Former CEO Gets 42-Month Prison Sentence for Credit Union Embezzlement

A federal judge ordered a former president/CEO, Phillip Brian Topping, to begin his 42-month prison sentence in July for embezzling $267,000 from the $1.1 million New Pilgrim Federal Credit Union in Birmingham, Ala.

During a sentencing hearing last week, U.S. District Court Judge R. David Proctor in Birmingham also ordered Topping to pay restitution of $255,000 to CUNA Mutual Group (CMG) and $20,440 to NPFCU.

Topping pleaded guilty last October to one felony count of embezzlement by a credit union employee.

Angela Malone, NPFCU’s board chair, wrote in a letter to Judge Proctor that Topping’s crime not only caused a significant financial loss, but it also severely damaged the credit union’s reputation.

“The damaged reputation of the credit union is not quantitative,” Malone wrote. “However, the emotional and financial impact of Mr. Toppings’ crimes will be suffered for years to come. Mr. Topping betrayed the trust of the New Pilgrim Federal Credit Union, its members and the community.”

During Topping’s embezzlement from 2015 to 2021, NPFCU was already in a distressed status with respect to its capitalization. His crime substantially jeopardized the safety and soundness of the credit union since it would have been insolvent had CMG not paid the $255,000 employee dishonesty loss claim.

In a memo to Judge Proctor, Topping’s lawyer wrote the former CEO began stealing money in small amounts in 2015 and hoped to pay it back before it was missed.

“He accepts full responsibility for his conduct, and he is deeply remorseful for the damage he has done to New Pilgrim Federal Credit Union and its financial security,” Topping’s lawyer wrote.

The credit union remains undercapitalized with a net worth of 5.15% at the end of last year, according to NCUA Call Reports. At the end of 2021, NPFCU posted a net worth of 3.89%.

The credit union initially detected the embezzlement in August 2021 when 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.

NPFCU launched an audit, which revealed Topping pilfered $150,400 in cash from the credit union’s ATM located in the lobby of New Pilgrim Baptist Church that houses NPFCU’s office. The credit union, which currently serves 550 members, 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 would then 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 documents.

He also stole $112,800 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.