Former Michigan CU CEO Charged With Embezzlement
Michigan authorities said Stanley Hayes, former CEO of the liquidated Valley State Credit Union, allegedly embezzled more than $710,000 from the Saginaw cooperative.
Michigan Attorney General Bill Schuette filed 13 felony charges against the 45-year-old Hayes on Friday.
Hayes allegedly used embezzled funds to pay defaulted loans, including loans held by dead persons to conceal the credit union’s financial troubles from auditors, according to Schuette.
In addition to stealing from the small credit union with only $19 million in assets, the former CEO was paid $142,864 in 2015, according to the credit union’s 990 financial document filed with the IRS. Valley State’s 990 document for 2016 was not publicly available.
Hayes was president/CEO of Valley State Credit Union from 2005 until his was fired in 2016. During this time, he allegedly used embezzled funds to pay for his insurance, property taxes, travel and other personal expenses.
Most of the embezzlement was allegedly committed via a computer, but nearly $200,000 in cash was taken from Hayes’ teller drawer over several years.
The alleged embezzlement was uncovered after an investigation by the Michigan Department of Insurance and Financial Services found financial irregularities, including overly high risk in its loan portfolio, lack of internal controls, inaccurate reporting and failure of management and the board of directors to address these problems, Schuette said in a prepared statement.
Following the state regulator’s investigation in 2016, Hayes was fired and the credit union was placed into conservatorship.
Last April, the state regulator decided to liquidate the credit union after determining it was insolvent. The NCUA was named the liquidating agent.
The $543 million ELGA Credit Union in Burton, Mich. assumed Valley State CUs assets, shares, and loans and continued to serve its 2,715 members.
Hayes was charged with conducting a continuing criminal enterprise, two felony counts of embezzlement of more than $20,000, seven counts of embezzlement of more than $1,000, and three counts of using a computer to commit a crime.
Hayes was arraigned Friday in Michigan’s 70th District Court in Saginaw. His bond was set at $25,000.