Stanley Hayes, former president/CEO of the liquidated Valley State Credit Union, is scheduled to be sentenced in April after he admitted to embezzling $710,000 from the Saginaw, Mich. cooperative.
Michigan Attorney General Bill Schuette said Hayes pleaded guilty in a state court last week to 13 felonies, which included embezzlement, computer crime and racketeering.
Hayes, 45, was CEO of VSCU from 2005 until he was fired in 2016.
In order to make the financial position of VSCU appear better than it was to auditors, Hayes used embezzled funds to pay loans, including loans held by dead persons.
He also used the money he stole to pay for his insurance, property taxes, travel and other personal expenses.
Most of the money was siphoned from the credit union via computer transactions, but nearly $200,000 in cash was taken from Hayes’ teller drawer over several years, according to state prosecutors.
In addition to stealing from the small credit union with only $19.8 million in assets, the former CEO was paid $142,864 in 2015, according to the credit union’s 990 financial documents filed with the IRS.
The fraud was uncovered after an investigation by the Michigan Department of Insurance and Financial Services found financial irregularities, including overly high risks in its loan portfolio, lack of internal controls, inaccurate reporting and the failures of management and the board of directors to address these problems.
In April 2017, the state regulator liquidated the credit union after determining it was insolvent.
The $568 million ELGA Credit Union in Burton, Mich. assumed Valley State CUs assets, shares, and loans and continued to serve its 2,715 members.
