Louisville KY. Feb 23 2008 For almost four years, Patricia Helen Sherman hid stacks of $100 bills in her pockets and carried them out of the Obelisk Federal Credit Union in New Albany, Ind., where she worked as head teller, federal investigators say.
Sherman, 50, of Louisville, eventually took $7 million -- an average of $152,454 a month -- and gambled most of it away at Ohio River casinos, authorities said when they charged her with embezzlement in U.S. District Court last fall.
Sherman, 50, of Louisville, eventually took $7 million -- an average of $152,454 a month -- and gambled most of it away at Ohio River casinos, authorities said when they charged her with embezzlement in U.S. District Court last fall.
Sherman could get her hands on the money because she had oversight of cash in the vault as well as the credit union's ledger that tracks the cash, according to documents filed with the case.
Sherman now claims the money is entirely gone, authorities say. She faces up to 30 years in prison and is expected to enter a guilty plea in the next three weeks.
The staggering scale of the theft -- estimated by the FBI to be one of the largest embezzlements against a U.S. financial institution by an employee -- stunned co-workers and employees at General Mills, the former Pillsbury plant on Grant Line Road where the credit union is based.
Customers of Sherman recalled her as a sincere person who was good with people.
"The first thing I thought was: How do you take that kind of money and nobody notices?" said Barbara Anderson, executive director of the Haven House homeless shelter who first met Sherman when she worked at a Jeffersonville credit union.
"We used to tease and cut up and laugh all time," Anderson said. "Nicest person you'd ever want to know."
Roger Miller, union president at General Mills, said Sherman was like all the employees he encountered at Obelisk -- "friendly and real professional." Obelisk forced to merge
While credit union officials said no federally insured customer accounts were affected, the fallout meant a swift end to Obelisk. Federal regulators placed the insolvent credit union in conservatorship and it was merged last summer into the larger Columbus, Ind.-based Centra Credit Union.
A bond company paid $2 million toward covering the loss, but roughly $5 million had to be written off as an expense, according to National Credit Union Administration reports.
Centra, meantime, has a civil lawsuit pending against Sherman in Floyd County Superior Court in an attempt to collect anything that might still be left.
Federal investigators declined to comment on why Obelisk's internal controls took so long to discover that money was missing. The embezzlement occurred over 46 months starting around June 2003, officials say.
But a press release from the U.S. attorney's office in Indianapolis in November announcing the case against Sherman and her intention to plead guilty noted her role at the business.
As head teller, Sherman ordered and replenished cash for the vault. She also was in charge of reconciling and overseeing vault activity while keeping the credit union's general ledger, and ensuring the ledger agreed with a physical count of cash on hand, according to records filed with the case.
To conceal the missing funds, Sherman altered the ledger account to reflect the amount of cash on hand and made sure she was present to help the credit union's supervisory committee count the cash and provide an "adjusted" report to cloak her activities, the records said.
Finally, on a Friday afternoon last March after closing, a co-worker thought the amount of cash shown on the vault ledger account was more than it should be and asked Sherman about it. She wound up confessing to Ralph Lily, the former chief operating officer at Obelisk, the records said.
The credit union immediately reported the situation to the National Credit Union Administration, the federal regulator for such institutions, and contacted New Albany police, which brought in the FBI after learning the amount involved.
Auditors from outside the credit union were brought in early the next week, according to the court records, and determined that Sherman's estimate of taking about $6 million was actually $7,012,900.
Susan Dowd, the assistant U.S. attorney who is prosecuting the case, and FBI agents who investigated it, declined to comment.
Before going to work at Obelisk, Sherman underwent a personal bankruptcy and had other financial problems, according to records at local courts in Floyd County, Ind., and Jefferson County, Ky.
It's not clear, however, whether her supervisor or the Obelisk board of directors knew of those problems or whether knowing about them would have prevented her from being hired.
Jim Mills, market president for Centra in southern Indiana, said he doesn't know what practices Obelisk used to check job applicants or to safeguard against fraud. But Mills said he stands by Centra's procedures.
"If I was there, I can tell you (a $7 million theft) wouldn't have happened," he said.
Banks and credit unions routinely use criminal background checks and pre-employment credit checks to identify people who might be considered a risk to steal money, said David A. Reed, founder of CU Doctor LLC, a Fairfax, Va., law practice that specializes in credit union security, collections and operations.
While a bankruptcy might not prevent someone from getting hired, having unpaid judgments "would be a really big flag," Reed said. Sherman's debts
In 1998, a finance company won a civil judgment against Sherman in Jefferson County, Ky., for an unpaid $2,296 debt, resulting in an order sent to her then-employer, the Census Credit Union in Jeffersonville, to have her wages garnisheed.
American General Financial took Sherman to Floyd Superior Court claiming she defaulted on an August 1999 loan of $550 -- at 36 percent interest. It was satisfied in February 2002, records show.
Sherman's 1998 U.S. Bankruptcy Court filing shows $34,017 in credit card bills and loans. Among the debts she listed were $9,000 borrowed from her father to buy a car. She also listed a $4,500 loan from him.
Her father, Ted Sparks Sr., died in May 2000.
Mills, who did not know Sherman and declined to comment about the embezzlement charge she faces said he feels the same bafflement about her that he hears from customers coming in to the credit union.
"Everything I've heard about Patti Sherman is that she was a really nice lady," he said.
Sherman now claims the money is entirely gone, authorities say. She faces up to 30 years in prison and is expected to enter a guilty plea in the next three weeks.
The staggering scale of the theft -- estimated by the FBI to be one of the largest embezzlements against a U.S. financial institution by an employee -- stunned co-workers and employees at General Mills, the former Pillsbury plant on Grant Line Road where the credit union is based.
Customers of Sherman recalled her as a sincere person who was good with people.
"The first thing I thought was: How do you take that kind of money and nobody notices?" said Barbara Anderson, executive director of the Haven House homeless shelter who first met Sherman when she worked at a Jeffersonville credit union.
"We used to tease and cut up and laugh all time," Anderson said. "Nicest person you'd ever want to know."
Roger Miller, union president at General Mills, said Sherman was like all the employees he encountered at Obelisk -- "friendly and real professional." Obelisk forced to merge
While credit union officials said no federally insured customer accounts were affected, the fallout meant a swift end to Obelisk. Federal regulators placed the insolvent credit union in conservatorship and it was merged last summer into the larger Columbus, Ind.-based Centra Credit Union.
A bond company paid $2 million toward covering the loss, but roughly $5 million had to be written off as an expense, according to National Credit Union Administration reports.
Centra, meantime, has a civil lawsuit pending against Sherman in Floyd County Superior Court in an attempt to collect anything that might still be left.
Federal investigators declined to comment on why Obelisk's internal controls took so long to discover that money was missing. The embezzlement occurred over 46 months starting around June 2003, officials say.
But a press release from the U.S. attorney's office in Indianapolis in November announcing the case against Sherman and her intention to plead guilty noted her role at the business.
As head teller, Sherman ordered and replenished cash for the vault. She also was in charge of reconciling and overseeing vault activity while keeping the credit union's general ledger, and ensuring the ledger agreed with a physical count of cash on hand, according to records filed with the case.
To conceal the missing funds, Sherman altered the ledger account to reflect the amount of cash on hand and made sure she was present to help the credit union's supervisory committee count the cash and provide an "adjusted" report to cloak her activities, the records said.
Finally, on a Friday afternoon last March after closing, a co-worker thought the amount of cash shown on the vault ledger account was more than it should be and asked Sherman about it. She wound up confessing to Ralph Lily, the former chief operating officer at Obelisk, the records said.
The credit union immediately reported the situation to the National Credit Union Administration, the federal regulator for such institutions, and contacted New Albany police, which brought in the FBI after learning the amount involved.
Auditors from outside the credit union were brought in early the next week, according to the court records, and determined that Sherman's estimate of taking about $6 million was actually $7,012,900.
Susan Dowd, the assistant U.S. attorney who is prosecuting the case, and FBI agents who investigated it, declined to comment.
Before going to work at Obelisk, Sherman underwent a personal bankruptcy and had other financial problems, according to records at local courts in Floyd County, Ind., and Jefferson County, Ky.
It's not clear, however, whether her supervisor or the Obelisk board of directors knew of those problems or whether knowing about them would have prevented her from being hired.
Jim Mills, market president for Centra in southern Indiana, said he doesn't know what practices Obelisk used to check job applicants or to safeguard against fraud. But Mills said he stands by Centra's procedures.
"If I was there, I can tell you (a $7 million theft) wouldn't have happened," he said.
Banks and credit unions routinely use criminal background checks and pre-employment credit checks to identify people who might be considered a risk to steal money, said David A. Reed, founder of CU Doctor LLC, a Fairfax, Va., law practice that specializes in credit union security, collections and operations.
While a bankruptcy might not prevent someone from getting hired, having unpaid judgments "would be a really big flag," Reed said. Sherman's debts
In 1998, a finance company won a civil judgment against Sherman in Jefferson County, Ky., for an unpaid $2,296 debt, resulting in an order sent to her then-employer, the Census Credit Union in Jeffersonville, to have her wages garnisheed.
American General Financial took Sherman to Floyd Superior Court claiming she defaulted on an August 1999 loan of $550 -- at 36 percent interest. It was satisfied in February 2002, records show.
Sherman's 1998 U.S. Bankruptcy Court filing shows $34,017 in credit card bills and loans. Among the debts she listed were $9,000 borrowed from her father to buy a car. She also listed a $4,500 loan from him.
Her father, Ted Sparks Sr., died in May 2000.
Mills, who did not know Sherman and declined to comment about the embezzlement charge she faces said he feels the same bafflement about her that he hears from customers coming in to the credit union.
"Everything I've heard about Patti Sherman is that she was a really nice lady," he said.
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VISIT US AT MYSPACE.COM/privateofficernews
COME BE PART OF THIS EXCITING COMMUNITY!
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