Text message leads to uncovering fraud of nearly $900K

A text message to a bank branch manager and head teller ultimately led to the uncovering of a fraud of nearly $900,000 from a Tennessee bank, according to a report released Friday by the federal insurer of banks deposits.

In its report of August enforcements made public Friday, the Federal Deposit Insurance Corp. (FDIC) said it is seeking a prohibition against Lauren Melissa McDivitt, formerly of INSOUTH Bank in Brownsville, Tenn., from being employed (or other engagement) by a federally insured financial institution, after McDivitt pleaded guilty to embezzlement and misapplication of $888,470 from the bank.

The fraud, according to FDIC, occurred between 2006 and 2017, and involved approximately 334 transactions involving at least 14 different customers’ accounts.

But the fraud only became clear after a text message was sent – and a reply received – from the bank to McDivitt while she was on vacation, the agency said.

In its report Friday of August enforcements made public, the (FDIC) said Lauren Melissa McDivitt had pleaded guilty to embezzlement and misapplication of $888,470. The former bank employee also in the plea agreement agreed she would not seek future employment or “conduct of the affairs of any institution or agency” with a federally insured institution without prior approval of the FDIC. The agency is now seeking a prohibition order against her.

In filings outlining the fraud, the FDIC said that in the waning days of last year (Dec. 29), while McDivitt was on vacation, two customers came into the bank’s Atoka, Tenn., branch to obtain a year-end print-out of their account. The customers immediately noticed that their account balance was not correct.

The bank investigated and found several unauthorized cash withdrawals from the account which McDivitt processed, the FDIC said, without the customers’ knowledge. Further investigation by the bank discovered additional withdrawals and transfers from other accounts, all of which had been processed by McDivitt, FDIC said.

That same day, FDIC said, the bank attempted to contact McDivitt by telephone, but could not reach her. Then, in a text message, the bank asked her to return to the bank to “sort everything out.”

McDivitt replied, the FDIC said, by texting: “Unfortunately there isn’t anything to sort out. It is what it seems and it is not the only one. I have lost count over the years … I can’t apologize enough.” She then resigned, leaving her keys and company cell phone in the bank’s after-hours deposit box.

A more comprehensive audit by the bank, the next day, uncovered the full extent of the fraud: the $888,470 withdrawn or transferred in the hundreds of transactions over the 10-year period.

The FDIC said McDivitt deposited the fraudulently obtained funds into accounts owned by her mother, or into fictitious accounts that McDivitt had created in her mother’s name, without her mother’s knowledge or consent (but which McDivitt controlled). She then withdrew the deposited funds, in cash or by check card, converting the embezzled funds for her own personal use.

The FDIC also reported issuing four other removal/prohibition orders for:

  • Robert James Bortolotti, formerly of First Choice Bank in Lawrenceville, N.J., who the FDIC said while employed as the chief lending officer of the bank, knowingly originated loans and extended the maturity dates on existing loans to borrowers despite their inability to repay the loans, and caused inaccurate past due reports on the loans to be provided to the bank’s board, thereby preventing the board from discovering that the borrowers were not making their payments to the bank on a timely basis. Bortolotti was also assessed a civil money penalty (CMP) of $15,000, the agency said.
  • Julius Clint Martin II, formerly of First Guaranty Bank in Martin, Ky., who the agency said while chief operating officer, chief financial officer, and board secretary at the bank, caused the bank to pay for credit card expenses associated with non-bank business (causing the bank a loss). Martin was also assessed a CMP of $35,000, the agency said.
  • Lacy Danielle Mack, formerly of Bank of Eastman of Eastman, Ga., for allegedly while employed as a head teller at the bank wrongfully removed funds from the vault of the bank and then used the proceeds for her own purposes (causing a loss to the bank), the FDIC said.
  • Michael J. Bedwell, formerly of Merchants Bank of Jackson, Ala., who the FDIC said fraudulently obtained 15 loans in the names of 11 different customers of the bank, knowing that he had no authority to obtain the loans in the names of the unknowing customers, and then used the proceeds of the loans for his own purposes.

In other August enforcement actions made public, the FDIC also reported:

  • Termination of seven consent and/or restitution orders for: Laona State Bank of Laona, Wis., which had been in place since February 2015; First Electronic Bank of Salt Lake City, Utah, in place since December 2015; and Comenity Capital Bank, also of Salt Lake City (consent and restitution), in place since September 2015; Ameris Bank of Moultrie, Ga., in place since December 2016 (and which was actually terminated in December 2017, but only revealed now); American Enterprise Bank, of Buffalo Grove, Ill., in place since September 2016; Millennium Bank of Des Plaines, Ill., in place since March 2016; and Comenity Bank of Wilmington, Del. (no date given for when the order was placed).
  • Approval of “section 19” applications for five individuals, restoring their ability to work at (or be engaged with) a federally insured financial institution after being prohibited for prior offenses. They are: Cheryl Merritt (aka Cheryl Montaque), 22 years lapsed since last offense; Paula Lisa Wimbush, 24 years elapsed since last offenses; Michael Wayne Berry, 33 years elapsed since last offense; Mikhael J. Colon, 10 years lapsed since last offense; Sandra I. Rodriguez, four years lapsed since last offense.

FDIC Makes Public August Enforcement Actions