A former CEO of a Pennsylvania credit union was sentenced to two years in prison Friday for embezzling more than $740,000.
U.S. District Court Judge Davie S. Cerione also ordered Karen Schenck, 50, of Bear Lake, Pa., to pay $696,273 in restitution and served five years of supervised release after her imprisonment.
In a letter to Judge Cerione, Schenck wrote she accepted responsibility for her embezzlement and apologized. She also wrote that she was ashamed and remorseful for her actions.
“When the loans first started I was having financial difficulties and took the loans out with full intent of repaying them,” Schenck wrote. “Then it got out of control and spiraled. All loans were on the books and regular monthly payments were being made until August 2015.”
However, prosecutors said while Schenck worked as the CEO of the $4.6 million Corry Area Schools Federal Credit Union, she embezzled funds in a variety of ways and concealed her theft from January 2008 to August 2015.
For example, she made $268,402 in unauthorized or fictitious loans in the names of her family members and concealed out of balance conditions in various general ledger accounts. Schenck also made more than 60 fictitious deposits into her own account or the accounts of family members totaling approximately $317,897.
In addition, Schenck withdrew $51,035 and $44,572 from two accounts without the authorization of members and created $42,118 in loans to herself and fabricated loan underwriting documentation to give the appearance that she would have qualified for the loans.
The former CEO also used the embezzled credit union funds to pay off personal credit card balances and engaged in unauthorized credit card limits that led to more than $17.338 in losses to the credit union, according to federal prosecutors.
An annual NCUA audit uncovered the embezzlement in July 2015.
By December 2015, Corry Area Schools FCU posted a net worth 0.78%, an ROAA of -14.66%, and a net income loss of $672,761, according to NCUA financial performance reports.
At the end of 2016, however, the credit union recorded a net worth of 10.55% with an ROAA of 9.92% and a net income gain of $437,111.
