NCUA Bans Former Kansas Credit Union CEO for $1 Million Embezzlement Scheme

Federal prosecutors said they don’t know when Judith Shimanek began embezzling from the $2.9 million Ark City Teachers Credit Union in Arkansas City, Kan., but by the time it was detected, the former president/CEO had stolen more than $1 million.

On Monday, the NCUA publicly issued a prohibition order against Shimanek that bans her from ever participating in the affairs of any insured financial institution. She signed the prohibition order on Jan. 7, the same day that U.S. Chief District Court Judge Eric F. Melgren in Wichita sentenced the former executive to three years in minimum security federal prison in West Virginia. He also ordered her to pay restitution of $1,005,000 and serve three years of supervised release following her prison term.

Shimanek was indicted on one count of credit union embezzlement in April 2021 and pled guilty in October, federal court records showed.

“On or about a date unknown” and through May 7, 2018, Shimanek created fake loans and deposits and used the stolen funds “for her own benefit,” according to a plea deal. Federal prosecutors did not say how she spent the credit union’s money or on what, and they did not say how Shimanek concealed her fraud.

However, according to the NCUA’s prohibition order, Shimanek embezzled the credit union’s funds by creating phony deposits to her own account and the accounts of family members. She also repeatedly advanced due dates on multiple loans that effectively concealed the delinquent status of those loans, which led to losses of more than $490,000, the NCUA said.

The prohibition order did not say how many fictitious loans Shimanek created, when this fraudulent scheme began or on how the stolen money was spent.

Nevertheless, special conditions of her supervised release require Shimanek to refrain from any form of gambling, and to participate in a gambling addiction treatment program and follow its rules and regulations, according to court documents. She also is required to participate in a mental health treatment program and cognitive behavioral program.

The credit union’s profile reports filed with the NCUA showed Shimanek had been the CEO since at least 2012.

In June 2018, Ark City Teachers posted a loss of $1,370,877, NCUA financial performance reports showed. The federal agency approved the credit union’s merger into the $48.1 million Ark Valley Credit Union in Arkansas City, Kan., during the third quarter of 2018.

Shimanek is scheduled to begin her prison sentence on March 15, according to court records.