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Former Bank Manager Indicted for Originating Fictitious Loans

mortgagefraudblog.com | June 22, 2014

Linda Sue Newcomb, 62, Madison Heights, Virginia, former manager of the Lynrocten Federal Credit Union, Lynchburg, Virginia, was indicted by a federal grand jury and charged with embezzlement, bank fraud and aggravated identity theft charges for allegedly originating fictitious loans, then selling those loans to credit union partners.

In January 2014, the former head teller of LFCU, Teresa Wieringo Humphries, 58, Madison Heights, Virginia, waived her right to be indicted and pled guilty to an Information charging her with one count of embezzlement by an employee of a federal credit union.

The indictment alleges that in or about 2000, Newcomb, who was hired by the LFCU in the mid-1980s, and the former head teller at the bank, Teresa Humphries, carried out a scheme to defraud, embezzle and steal funds from LFCU’s deposits and accounts.

It was part of the scheme that Newcomb and Humphries originated loans in the names of LFCU members without those members’ knowledge or consent. Newcomb and Humphries drafted fictitious loan documentation and approved the fictitious loans in order to make false loans look legitimate. In addition, the indictment alleges that from on or about October 22, 2009 and continuing to on or about October 6, 2011, Newcomb entered into Loan Participation Agreements with another federal credit union.

In furtherance of the Loan Participation scheme, Newcomb, on behalf of LFCU, sold various fraudulent loans. In order to persuade the partner credit union to enter into the Loan Participation Agreement, Newcomb made various false statements to make the loans involved appear to be authentic and legitimate. The value of the fraudulent loans involved in the loan participation scheme was in excess of $1 million.

The indictment also alleges that Newcomb and Humphries transferred funds and wrote checks on certain LFCU members’ accounts without their knowledge or consent. At least three different accounts are alleged to have been used by the two defendants. Certain proceeds from the schemes were deposited to the LFCU bank accounts of Newcomb, Humphries, and their family members or were used by the two defendants to make “payments” to other fraudulent loans.

In order to conceal the unauthorized use of LFCU member accounts, and in furtherance of the scheme, Newcomb and Humphries altered and withheld LFCU member statements.

The investigation of the case was conducted by the United States Secret Service, the Federal Bureau of Investigation, the Lynchburg City Police Department and the Amherst County Sheriff’s Office.  Assistant United States Attorneys Anthony Giorno and Daniel Bubar are prosecuting the case for the United States.

 

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