A former teller and vault custodian of Farmers & Merchants Bank (Baldwin, Miss.) was barred from future work in banking and ordered to pay a combined $30,331.27 in restitution and fine over allegedly embezzling hundreds of thousands of dollars in cash from customer accounts and vault cash over a period of 12 years, according to an order and decision released Tuesday by the Federal Reserve Board.
The Fed’s order said that Carol Allen, who was fired from her position in April 2018, “engaged in self-dealing” by embezzling money from the bank’s Marietta branch vault and from customer certificates of deposit (CDs). She then deposited embezzled cash into her accounts and those of her husband and daughter.
Allen – who did not respond to the Fed’s notice or request a hearing – reportedly admitted her wrongdoing 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. She told the bank 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; and removed cash from Federal Reserve bags and resealed them in order to make it appear as if they had not been opened.
The order states that an auditor’s review comparing the bank’s general ledger to the cash in the vault revealed a $247,976 shortfall. The bank also determined that from Feb. 2, 2006, to April 4, 2018, Allen withdrew $193,345 (and subsequently repaid $94,300) from 25 customer CDs without authorization. To conceal the unauthorized withdrawals, Allen sometimes altered customer CD statements and withheld account notices from customers, the order states.
The order also states that the bank returned to customers the missing net amount of $99,045, plus $5,264.27 in lost interest. As a result of Allen’s actions, it says, the bank lost at least $352,285.09, of which only $332,020.82 was recouped from the bank’s insurance carrier and proceeds from the employee profit sharing plan that Allen surrendered as partial restitution.
Allen was ordered to pay $20,264.27 in restitution to the bank (the amount not covered by insurance) plus a civil money penalty of $10,067.