CU Insider Linked to Fraud
Former Lockheed FCU Exec Barred by NCUA The National Credit Union Administration has issued orders to prohibit Milton Callan, a former vice president at Lockheed Federal Credit Union, located in Burbank, Calif., $3 billion in assets, from participating in future affairs at federally insured U.S. credit unions.Callan was convicted last year of embezzlement and sentenced to 41 months in prison, in addition to paying $831,763.91 for restitution.
Callan admitted to opening corporate credit accounts at several stores under Lockheed's name. According to the Federal Bureau of Investigation, with those falsely opened Lockheed accounts, Callan made personal purchases, including those associated with electronic goods, gift cards, food and furniture.
"By virtue of his position, Callan was able to direct mailroom employees to forward the invoices directly to him," the FBI says. "Callan then prepared purchase orders which falsely stated that he had used the corporate credit accounts to purchase items on behalf of the credit union."
Because the purchase orders were seeking payment under Callan's pre-authorized spending limit, the credit union approved the purchase orders without supporting documentation or approval from Callan's supervisor.
Callan pleaded guilty in September, 2010.
Four other individuals, along with Callan, were cited in the NCUA's prohibition order.
Insider Threats: Serious Concern
The case of Callan highlights a wider problem of insider fraud. On Sept. 7, the U.S. Attorney for the District of Maryland issued a statement about a six-year sentence handed down to Latesha Brown, a former credit union employee who orchestrated a widespread loan fraud scheme that spanned more than two years. [See Prison Sentence for Insider Crimes].Brown pleaded guilty to bank fraud and identity theft, schemes she carried out while employed with multiple credit unions.
Also on Sept. 7, Gary Foster, a former vice president in Citigroup Inc.'s treasury finance department, pleaded guilty to the role he played in a bank fraud scheme that allowed him to embezzle more than $22 million from Citi and its customers [See Citi Case Exposes Insider Risks].
