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Court document: Former credit union CEO used stolen money for credit cards, charity, gifts for employees

Becky Campbell • May 17, 2018 at 11:53 PM

A former credit union CEO will plead guilty in federal court next month on theft and attempted tax evasion charges related to $1.1 million stolen over a six-year period, according to a court document filed earlier this month.

Sherry Ann Allen, former CEO of Greater Eastern Credit Union, West Mountcastle Drive, Johnson City, signed her plea agreement May 1, and it was entered into her court file.

In it, she admitted that she “knowingly and willfully embezzled, abstracted, purloined or willfully misapplied money, funds or credits of such credit unions,” in violation of federal law. She faces up to 30 years on the theft charge and five on the tax evasion.

Allen will also be forced to repay the money, and has already relinquished some items bought with the funds.

Allen apparently developed a scheme in 2011 to skim money from the credit union and pay her credit card debt. According to the plea agreement statement of facts, Allen altered the amount due on invoices from vendors to reflect a higher amount. When GECU cut the check to pay the vendor, Allen processed the check and paid the vendor the original amount while pocketing the overage.

As part of the scheme, Allen opened six accounts she labeled as credit union member family accounts. At the time the investigation began, those accounts had a total of approximately $98,000 and were frozen. Credit union employee accounts were apparently protected from viewing by other credit union employees, therefore, no one at the institution could look at Allen’s various accounts. The court document indicated that Allen was able to move money into the different accounts without detection.

According to the document, in that first year of the scheme Allen skimmed around $10,000 from her employer. From there, the amounts varied year by year :

• $24,000 in 2012,

• $57,393 in 2013,

• $43,615 in 2014,

• $422,637 in 2015 and 

• $378,409 in 2016

In addition to the physical cash Allen kept for herself and her family, court records showed she spent money. Some of the spending included personal credit cards, an Infiniti and Ford truck for her personal use, a cruise, trips to Tuscon, Arizona and Eastern Europe, a timeshare in Orlando, Florida, a camper, clothes and jewelry.

But Allen was generous with others as well.

The plea agreement stated that Allen donated money to charity, paid for her church youth group trips to Ireland, Nicaragua and Florida, paid for Vacation Bible School items, gave money to people who needed groceries and bought two vehicles for church members.

The generosity didn’t stop at the church. Allen also paid for trips and cruises for fellow employees, bought expensive gifts for credit union employees through secret Santa and gave gifts of cash, a TV, mixer, fire pit, jewelry and outdoor furniture. She also gave expensive gifts to employees at the annual picnic.

Credit union officials reported the discrepancies to the Johnson City Police Department in November 2017 after a heating and air company sent notice that his invoice for a job he did was paid in full for $20,697.56. After receiving that notice of the paid invoice, the credit union accounting officer contacted the company to compare information because the invoice on file was for $30,697.56, which was $10,000 more than the record submitted by the company.

After comparing the company's invoice with what the credit union had, there was a clear difference of $10,000. The check deposited into his bank account for $20,697.56 cleared GECU as well as the check for $30,697.56. Both were written to the heating and air company, but the owner said he never received the $30,697 check.

When JCPD realized the case went deeper than one check, the department turned the case over to the FBI.

According to Allen’s plea agreement, she admitted to the theft and helped investigators find all the invoices she had altered over the previous six years. For her assistance, the U.S. Attorney’s office stated in the plea agreement it would not oppose sentence reductions the judge might grant.

Allen will be sentenced on the convictions in June. 

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