claimed in 2008 that it lost all of its records because of Hurricane Ike. No records prior to 2012 were available and no backup of those records was kept.
That meant examiners had to reconstruct transactions from daily work that showed Garza embezzled at least $466,675 over 17 years, federal prosecutors said.
For that bank fraud felony she pleaded guilty to in August 2017, the 61-year-old Garza was also ordered by U.S. District Court Judge George C. Hanks Jr. to three years of supervised released after serving her three-year prison sentence. Judge Hanks also approved a personal money judgement against Garza for $466,675.
NCUA examiners determined Garza paid her personal bills directly from members' accounts, stole cash from members' deposits and issued fraudulent loans in members' names. She used that money to pay for other bills or to provide funds for relatives. Garza repaid these phony loans from members' accounts as well, federal prosecutors said.
In the credit union's last Call Report for 2013's first quarter, EW572 FCU posted $622,857 in assets and a critically undercapitalized net worth of -36%. The credit union also recorded a net loss of $295,221.
The NCUA announced EW572 FCU's liquidation in May 2013. The credit union served 572 members.
A March 2017 indictment originally charged Garza with four felony counts of bank fraud, two counts of theft and misapplication and three counts of making false entries.
In exchange for her guilty plea to one count of bank fraud, prosecutors dropped the other felony charges.
Garza of Galveston was banned by the NCUA in July 2016.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
