New Haven County Credit Union CEO cooked the CU books to keep struggling restaurant afloat.
EAST HAVEN, CT — Former CEO James Farrell, 55, was sentenced to serve one day in prison for defrauding the credit union he led, prosecutors announced late Tuesday. Farrell, of East Haven, was also given two years of supervised release and 50 hours of community service for defrauding the New Haven County Credit Union.
Prosecutors said that according to court documents and statements made in court, Farrell was CEO from 1992 to June 2015. He was then retained by the credit union’s Board of Directors to provide assistance to the new CEO until March 2016. From 2010 until 2016, Farrell also provided financial and bookkeeping services to The Rib House, a restaurant located in East Haven. The Rib House maintained a business account at the credit union, and Farrell was primarily responsible for depositing cash sales and paying invoices for the restaurant. In pleading guilty, Farrell admitted that he defrauded the New Haven-based credit union by transferring funds from its general ledger account to the account held by The Rib House, prosecutors said.
As part of the scheme, when Farrell knew that The Rib House had a financial obligation it could not meet, he transferred funds from the credit union general ledger account into The Rib House account. This allowed The Rib House to pay its operating costs, including paying for taxes, food, liquor and other operating expenses. Prosecutors said between July 2011 and March 2016, Farrell fraudulently transferred $602,908.96 from the New Haven County Credit Union general ledger account primarily to The Rib House account and, to a lesser extent, for his personal benefit. Over time, Farrell replenished $370,278.18 to the credit union general ledger account, leaving a shortfall of $232,630.78, prosecutors said.
Farrell, who prosecutors said has paid full restitution, pleaded guilty in August to one count of bank fraud.
Source: The Patch
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