The Teller Who Bankrupted a Credit Union

Credit Union Journal
December 18, 2007 | COMMENTS

Authorities have little hope of recovering any of the $7 million a teller stole from Obelisk Federal Credit Union, forcing NCUA to liquidate the 70-year-old credit union earlier this year, and sell off its good parts.

That's because the teller, Patricia Sherman, 49, a resident of Louisville, Kentucky, apparently gambled the funds away at river boat casinos in southern Indiana, authorities reported.

Sherman confessed last month to stealing the money by walking out of work on a weekly basis with stacks of $100 bills, sometimes containing as much as $100,000. "This is one of the largest thefts of its kind," said a source with the U.S. Attorney's office in Indianapolis, noting how the purloined funds bankrupted the $52-million credit union.

As head teller Sherman was responsible for ordering and accounting for all cash replenishments for the credit union. She was also responsible for reconciling and overseeing vault activity, and for reconciling the vault cash account to the physical count of cash on hand.

The teller was able to hide her thefts by making journal entries into the vault cash account whenever there was an audit or cash count by the credit union supervisory committee, and then making adjusted entries after those counts were completed, according to charges in the case.

In addition, when she was going on vacation or had jury duty, she would make an entry to the cash account before she left so that it would properly reflect the amount of cash in the vault. When she returned, she would reverse the entry.

She was also able to hide the scheme because she helped the supervisory committee conduct an unannounced audit of the cash vault twice a year, enabling her to manipulate the ledger.

The embezzlement was discovered in March when another employee noticed that the balance in the cash vault looked significantly higher than it should be. After being confronted, Sherman confessed to the scheme.

She faces up to 30 years in prison when at her sentencing, which has not been scheduled yet.

The theft eliminated all of the credit union's net worth, forcing NCUA to take the credit union under conservatorship in March, then merge it into Centra Credit Union, a nearby $700-million credit union.

This article appeared at www.cujournal.com and is reprinted with permission.