A federal grand jury in Charlotte, N.C., has indicted a former credit union president and CEO with fraud in connection with the U.S. government’s Troubled Asset Relief Program.
According to the indictment, 61-year-old Saundra Torrence (also known as Saundra Scales), a former CEO of First Legacy Community Credit Union in Charlotte, was involved in defrauding the credit union of more than $375,000 in the aftermath of the financial crisis.
In March 2015, the National Credit Union Administration issued a prohibition order against Torrence (then identified as Sandra Scales) which forbade her from participating in the affairs of any federally insured financial institution. The NCUA order said she consented to the prohibition order to “avoid the time and expense of administrative litigation.”
The indictment was jointly announced in Charlotte by Special Inspector General for the Troubled Asset Relief Program Christy Goldsmith Romero, U.S. Attorney R. Andrew Murray of the Western District of North Carolina, and John A. Strong, special agent in charge of the Federal Bureau of Investigation, Charlotte Division.
Officials from the U.S. Attorney’s office, the FBI and Treasury Department declined to comment on why Torrence is only now being charged.
Today, FLCCU is a $32 million-asset institution with about 8,400 members.
Torrence was the credit union’s CEO from 1985 to August 2012. The indictment indicates in the fall of 2010, FLCCU received $1 million through TARP, which allowed the U.S. Treasury Department to make investments in certain financial institutions that provided credit and financial services to underserved populations and communities.
The indictment alleges Torrence abused her position as FLCCU’s CEO by, among other things, making false entries in the credit union’s books and records, misapplying and stealing funds from the credit union and fraudulently using at least one third-party victim’s identity to obtain a loan from FLCCU.
Torrence’s misconduct caused FLCCU to suffer “significant losses” while she personally received more than $110,000 from the wrongdoing, exposed the credit union to the risk of additional losses and caused regulatory action against FLCCU.
In 2012, during the final year of Torrence’s tenure as CEO, FLCCU incurred a net loss of about $5.4 million.
Specifically, the indictment alleges, Torrence approved payments to herself and others without authorization and contrary to the policies of FLCCU. This included compensation for unused sick leave, compensation for the sale of GAP insurance in connection with automobile loans and other uncategorized compensation. The indictment also alleges that “much of this compensation” was not reported as taxable income, which caused under-reporting and underpayment of personal federal and state income and/or employment taxes.
Further, Torrence is alleged to have fraudulently obtained a loan from FLCCU in the name of at least one third-party victim, identified as “K.H.” In connection with that loan, Torrence is said to have falsified documentation, and circumvented FLCCU policies and reporting requirements. The indictment also alleges Torrence improperly transferred funds between and among various third-party accounts at the credit union and her own accounts there.
Moreover, on certain occasions, Torrence is said to have improperly transferred loan proceeds into her own accounts. To conceal her wrongdoing, she allegedly falsified documents and made false entries into the credit union’s records, resulting in inaccurate financial reporting.
On the whole, Torrence has been charged with 13 counts of theft and embezzlement from a financial institution, 19 counts of making or causing false entries and one count of fraudulent participation. Each of the charged counts carries a maximum penalty of 30 years in prison, a $1 million fine or both.