Former credit union CEO pleads guilty to bank fraud
James Farrell, the former CEO of New Haven County Credit Union, pleaded guilty to one count of bank fraud for improperly transferring funds from the credit union to a local business.
The $20 million-asset credit union also entered into a consent order with the Connecticut Department of Banking for allegedly unsafe and unsound practices.
Farrell, 55, led New Haven County Credit Union from 1992 to 2015 and then assisted the new CEO until March 2016. Additionally, from 2010 to 2016, Farrell provided bookkeeping services to a restaurant in East Haven called the Rib House, which had a business account at North Haven, Conn.-based institution.
Farrell oversaw the depositing of cash and paying bills for the restaurant. He defrauded the credit union by moving money from the institution’s general ledger to the Rib House’s account, according to a press release from the Justice Department on Wednesday. He did this so the Rib House could pay for operating expenses, such as food, liquor and taxes, according to the press release.
Farrell transferred roughly $603,000 from the credit union’s general ledger to the Rib House account and for his own benefit from July 2011 to March 2016. He did repay roughly $370,300 of those funds, leaving a shortfall of about $232,600, according to the Justice Department.
Farrell, who has paid full restitution to the credit union, will be sentenced in November and faces a maximum prison sentence of 30 years. He was previously banned from working in the industry by the National Credit Union Administration.
The consent order that New Haven County Credit Union entered into has a number of requirements. For instance, the institution’s board to increase its oversight. That means directors must attend at least 75% of board meetings each year or be removed from their position. The board must also create a supervisory committee with at least three members that will meet quarterly, according to the consent order, which is dated Aug. 5.
The consent order also requires New Haven County CU to hire a consultant to analysis the credit union’s board, management and employees to ensure proper supervision. New Haven County CU will have to complete reconciliation of all general ledger accounts on a monthly basis and prepare accurate financial statements each month, among other requirements.