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Former credit union manager convicted of fraud, tax evasion
By OBSERVER STAFF REPORTS
Melinda Diane Andrews, 53, of Spring, the former manager of the International Longshoremen’s Association No. 24 Credit Union, has pleaded guilty to financial institution fraud against the credit union and tax evasion as alleged in a two-count criminal indictment, acting United States Attorney Tim Johnson announced today.
At a Nov. 20 hearing before United States District Judge Lynn N. Hughes, Andrews pleaded guilty to creating a large volume of fraudulent loans in the names of members of the credit union for the benefit of herself and her family members. The membership of the credit union was comprised primarily of employees and family members belonging to the International Longshoremen’s Association Union Local No. 24.
Andrews used the money members deposited in the credit union to fund the loans she created. Andrews concealed the loans she created from the credit union board of directors by developing fictitious loan statements indicating that members had actually taken out the loans. She then took the money from the loans she created and transferred the funds into share accounts and loan accounts of her family members.
As Andrews created a fraudulent loan, she also applied a portion of the funds to pay off an earlier loan. From Jan. 1, 2000, until Feb. 28, 2006, Andrews made approximately 1,600 payments worth $2,214,383 to herself and members of her family. The $2 million plus sum represents the actual amount of money taken from the credit union. The total amount of fraudulent loans was valued at approximately $7 million.
In Feb. 2006, Andrews’ scheme was discovered. The credit union, insured by the National Credit Union Association, failed shortly thereafter.
Additionally, in 2004, Andrews reported taxable income in her federal income tax return of $91,193. However, she received unreported income from the fraudulent loan scheme of $341,361. Andrews was well aware of the unreported income, failed to include it as reported income and did not pay federal income taxes on that income.
Andrews faces up to 30 years in prison and a fine of up to $1 million on the financial institution fraud conviction and up to five years in prison, as well as a fine of up to $250,000 on the tax evasion conviction. The judge scheduled sentencing for Feb. 23, 2009. Andrews will be permitted to remain free on bond pending her sentencing.
The case was investigated by the Houston field office of the Federal Bureau of Investigation and the Houston field office of the Internal Revenue Service Criminal Investigation Division.
Assistant United States Attorney Quincy L. Ollison is prosecuting the case.
At a Nov. 20 hearing before United States District Judge Lynn N. Hughes, Andrews pleaded guilty to creating a large volume of fraudulent loans in the names of members of the credit union for the benefit of herself and her family members. The membership of the credit union was comprised primarily of employees and family members belonging to the International Longshoremen’s Association Union Local No. 24.
Andrews used the money members deposited in the credit union to fund the loans she created. Andrews concealed the loans she created from the credit union board of directors by developing fictitious loan statements indicating that members had actually taken out the loans. She then took the money from the loans she created and transferred the funds into share accounts and loan accounts of her family members.
As Andrews created a fraudulent loan, she also applied a portion of the funds to pay off an earlier loan. From Jan. 1, 2000, until Feb. 28, 2006, Andrews made approximately 1,600 payments worth $2,214,383 to herself and members of her family. The $2 million plus sum represents the actual amount of money taken from the credit union. The total amount of fraudulent loans was valued at approximately $7 million.
In Feb. 2006, Andrews’ scheme was discovered. The credit union, insured by the National Credit Union Association, failed shortly thereafter.
Additionally, in 2004, Andrews reported taxable income in her federal income tax return of $91,193. However, she received unreported income from the fraudulent loan scheme of $341,361. Andrews was well aware of the unreported income, failed to include it as reported income and did not pay federal income taxes on that income.
Andrews faces up to 30 years in prison and a fine of up to $1 million on the financial institution fraud conviction and up to five years in prison, as well as a fine of up to $250,000 on the tax evasion conviction. The judge scheduled sentencing for Feb. 23, 2009. Andrews will be permitted to remain free on bond pending her sentencing.
The case was investigated by the Houston field office of the Federal Bureau of Investigation and the Houston field office of the Internal Revenue Service Criminal Investigation Division.
Assistant United States Attorney Quincy L. Ollison is prosecuting the case.
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