ST. PAUL, Minn. — The former CEO a credit union has pleaded guilty to stealing at least $2.5 million following a five-year fraud investigation by the FBI.
Margurite Mary Cofell, former CEO of the St. Francis Campus Credit Union in Little Falls, Minn., appeared in U.S. District Court in St. Paul on a criminal charge of felony credit union fraud, where she entered her guilty plea. Her next court hearing has not yet been set, according to the Duluth News Tribune.
As CUToday.info reported earlier, the FBI launched its investigation in January 2014, about three weeks before the Minnesota Department of Commerce conserved the then $51-million St. Francis Campus Credit Union. NCUA was appointed the liquidating agent.
While the credit union was shuttered in 2014, the fraud was not made public until two years later in January of 2016 when NCUA filed suit against CUMIS Insurance Society after the company opted not to pay the federal agency’s fidelity bond claim. The agency filed a proof of loss with CUMIS for $3,086,755.
CUMIS said it rescinded the fidelity bond agreement because Cofell lied on its application to extend the employee dishonesty coverage from $2.25 million to $2.75 million in April 2013, the News Tribune noted.
Forensic Audit
A forensic audit by NCUA alleged Cofell’s embezzlement had led to a loss of more than $10 million, which in turn led to the collapse of the CU.
According to court documents, after being confronted by NCUA examiners, Cofell admitted in writing in 2014 she began embezzling in the 1990s. But the forensic audit was unable to identify complete transactional documentation from 2011 to 2014 because Cofell allegedly destroyed the data processing system’s backup information prior to 2011, the publication stated.
The audit did determine Cofell had allegedly stolen at least $3 million, and in 2017, NCUA filed a $2.8 million civil lawsuit against Cofell, who denied allegations. That lawsuit is pending.
Federal prosecutors filed one felony count of credit union fraud and alleged the scheme began in June 2006 and continued through January 2014, when Cofell was terminated.
How Scheme Worked
Court documents state Cofell fraudulently diverted credit union funds into her accounts and the accounts of family members and close friends by creating fictitious electronic deposits, and then making withdrawals. Cofell also allegedly created bogus loans, as well.
According to the plea agreement, Cofell agrees to waive indictment by a grand jury on the fraud charge, the News Tribune reported. The felony count carries a maximum of 30 years in prison, five years of supervised release, and up to $1 million fine or twice the gross gain or loss generated by the offense.
The members and assets of St. Francis Campus Credit Union were merged into Central Minnesota Credit Union.