Former CEO Steals Credit Union Funds to Pay for Restaurant’s Costs

A former CEO stole more than $600,000 from his Connecticut credit union to pay for a restaurant’s operating costs where he was moonlighting as a bookkeeper.

James Farrell, 55, of East Haven, Conn. pleaded guilty to one count of bank fraud Wednesday before U.S. District Judge Stefan R. Underhill in Bridgeport, according to the U.S. Attorney’s office in Connecticut.

Farrell served as the president/CEO of the $20.1 million New Haven County Credit Union from 1992 to June 2015. He was then retained by NHCCU’s board of directors to assist the new CEO until March 2016.

From 2010 until 2016, Farrell also provided financial and bookkeeping services to The Rib House, an East Haven restaurant, which maintained a business account at NHCCU. Farrell was responsible for depositing cash sales and paying invoices for the restaurant.

In pleading guilty, the former executive admitted that between July 2011 and March 2016, he fraudulently transferred $602,908 from the NHCCU general ledger account primarily to The Rib House account and, to a lesser extent, for his own personal benefit, according to court documents and statements made in court.

When Farrell knew that The Rib House didn’t have enough cash to pay its bill, he tapped the credit union’s funds to pay for the restaurant’s operating costs, including its taxes, food, liquor and other expenses.

While he was stealing from the credit union’s coffers from 2011 to 2016, NCUA financial performance reports show that NHCCU posted six-figure and five-figure losses in four out of those six years for a total net income loss of $429,826.

Over time, Farrell replenished $370,278 to NHCCU’s general ledger account, leaving a shortfall of $232,630. He has paid full restitution to the credit unions, according to court documents.

Farrell has been released on bond pending a Nov. 20 sentencing hearing.

He faces a maximum imprisonment term of 30 years.