No Prison Time for Ex-CEO Who Stole Nearly $600,000 From Kansas CU

A former president/CEO received no prison time for stealing nearly $600,000 from a Kansas credit union that led to its forced merger.

U.S. District Court Judge Eric F. Melgren in Wichita, Kan., sentenced Audrey Elkins last week to time served and two years of supervised release, though she must serve six months in home confinement and participate in an approved mental health treatment program, according to court documents. The ex-CEO of the $1 million William Newton Memorial Hospital Credit Union in Winfield also was ordered to pay $260,000 in restitution to CUMIS Insurance and $500 to Panhandle Federal Credit Union.

In an earlier filed plea deal, prosecutors and Elkins’ public defender attorney, Mitch E. Biebighauser, agreed to recommend to Judge Melgren no prison time for Elkins and 36 months of supervised release.

A sentencing memo filed by Elkins’ attorney showed that this joint recommendation was based on a report by Dr. Christy Blanchard, a Lawrence, Kan.-based licensed psychologist, who specializes in forensic (psychological) evaluations, primarily for criminals, court testimony, forensic consultation to attorneys and law enforcement agencies, according to her LinkedIn page.

Blanchard’s report is not publicly available on the federal docket.

Ms. Elkins’ statements about her offense, “specifically why she did not embezzle money from the credit union for personal gain but because she felt as though she had no other choice,” Biebighauser wrote in a sentencing memo.

However, prosecutors said in court documents that Elkins spent more than $250,000 for her own personal use, but they did not specify on what or how she spent the stolen credit union funds. She also covered up her theft through a phony loan scheme over seven years.

Dr. Blanchard’s report analyzed the emotional trauma endured by Elkins “concurrent to the offense,” and that the psychologist reached three conclusions regarding the nature and circumstances of the offense. Those conclusions, however, were not specified in the sentencing memo.

“Based on review of previous therapy notes, interviews with third parties and Ms. Elkins’ own account, Dr. Blanchard’s report describes the circumstances of the offense by focusing on the uniquely compelling and extenuating circumstances of Ms. Elkins’ previous marriage during the period of the offense and its direct causal relationship to this offense,” Elkins’ lawyer wrote in the sentencing memo.  “After considering her findings, the court should find that retribution does not mandate imprisonment. At the time of sentencing Ms. Elkins intends to atone via a substantial good faith payment toward restitution.”

Biebighauser did not specify the total amount of that “substantial good faith payment.”

Retribution is one of the four primary elements that federal judges must consider to render a sentence. But how Judge Melgren decided Elkins’ sentence will not be known publicly because his “statement of reasons” document that explains how he came to his sentencing decision is restricted to prosecutors, the federal docket showed.

Elkins’ lawyer did not respond to CU Times‘ request to answer questions about this case. The U.S. Attorney’s office in Wichita declined to comment on CU Times’ questions when reached Wednesday.

From November 2010 to November 2017, Elkins embezzled the credit union’s funds through a fake loan scheme, which totaled nearly $600,000. She recycled $322,340 back into the credit union to make it appear as though the loans were being repaid, according to court documents. Elkins transferred the remaining $266,981 to other bank accounts and spent the credit union’s funds for her own personal use, federal prosecutors said.

In May 2018, the NCUA approved the merger of W.N.M.H. CU, which served nearly 500 members, because of its poor financial condition. It was consolidated into the $65.3 million Panhandle Federal Credit Union in Wellington, Kan. At the end of the first quarter in 2018, W.N.M.H. CU posted $1,090,641 in assets and a loss of $327,079, according to NCUA financial performance reports.