Former Southern Pine Credit Union Controller Must Pay $1.2 Million in Restitution to the Credit Union – Fraud Friday

October 11, 2024

Delaney Sexton
Contributing Editor

Former Southern Pine Credit Union Controller Must Pay $1.2 Million in Restitution to the Credit Union – Fraud Friday

“The criminal behavior in these cases represent the most egregious betrayal of trust by two of this institution’s leaders, resulting in years of ill-gotten gains for the defendants, all while violating the faith that SPCU’s members placed in them,” says Kyle A. Myles, Special Agent in Charge of the Federal Deposit Insurance Corporation, Office of Inspector General, Atlanta Region.

In September, Teresa Paulo was sentenced to five years in prison – 24 months for aggravated identity theft and 36 months for bank fraud – but Paulo was not alone in her sentencing. Another individual from her institution received a six-year prison sentence earlier this year for committing fraud. Leah Lehman, the former SPCU President, was sentenced to 24 months for aggravated identity theft and 48 months for bank fraud.

Both women were authorized to originate loans, and their positions gave them access to all SPCU employees’ usernames and passwords for all the credit union’s computers and software.

Starting in 2011, Teresa Paulo opened a share secured loan in an account using the name and social security number of another individual without their knowledge. For the next nine years, she took out additional advances and loans from the account. She transferred the loan proceeds into a joint account to be used for personal spending. During her time at the bank, she created another account using someone else’s identity, and she paid off the loan and rebooked it several times with additional advances.

To conceal the scheme, she created false credit transactions using the usernames and passwords of other SPCU employees. This simulated the payoff of the loans in order to advance the loans’ due dates and prevent the loans from appearing on quarterly call reports. Paulo also created debit entries to put the loans back on the accounts. Eventually, the loan balances ballooned to more than $1.23 million. While committing the fraud, she made $7,736.16 in legitimate payments to the loan balances.

Paulo’s fraud was a replica of Leah Lehman’s scheme which had been going on for much longer. Starting in 2003, Lehman created a share secured loan in an account using an individual’s name and social security number. From 2012 to 2020, she paid off the loan and rebooked it multiple times with additional advances. The money was used to pay for a boat, a hunting club share, personal expenses, and gifts for family members. She eventually paid off the loan in full, but she started the fraud scheme again with a new account.

Just as Paulo would later do, Lehman used SPCU employees’ usernames and passwords to create false credit transactions to advance the due dates on the loans. Later, Lehman created debit entries to put the loans back on the accounts. She also made additional fraudulent loan advances simultaneously with the other entries to advance the loan due dates. By the end of the fraud, the total loan balance was over $4.5 million.

“These sentencings are the direct result of a diligent investigation by hardworking FBI employees and our partners at the Federal Deposit Insurance Corporation, Office of Inspector General,” says Rich Bilson, Senior Supervisory Resident Agent of FBI Atlanta’s Valdosta office. “The defendants’ greed driven scheme stole hundreds of thousands of dollars and damaged the financial security of innocent victims. They will now be held accountable for their blatant misuse of the power of their positions.”

Source:
U.S. Attorney’s Office Press Release

Read our previous reporting:
Fraud Friday – President and Controller of Southern Pine Credit Union Plead Guilty to Fraud – 11/10/23