LANSING, Mich.—In response to two Michigan CU fraud cases—one at Clarkston Brandon Community CU and another at Shoreline FCU—the Michigan Credit Union League & Affiliates has developed a white paper detailing ways CUs can reduce fraud risk.
A task force appointed by the league drafted the white paper titled “Mitigating the Risk of Internal Fraud,” which can be found in CUToday.info’s The vault.
It was drafted by a task force comprised of credit union leaders from across Michigan and in consultation with DIFS, NCUA, CUNA Mutual Group, two CPA firms and legal counsel.
The white paper includes in-depth research and data on the following topics:
- Suggestions for scalable internal controls to designed to help prevent fraud.
- Specific examples of fraud, including descriptions of how insiders were able engineer their thefts and keep them secret, how the activity was detected, and how it could have been prevented.
- Survey results gauging what controls Michigan credit unions currently have in place.
- Sample risk assessments, audit tracking sheets and anti-fraud verification certifications and a toll-free, anonymous tip line for Michigan credit unions.
“Our task force leveraged the collective experience of a wide variety of professionals involved in fraud prevention as we drafted the white paper—we heard from lawyers, CPA's, regulators and CUNA Mutual,” Task Force Chair and MCUL EVP/COO Ken Ross said. "Our goal was to create a resource that was valuable to a wide variety of audiences, from the CEO to board members to compliance professionals.”
The paper said fraud cases at Shoreline in Northern Shores and Clarkston Brandon Community Credit Union in Pontiac led to the paper’s development. Kathryn Sue Simmerman, a former manager at Shoreline, has pleaded guilty to embezzling nearly $2 million over a 13-year period. Michael LaJoice, the former CFO at Clarkston Brandon, is charged with embezzling $20 million over 12 years.