The former head of a North Haven credit union has pleaded guilty to bank fraud.
East Haven resident James Farrell, 55, waived his right to be indicted and pleaded guilty in federal court in Bridgeport Wednesday to one count of bank fraud.
Farrell was the chief executive officer of the New Haven County Credit Union from 1992 to June 2015. He was then retained by NHCCU’s board of directors to provide assistance to the new CEO of NHCCU until March 2016. Farrell also provided financial and bookkeeping services to The Rib House, a restaurant located in East Haven, from 2010 to 2016, prosecutors said. The Rib House maintained a business account at NHCCU, and Farrell was primarily responsible for depositing cash sales and paying invoices for the restaurant. In pleading guilty, Farrell admitted that he defrauded NHCCU by transferring of funds from NHCCU’s general ledger account to the account held by The Rib House.
As part of the scheme, prosecutors said, when Farrell knew that The Rib House had a financial obligation it could not meet, he transferred funds from the NHCCU 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. Farrell fraudulently transferred $602,908 from the NHCCU general ledger account primarily to The Rib House account and, to a lesser extent, for his personal benefit, between July 2011 and March 2016. Over time, Farrell replenished $370,278.18 to the NHCCU general ledger account, leaving a shortfall of $232,630.78.
Sentencing is scheduled for Nov. 20. Farrell faces a maximum prison term of 30 years and has already paid full restitution to NHCCU. Farrell was released on bond pending sentencing.
NHCCU was also subject to a consent order from the state Department of Banking in August, however a DOB spokesperson told The Commercial Record that the order was unrelated to Farrell’s actions. Instead, it referred to violations that were “largely administrative” in areas that were not “consumer-facing,” and which would usually have been worked out during its normal examination process if a new CEO hadn’t recently joined the credit union.
The consent order requires the NHCCU board take a more active role overseeing the lender, hire a consultant to conduct an assessment of the board and NHCCU management, retrain all staff on the Bank Secrecy Act, update the credit union’s BSA plan, and come up with new a new loan policy and information security program by early November.
Updated: 7:09 p.m., Aug. 29, 2019: This post has been updated to include comments from the Connecticut Department of Banking.
