In the following press release the US DOJ in Springfield, MA announced that the former executive director of the D. Edward Wells Federal Credit Union, along with her husband and son, were charged with embezzlement, tax fraud and other crimes relating to the failure of the credit union in the spring of 2003.
United States Attorney Michael J. Sullivan; Michael J. Thomas, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation in New York; Douglas A. Bricker, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation in New England; Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England; and Peter Emerzian, Special Agent in Agent of the Department of Housing and Urban Development in Boston, announced today that CAROL ARANJO, age 65, of Springfield, Massachusetts, her husband, ALPHONSO SMITH, age 67, of Springfield, Massachusetts, and their son, DOUGLAS SMITH, age 46, of Chicopee, Massachusetts, were charged in an eighty-six count Indictment with conspiracy to embezzle money from the Wells Federal Credit Union and to prevent detection of the fraud. The three were also charged with filing false tax returns by failing to report the embezzled funds as income.

According to the Indictment, ARANJO ran the Wells Federal Credit Union, located at 864 State Street in Springfield, until February, 2003, when the National Credit Union Administration (“NCUA”) placed it under conservatorship in order to protect the interests of credit union members and the National Credit Union Insurance Fund (“NCUIF”). The NCUIF insures deposits at federal credit unions. The NCUA ultimately placed the Wells Federal Credit Union into liquidation after discovering that it was insolvent.

The Indictment also charges ARANJO with making false entries in the credit union’s records and obstructing the examinations of the NCUA, which regulates federal credit unions. It also alleges that she engaged in a bank fraud scheme involving a $2 million line of credit issued to an organization called Friends of the Credit Union and used advances of the line of credit to refinance other loans, cover up negative account balances and generate false interest income.

The Indictment also charges ALPHONSO SMITH with defrauding three commercial lending institutions by submitting fraudulent loan applications and false verifications of employment in order to obtain mortgage loans.

ALPHONSO and DOUGLAS SMITH are also charged with submitting a false bid for the construction of seven houses on Tyler, Quincy and Cambridge Streets in Springfield. In addition, DOUGLAS SMITH was charged with making a false claim to the Department of Housing and Urban Development’s HOME Program for $10,000.

All three were arrested on the charges on Friday, July 7, 2006, and were arraigned before U.S. Magistrate Judge Kenneth P. Neiman. They were each released pending trial on a $100,000 unsecured bond. If convicted on these charges, each defendant faces up to 30 years’ imprisonment, to be followed by 5 years of supervised release, and a $250,00 fine.

The case was investigated by the U.S. Internal Revenue Service, Criminal Investigation for New York and New England, the Federal Bureau of Investigation and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Karen Goodwin in Sullivan’s Springfield Office.

The details contained in the Indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Delaware News Journal - February 19, 2005

Sean O’Sullivan reported on Delaware Online that a man who embezzled an estimated $1.4 million from Wilmington Trust offered no apologies and no explanation Friday as he was sentenced to five years and three months in jail. John Flowers, 58, dressed in a suit and with his wife and children in the courtroom, did not react to the sentence from U.S. District Judge Kent Jordan.

Flowers’ attorney, Edmund D. Lyons Jr., said he could offer the court no reason for his client’s behavior. There was no issue with gambling or addiction, he said. All the money apparently went to maintaining “the lifestyle of the Flowers family.” Assistant U.S. Attorney Ferris Wharton said that explanation seemed to be “a nice way of saying greed.” Flowers wanted more money and a better life but didn’t want to earn it, he said.

According to prosecutors, Flowers used his position as a vice president and mortgage loan originator to steal at least $9,000 nearly every month between 1991 and September 2003. Flowers did this by transferring money from an internal Wilmington Trust account into his own account while submitting false papers to cover his trail. No customer accounts were affected, Wharton said, and the scheme involved about 150 transactions over a dozen years. The thefts were discovered by the bank, which turned the case over to prosecutors.

While Flowers did sign over his pension account worth $242,000 to make restitution to the bank, he did not stop living his “lifestyle” after he was caught.

Although his bank accounts were frozen, Flowers sold a beach house to make $162,000, which he then used to pay off credit cards, car loans and student loans. He also continued to pay for private school for one of his children and spent $18,000 to $20,000 on a wedding for his daughter at Winterthur in August. Flowers told the judge he paid off loans because he “didn’t wish to place any additional punishment” on his family. He offered no explanation for the wedding.

Jordan told Flowers he was perplexed by his actions. “It just beats the life out of me what got into you,” he said, agreeing with Wharton that Flowers’ motive appeared to be greed. There were no addictions, no medical issues, not even childhood issues, he said. “There is nothing even to pity there.”

Jordan sentenced Flowers to 63 months and ordered him to make full restitution to the bank, but allowed him until March 10 to report to jail.

“I’ll note I’m demonstrating some trust,” Jordan said.

Afterward, Lyons said he could not argue with the sentence and said it was unlikely Flowers would ever be able to repay Wilmington Trust in full. He said Flowers’ spending habits before his sentencing likely added to his time in jail. “Apparently that was a trade-off he was willing to make,” he said.

USDOJ Press Release - October 25, 2004

Lexington, Ky . — Gregory F. Van Tatenhove, United States Attorney for the Eastern District of Kentucky, and Charles D. Elder, Special Agent in Charge, Federal Bureau of Investigation, Louisville, Kentucky, jointly announce that BRADLEY S. DETTY , age 35, of 3504 Forest Cove Lane, Lexington, Kentucky, pleaded guilty today to an Information charging violations of Title 18, United States Code, Section 656, embezzlement. DETTY entered his guilty plea in United States District Court in Lexington before Judge Joseph M. Hood.

The Information provides that DETTY , who was a loan officer at the Community Trust Bank in Winchester, Kentucky, embezzled and misapplied money, funds, and credits of the bank by making unauthorized draws and withdrawals on various bank customer lines.

DETTY is currently scheduled to appear for sentencing before the United States District Court in Lexington on January 24, 2005.