Former Georgia CU CEO Sentenced to Six Years for Embezzlement & ID Theft

A federal judge in Georgia sentenced Leah Lehman, 63, last week to six years in prison for embezzling millions from the $33.1 million Southern Pine Credit Union in Valdosta while she was its president/CEO for three decades.

U.S. District Judge W. Louis Sands also ordered Lehman to pay Southern Pine Credit Union (SPCU) restitution in the amount of $4,491,253 and to two years of supervised release following her 72-month prison sentence, according to court filings. Her sentencing memo to Judge Sands that was posted on the federal docket was not open to the public or the media.

Lehman of Valdosta pleaded guilty to one felony count of bank fraud and one felony count of aggravated identity theft last October.

She began her fraud in June 2003, when she created a share secured loan in a SPCU account using the name and Social Security number of a member without that individual’s knowledge, according to court documents.

From February 2012 to May 31, 2020, Lehman paid off the loan and rebooked it multiple times with additional advances. She would take the proceeds and put them in a joint share draft account she had with the individual, using the proceeds to pay for a boat, a hunting club share, personal expenses and gifts to family members. This loan was repaid in full.

However, Lehman created another share secured loan in another individual’s name without their knowledge and would also pay off the loan and rebook it multiple times for personal spending. To conceal these activities, the former CEO created false credit transactions using the names and passwords of SPCU employees, court documents showed.

These transactions would advance the due date on the loans, which prevented these loans from appearing on quarterly Call Reports to the NCUA, which allowed Lehman to defer or not make payment on these loans. Following these transactions, she created debit entries to put the loans back on the accounts, which would often include interest accrued on the outstanding loans.

Lehman made additional fraudulent loan advances simultaneously with those entries to advance the loan dates. She reflected the loans as being paid off at the end of the quarter to prevent possible detection of artificial growth in the SPCU loan portfolio.

In total, the drafts needed to pay off the loan balances at each quarter grew to $4,112,870, excluding payments and interest, as of May 31, 2020, according to court documents.

Teresa Paulo, a co-defendant in this case who was SPCU’s controller, pleaded guilty to one felony count of bank fraud and one felony count of aggravated identity theft last November. Her sentencing hearing is scheduled for July.

Paulo, who embezzled more than $1.2 million, committed a similar fraud scheme to Lehman’s.

In October 2011, Paulo created a share secured loan in a SPCU account using the name and Social Security number of a member without that individual’s knowledge.

From November 2011 until May 29, 2020, Paulo took out additional advances on the loan as well as additional loans from the account. She would transfer the loan proceeds into a joint account for personal spending purposes.

The former credit union employee also created another share secured account using the personal identity of another individual and would pay off the loan and rebook it multiple times with additional advances, using the proceeds for her own personal expenses or electronically transferring money into her family’s accounts, according to court documents.

Paulo concealed her schemes in the same way Lehman did, prosecutors said.