A former employee of a US not-for-profit financial cooperative that offers banking services has pleaded guilty in court to nine indictments accusing him of fraud.

Theodore Longust, a former employee of Scott Credit Union, used unauthorised letters of credit (L/Cs) in a series of frauds.

Indictments

Longust, who worked in the credit union's commercial loan department, was accused of issuing L/Cs "without the required documentation and security."

He was also indicted on one count of financial institution fraud, four counts of misapplication of funds, three counts of money laundering and one count of making a false record to Scott Credit Union with the intent to deceive.

Unauthorised activities

The court heard that the former business relationship manager executed a scheme to defraud through the embezzlement of credit union funds, the creation of fraudulent loans and the payment of loans through the misapplication of funds from other loans.

He also fraudulently increased credit limits on loans that did not have the requisite board approval and issued business loans without the required documentation or security

Longust faces a prison sentence of up to 240 years and a fine of up to US$4.5 million.

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