Date: 11-18-2019

Case Style:

Case Number: 3:19-cr-00095-JHM

Judge: Joseph H. McKinley

Court: United States District Court for the Western District of Kentucky (Jefferson County)

Plaintiff's Attorney: Stephanie M. Zimdahl

Defendant's Attorney:

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Description: Louisville, KY - The United States of America charged Josephine M. Crowe with:

18:1344 FINANCIAL INSTITUTION FRAUD
(1)

18:1028A(a)(1) AGGRAVATED IDENTITY THEFT
(2)

Josephine M. Crowe was sentenced to 132 months’ imprisonment followed by 3 years supervised release. He also ordered restitution in the amount of $3,049,025 for fraud and aggravated identity theft, announced United States Attorney Russell Coleman.

“The outcome in this case was the result of some outstanding investigation by the FBI and one of our finest career federal prosecutors,” said U.S. Attorney Russell Coleman.

Crowe, 46, of Louisville, Kentucky, was charged in a criminal Information with one count of financial institution fraud and one count of aggravated identity theft as part of a scheme to defraud the Louisville Metro Police Officer’s Credit Union of over $3 million during a four year period.

According to a Sentencing Memo, beginning no later than January 2013, and continuing to on or about November 2017, Crowe, as the Vice President of the Metro Police Officer’s Credit Union stole over $3 million. She used access to the Credit Union’s funds and information granted to her by virtue of her position as Vice President to devise and execute a scheme to steal cash from the Credit Union’s vault and teller drawers, to transfer Credit Union funds into accounts belonging to herself and certain of her family members, and to make payments on certain unwitting Credit Union members’ loans with Credit Union funds that did not belong to the members for whose benefit they were credited. Crowe also created and recorded fictitious, unauthorized loans at the Credit Union and used the proceeds of these loans to issue an Official Check, which she then directed individuals to cash at local pawn shops or financial institutions. The defendant would then place these cash proceeds in the Credit Union’s vault and teller drawers to cover up the cash missing due to her previous thefts. In order to create and record these fictitious loans, the defendant knowingly misused the means of identification of many members of the Credit Union.

In order to compensate for the depletion of cash the defendant engaged in various methods to obtain cash for day-to-day operations including: instructing Credit Union employees, members, and others to withdraw cash from an ATM using either a debit card she provided or the individual’s personal debit card and return the cash to her for Credit Union operating needs; (b) obtaining credit card cash advances from members’ credit cards; (c) wire transferring funds to external accounts at various other financial institutions and then obtaining cash from the transfer; and (d) recording fictitious, unauthorized loans and using the proceeds of these loans to issue an Official Check, which she directed individuals to cash at local pawn shops or financial institutions and to return the cash proceeds to her so that she could then place it in the Credit Union’s vault and teller drawers.

Crowe took numerous steps to conceal her scheme to defraud from detection by the Credit Union and others, according to the Sentencing Memo. During the course of the scheme the defendant engaged in elaborate check kiting wherein she issued unauthorized Official Checks from certain members’ accounts at the Credit Union and deposited those Official Checks into other members’ accounts, all without the members’ knowledge, and continued issuing new checks to cover insufficient funds notices on the original checks when she overdrew the members’ accounts. As the funds that were purportedly on deposit for these Official Checks were largely non-existent, over $675,000 of checks were returned for insufficient funds when the defendant’s scheme was uncovered and her kiting of checks brought to a halt. The defendant also manipulated the books and records of the Credit Union to conceal her thefts from the Credit Union and make it appear that the fraudulent loan agreements, related documents, and subsequently generated loans were legitimate contracts and loans. Among other things, the defendant deleted information from and added false information to files, manipulated the Credit Union’s general ledger in various ways, and manipulated members’ accounts and account statements to conceal unauthorized changes she had made to the accounts. When the defendant’s scheme was discovered by the Credit Union and brought to an end in November 2017, the defendant took further steps to attempt to conceal her fraudulent activity even after she had been suspended and removed from her position, including remotely accessing the Credit Union’s data processing system, making changes to the general ledger, and deleting significant files and information from her computer at the Credit Union.

Crowe’s scheme to defraud had dramatic consequences. In December 2017, the Credit Union was placed into conservatorship by the National Credit Union Association (“NCUA”) and considerable efforts were undertaken to untangle the defendant’s scheme, address the harms it caused, and correct the operational weaknesses the defendant had created at the Credit Union. Ultimately, as a result of the scheme, the Credit Union suffered catastrophic losses, was rendered insolvent with no prospect for restoring viable operations, and had to be liquidated by the NCUA. Due to fraudulent activity within their accounts as a result of defendant Crowe’s criminal conduct and other record keeping errors, 247 member accounts had to be written off by the NCUA for a loss of almost $3.9 million.

Outcome: BOP- 108 months; 3 years S/R (concur); Total Restitution: $3,049,025.00; $200 SPA ($100 per convicted count)

11/08/2019 23 JUDGMENT and COMMITMENT ORDER by Senior Judge Joseph H. McKinley, Jr. on 11/8/2019 as to Josephine Crowe (1): Count(s) 1, BOP- 108 months; 3 years S/R (concur); Total Restitution: $3,049,025.00; $200 SPA ($100 per convicted count); Count(s) 2, BOP- 24 months (consec); 3 years S/R (concur); Total Restitution: $3,049,025.00; $200 SPA ($100 per convicted count). cc: counsel, Finance, USA (JM) (Entered: 11/08/2019)
11/08/2019 24 Statement of Reason(Sealed) re: 23 Judgment and Commitment,. cc:USA/Applicable Counsel (DJT) (Entered: 11/08/2019)

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