Former Florida CU Employee Sentenced to 10 Years for $5 Million Embezzlement

U.S. District Judge Brian J. Davis sentenced the former credit union employee to 10 years in federal prison for mail fraud, embezzlement of credit union funds and filing a false federal income tax return.

During a two-day sentencing hearing that ended on Monday, however, Florida federal prosecutors said there was a sinister motivation as to why Deane Allen Sikes embezzled more than $5 million from Vystar Credit Union in Jacksonville, Fla.

Sikes allegedly paid underage boys of middle school and high school ages to allow him to take photos of them naked, often while swimming in his pool, and to perform certain acts on each other, federal prosecutors wrote in a sentencing memo to Judge Davis.

Sikes’ lawyers have denied these allegations, arguing in court documents that they have never been proven or prosecuted.

Three of those underage boys, now in their 20s, testified that Sikes made advances on them after gaining their trust and offered hundreds of dollars for naked photos and sexual favors, according to court documents.

After interviewing these witnesses, FBI agents confirmed through bank records that the fraud money had been paid via checks to family members of the witnesses and to one of the witnesses, court documents show. Sikes allegedly spent large sums of money on the young boys in the form of gifts, even a new car in one instance, dining out or cash payments. He also allegedly provided cash for drugs and alcohol for the underage boys, according to court documents.

Federal prosecutors said they believed it was their obligation to present this information to Judge Davis, in part, because it established a motive as to the underlying financial crime.

Sikes defense attorney William Mallory Kent, however, strongly denied these allegations, arguing that they are “uncharged, unproven criminal acts unrelated to the charged offenses.”

“What the government failed to disclose was that in the anonymous report (one of) the accuser (s) admitted that he wanted to be compensated,” Kent wrote in court documents. “This is what this is about.”

Kent also pointed that that FBI investigators interviewed many young men who spent time at Sikes home.

“Not one, not a single one, corroborated the allegations of the four accusers the government has brought to the attention of the court,” he wrote. “Each and every one instead stated that Sikes never behaved inappropriately in any way and would not tolerate alcohol even for underage visitors. Each stated that Sikes never got in the pool when children were present. All consistently stated that they had never even heard rumors, gossip or anything like these four accusers say happened.”

Kent also said one of the persons interviewed by the FBI said one of the accusers contacted him and attempted to get him to join with them in their accusations, but that person refused because the allegations were not true.

Nevertheless, after the testimonies and cross examinations were completed, Judge Davis ruled prosecutors presented sufficient evidence and met the burden of proof about Sikes’ alleged conduct with minors, which is why the sentence was higher than the recommended term, according to local media reports.

“My conscience is shocked,” Judge Davis said.

In addition to the 10-year prison sentence, Judge Davis ordered Sikes to pay $178,161 to VyStar Credit Union, $5,284,800 to CUMIS Insurance Society Inc. and $1,009,175 to the IRS.

Sikes, of Jacksonville, worked in VyStar’s mailroom from 1994 to 2017. Part of his duties included using credit union issued checks every week to buy postage for a postage meter that paid for the credit union’s mail expenses.

However, on every other week, Sikes used the credit union’s checks to buy large amounts of postage stamps from the Jacksonville post office. He then shipped these stamps to a New York-based vendor, who then sold these stamps and cut a check to Sikes for his portion of the sales proceeds, according court documents.

Between 2007 and 2017, the vendor paid Sikes more than $3.6 million. Federal prosecutors said that the former mailroom employee sold stamps to the vendor over 15 years and embezzled a total of $5.4 million from the credit union.

However, Kevin Owens vice president of corporate security and safety at the $9 billion VyStar CU, reportedly testified that the total amount Sikes embezzled was $6.8 million over 13 years.