Former CEO of an Alabama CU Charged With Embezzlement

The former president/CEO of New Pilgrim Federal Credit Union is expected to be arraigned in an Alabama federal courtroom on Sept. 22 to face a charge that he embezzled more than $260,000, according to court documents.

Phillip Brian Topping, 42, of Birmingham, signed a plea agreement in August with federal prosecutors for the U.S. Northern District of Alabama in Birmingham. The former CEO agreed to plead guilty to one felony count of theft or embezzlement by a credit union employee.

In August 2021, the $1.2 million NPFCU in Birmingham discovered that Topping moved the due date on his personal loan. After the board fired him, the credit union found its ATM was short by $4,120 and the teller drawer was short $600. The credit union also discovered that its share deletion account posted a credit balance of $191,680, which was unusual, according to court documents.

Unable to resolve this credit issue, NPFCU launched an audit, which revealed Topping allegedly stole $268,000 since 2016, federal prosecutors wrote in court filings.

Topping began working as the credit union’s CEO in 2013, NCUA profile reports showed.

The audit uncovered that Topping pilfered $150,400 in cash from the credit union’s ATM located in the lobby of New Pilgrim Baptist Church, which houses NPFCU’s office. The credit union, which currently has a membership of nearly 570, was chartered in 1965 to serve members of the church, their families and associational affiliate groups of the church such as its daycare service.

To conceal his crime, Topping debited members’ accounts – usually accounts associated with church-sponsored groups or clubs – and then would credit the ATM’s general ledger with these monies to account for missing funds. Topping, who was the only employee who serviced and replenished the ATM’s cash, also created phony expenses of various items to different general ledger accounts to cover shortfalls, but there was no record that the items expensed were ever purchased, according to court filings.

Topping also stole $112,800 in cash from the credit union’s teller cash drawer. He covered up his theft by debiting the funds from a share deletion account and then credited the funds to the teller cash drawer, according to prosecutors.

CUNA Mutual Group paid a $250,000 employee misconduct loss claim to NPFCU last April, which was the maximum amount of the credit union’s insurance coverage.

“During the period of Topping’s embezzlement (from 2016 to August 2021), NPFCU was in a distressed status with respect to its capitalization,” prosecutors wrote in court documents. “Topping’s conduct substantially jeopardized the safety and soundness of NPFCU since NPFCU would have been insolvent had CUNA Mutual Group not paid the $250,000 policy limit on the loss claim.”

Adding the $5,000 audit cost, Topping’s crime caused a total loss of $273,000, according to court documents.

Although the credit union posted a loss of more than $23,000 at the end of 2016, it recorded meager income gains of $8,101 in 2017, $5,094 in 2018 and $925 in 2019, according to NCUA financial performance reports.

At the end of 2020 and 2021, however, NPFCU showed losses of $45,916 and $23,950, respectively. In the first quarter of this year, the credit union posted a $6,282 loss and $5,965 gain in the second quarter, according to NCUA financial performance reports.

NPFCU’s second quarter financial performance reports showed its net worth was 4.95%, up from 3.28% in the first quarter and 3.89% in December 2021.

In exchange for his guilty plea, prosecutors agreed to recommend that Topping “be given a sentence consistent with the low end of the United States Sentencing Guidelines range as determined by the Court,” federal prosecutors wrote in the plea agreement.

Topping also will be required to pay restitution.

NPFCU did not respond to CU Times’ phone and email requests for comment.