A convicted credit union business relationship manager argued he should have received a lighter sentence because he used some of the millions in fraudulent loans to keep a struggling company afloat and pocketed just under $200,000 for himself.
A three-judge panel of the Seventh Circuit U.S. Court of Appeals in Chicago last month unanimously rejected this appeal and affirmed the 10-year sentence of Theodore J. Longust handed down by a U.S. District Court judge in November 2016.
Longust pleaded guilty last year to running a six-year multimillion-dollar fraudulent loan scheme at the $1.1 billion Scott Credit Union in Edwardsville, Ill.
He fraudulently issued loans that caused $13.7 million in losses to Scott CU. About $1.7 million of these losses arose from unauthorized loan advances that Longust made to a local company.
Before U.S. District Court Judge Staci M. Yandle in Benton, Ill., Longust’s lawyer argued for a seven-year sentence based on his relatively limited enrichment, the detrimental effect that his conviction will have on his future work prospects and his desire to keep the struggling window and door business operating by funneling it fraudulent loans.
Without any evidence, Longust claimed that the business knew the $1.7 million in loan advances were fraudulent. He argued in court documents that this made his conduct “less egregious.”
Judge Yandle brushed aside Longust’s arguments as irrelevant.
In response to Longust’s point that he kept less than $200,000 for his personal use, Judge Yandle stated that his offense was still very serious because of the damage he had caused to the credit union’s finances and reputation.
Although the federal judge noted his lack of criminal history, she emphasized Longust’s betrayal of public trust, the significant losses of the credit union, including a compelling victim impact statement by Scott CU President/CEO Frank Padak, which was not included in the public record.
In addition to the $13.7 million in losses stemming from Longust’s crimes, Scott CU lost an additional $12 million from defaulted loans. Although Longust lawfully issued those loans, they were not supported by sufficient collateral, according to court documents.
