A former employee of Farmers & Merchants Bank’s Marietta branch has been ordered to pay restitution to the bank and a civil penalty after admitting to embezzling hundreds of thousands of dollars over a 12-year period.
The Federal Reserve announced last week that it had issued an Order of Prohibition, Restitution, and Civil Monetary Penalty against Carol Allen, of Marietta. The Board of Governors of the Federal Reserve System ordered Allen to repay FMBank $20,264.27 for the losses she caused to the bank as well as a $10,067 civil penalty. It has also barred Allen from ever working or being involved in any operations of an FDIC-affiliated bank or lending agency. Further, the agency said Allen’s reported filing of Chapter 13 bankruptcy does not affect the Board’s jurisdiction to collect on the penalties or the requirement that she repay the bank.
“We turned the information over to the proper authorities,” FMBank said in a brief statement issued Tuesday. “It is under thorough investigation and all customers have been made whole.”
According to information from the Federal Reserve announcement, Allen served as a teller and vault custodian at the Marietta Branch and her embezzlement came to light in 2018 after the Marietta branch could not honor a customer’s request for $9,500 in loan proceeds to be paid in large denominations of cash because the vault contained an insufficient number of large bills due to Respondent’s misconduct.
According to the Fed’s complaint against Allen, referred to as “Respondent,” she “violated the law and engaged in unsafe or unsound banking practices, that she received financial gain or benefit and FMB suffered loss or other damage, and that the misconduct involved personal dishonesty or a willful and continuing disregard for the Bank’s safety and soundness. In her role as a teller and vault custodian for the Bank until her termination in April 2018, Respondent engaged in self-dealing by embezzling money from FMB’s Marietta branch vault and from customer certificates of deposit (“CDs”). Respondent then deposited embezzled cash into her accounts, as well as those owned by her husband and daughter.
“Specifically, Respondent admitted to FMB’s management that over the course of years she took $100 and $20 bills from the center of straps of cash stored in the vault and replaced them with $1 bills,” the announcement stated. “She also removed cash from Federal Reserve bags and resealed them in order to make it appear as if they had not been opened. An auditor’s review comparing the Bank’s general ledger to the cash in the vault revealed a $247,976 shortfall. In addition, FMB determined that from February 2, 2006, to April 4, 2018, Respondent withdrew $193,345 (and subsequently repaid $94,300) from twenty-five customer CDs without authorization.
“To conceal her unauthorized withdrawals, Respondent sometimes altered customer CD statements and withheld account notices from customers. FMB returned to customers the missing net amount of $99,045, as well as $5,264.27 in lost interest. As a result of Respondent’s actions, FMB lost at least $352,285.09, of which only $332,020.82 was recouped from FMB’s insurance carrier and proceeds from the Employee Profit Sharing Plan that Respondent surrendered as partial restitution.”