A former CFO pleaded guilty to an $18 million fraud scheme at the failed Clarkston Brandon Community Credit Union in Clarkston, Mich.
Michael A. LaJoice, 37, initially entered a not guilty plea in U.S. District Court in Detroit Thursday, but later changed his pleas to guilty, according to federal court documents.
During the plea hearing, LaJoice agreed to remain in custody at the Oakland County Jail where he has been since Jan. 6. On that date, he shocked police investigators after he walked into the Oakland County Sheriff’s Office and admitted that he embezzled millions of dollars over several years from the credit union.
On Dec. 12, a trial has been scheduled in an Oakland County court where LaJoice will face 14 counts of embezzlement.
Federal prosecutors detailed in court documents how LaJoice embezzled more than $16.1 million from Clarkston Brandon Community CU by conducting ACH withdrawals from the credit union to his personal accounts held a PayPal, Capital One Bank, TD Ameritrade and American Express.
He set up ACH withdrawals to debit funds from the credit union’s investment general ledger, which he was responsible for balancing. When the electronic transfer debited the credit union’s general ledger investment account, the funds were deposited in his personal accounts.
After the funds were deposited, LaJoice cleared the credit union’s ledger to delete the corresponding transaction and wire transferred the funds from his personal accounts to other accounts, including his business account at Comerica Bank.
The checks, typically deposited via ATMs, were made payable to the respective institutions and in the names of fake individuals, according to court documents.
LaJoice also siphoned more than $2.5 million by issuing cashier’s check from various credit union accounts without authorization. These checks were deposited in LaJoice bank accounts at Capital One Bank, Comerica Bank, Scottrade and at the $2.1 billion Genisys Credit Union in Auburn Hills, Mich.
What’s more, LaJoice concealed his fraud by creating fictitious investments in certificates of deposits and bonds at the $2.7 billion Total Bank in Miami, Fla.
These fictitious investments were provided to auditors and state examiners to show that the credit union’s books were balanced and to avoid detection of the missing funds.
Federal prosecutors said LaJoice used the stolen funds to build and furnish his new, custom-built home worth more than a million dollars.
LaJoice’s 5,800-square-foot home was originally reported to be valued at $1.3 million. Michigan police investigators, however, estimated the home to be valued at $4.5 million because it had been built to include a nine-seat movie theater, three sets of washers and dryers, and other top-of-the-line appliances.
In addition to the custom-built home, he used the embezzled funds to buy new vehicles, commercial properties and to support a local dance studio, according to court records.
LaJoice explained his lavish lifestyle by telling his wife that he was getting big returns from stock investments, and he told credit union colleagues that he got a big inheritance.
LaJoice founded LaJoice Properties LLC in April 2015. That company publicly announced plans in October 2015 to build a retail and residential project on commercial land he purchased with stolen credit union money.
The local media reported LaJoice’s plan was the biggest development project in the history of Fenton, Mich., located about 60 miles northwest of Detroit. He has also been the owner of Chassé Ballroom and Latin Dance Studio in Fenton since June 2007, according to his LinkedIn page.
Federal prosecutors said LaJoice began stealing from the credit union in 2003 when he joined it as account manager. He became the credit union CFO in June 2015.
Finally, on Jan. 4 he was questioned by state examiners about discrepancies uncovered in an ongoing audit. LaJoice allegedly said the discrepancies were a mistake, left the credit union’s office and never returned.
About a week after LaJoice was arrested and charged with embezzlement by state prosecutors, Clarkston Brandon Community CU was placed into conservatorship by the Michigan Department of Insurance and Financial Services. In March, the credit union was merged into the $3.2 billion Michigan State University Federal Credit Union of East Lansing in March.
