Two Sentenced to Federal Prison for Defrauding El Paso Federal Credit Union Leading to its Failure
In El Paso, a former El Paso Federal Credit Union (EPFCU) manager and an assistant manager have been sentenced to federal prison for their roles in a scheme to steal millions of dollars from the financial institution which lead to the credit union’s failure announced United States Attorney Richard L. Durbin, Jr., and Federal Bureau of Investigation Special Agent in Charge Douglas Lindquist, El Paso Division.
This morning, United States District Court Judge Philip Martinez sentenced 53-year-old former EPFCU assistant manager Hilda Simental Mendoza of El Paso to 121 months in federal prison followed by five years of supervised release. In addition to the prison term, Judge Martinez ordered that Mendoza perform 100 hours of community service.
On September 21, 2016, Judge Martinez sentenced 59–year-old former EPFCU manager Maria Guadalupe Hernandez to 188 months in federal prison followed by five years of supervised release. In addition to the prison term, Judge Martinez ordered Hernandez to pay a $10,000 fine.
At sentencing, Judge Martinez ordered both defendants to pay $18,376,542 in restitution to the National Credit Union Administration (NCUA) representing the loss generated by their scheme.
On May 24, 2016, the defendants pleaded guilty to an eleven-count indictment which included charges of bank fraud, wire fraud and conspiracies to commit both bank and wire fraud.
According to court records, beginning in August 2007, the defendants sold more than 100 EPFCU share certificates to other credit unions. The defendants did not record the sale of these share certificates in the credit union records, but kept a log of them is a secret ledger. Monies generated by the unrecorded sales of EPFCU share certificates were placed into accounts created and controlled by the defendants using relatives accounts, dormant customer accounts, and even active accounts belonging to deceased individuals. The defendants used the generated funds from newly sold EPFCU share certificates to pay out dividends to investors and principal payments to prior purchasers of EPFCU share certificates. Hernandez used the monies generated by the EPFCU share certificate sales for personal benefit to included travel, purchase real estate and vacations.
The defendants created fraudulent EPFCU records to conceal their scheme from auditors, but were unsuccessful. In September 2011, an examiner from the NCUA discovered accounting irregularities in the amount of EPFCU’s undivided earnings in that month’s Call Reports. In June 2012, examiners performed a detailed audit of EPFCU records and discovered additional accounting irregularities. During an audit follow-up, examiners discovered a hidden binder inside the credit union which contained an accounting of all of the unrecorded EPFCU share certificates sold by the defendants. On September 28, 2012, the NCUA delivered the liquidation order to EPFCU’s Board of Directors and thereafter, liquidated EPFCU.
This investigation was conducted by the FBI with assistance from the NCUA. Assistant United States Attorney Chris Skillern prosecuted this case on behalf of the Government.