A former business relationship manager was sentenced Tuesday to 10 years for a six-year multimillion-dollar fraudulent loan scheme at the $1 billion Scott Credit Union in Edwardsville, Ill.
Theodore J. Longust, 51, formerly of Columbia, Ill., was ordered to pay $14.1 million in restitution by U.S. District Court Judge Staci M. Yandle in Benton.
Evidence presented during Longust’s sentencing hearing showed that the credit union’s total loss, including criminal and civil losses, amounted to $25.8 million, according to federal prosecutors.
Longust pleaded guilty to financial institution fraud, misapplication of funds, money laundering and filing a false report in May.
He began his fraudulent scheme in November 2008, three years after he was hired.
Longust submitted false reports to top executives that misstated loan balances, omitted loan amounts, and underreported loans of more than $12 million.
The former business relationship manager was required to meet quarterly with Scott Credit Union President/CEO Frank A. Padak and Chief Lending Officer Craig Burkhard to review members who had loans of more than $500,000, according to federal indictment documents.
In addition, Longust was required to secure approval from the business loan committee for loans exceeding $100,000 and the approval from the board of directors for loans of more than $1 million, according to court records.
Longust began his fraud by creating an unauthorized loan in the name of the South County Baptist Church. Court documents did not say whether Longust was a member of that church. Though the amount of the church loan was not specified in court documents, Longust used more than $76,000 from that loan to pay off his personal credit card bills.
Over the next few years, Longust’s embezzlement schemes became bigger and bolder.
In one instance, he made loan advances from a business loan account in two transactions totaling $301,000. Those transactions brought the outstanding balance of the loan to $1.4 million.
On the second business loan account, he made loan advances totaling $212,000, which caused the outstanding balance on that account to grow to $1.6 million.
On the third business account, Longust made a loan advance of more than $129,000, which caused the outstanding balance on that loan account to reach $1.5 million.
According to court documents, Longust also took out an $875,000 loan in the name of Atlas Transportation, LLC by falsifying a credit proposal to obtain the approval of Scott CU’s chief loan officer.
Longust falsely indicated the loan would be secured by real estate worth $2 million, and he forged the signature of a bank vice president from another financial institution on a document to show Atlas Transportation maintained a cash balance account of more than $1.5 million.
And up to the day he resigned from the credit union on Dec. 8, 2014, he made a fraudulent payment of $126,000 on the South County Baptist Church loan and then made a second fraudulent payment on the church loan for $54,000. He made these phony loan payments from another business loan.
Scott Credit Union did not respond to a CU Times request for comment.
