SPRINGFIELD, Mass. -- (July 10) The former executive director of the D. Edward Wells Federal Credit Union, along with her husband and son, were charged with embezzlement, tax fraud and other crimes relating to the failure of the credit union in the spring of 2003.
United States Attorney Michael J. Sullivan; Michael J. Thomas, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation in New York; Douglas A. Bricker, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation in New England; Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England; and Peter Emerzian, Special Agent in Agent of the Department of Housing and Urban Development in Boston, announced today that CAROL ARANJO, age 65, of Springfield, Massachusetts, her husband, ALPHONSO SMITH, age 67, of Springfield, Massachusetts, and their son, DOUGLAS SMITH, age 46, of Chicopee, Massachusetts, were charged in an eighty-six count Indictment with conspiracy to embezzle money from the Wells Federal Credit Union and to prevent detection of the fraud. The three were also charged with filing false tax returns by failing to report the embezzled funds as income.
According to the Indictment, ARANJO ran the Wells Federal Credit Union, located at 864 State Street in Springfield, until February, 2003, when the National Credit Union Administration ("NCUA") placed it under conservatorship in order to protect the interests of credit union members and the National Credit Union Insurance Fund ("NCUIF"). The NCUIF insures deposits at federal credit unions. The NCUA ultimately placed the Wells Federal Credit Union into liquidation after discovering that it was insolvent.
The Indictment aso charges ARANJO with making false entries in the credit union's records and obstructing the examinations of the NCUA, which regulates federal credit unions. It also alleges that she engaged in a bank fraud scheme involving a $2 million line of credit issued to an organization called Friends of the Credit Union and used advances of the line of credit to refinance other loans, cover up negative account balances and generate false interest income.
The Indictment also charges ALPHONSO SMITH with defrauding three commercial lending institutions by submitting fraudulent loan applications and false verifications of employment in order to obtain mortgage loans.
ALPHONSO and DOUGLAS SMITH are also charged with submitting a false bid for the construction of seven houses on Tyler, Quincy and Cambridge Streets in Springfield. In addition, DOUGLAS SMITH was charged with making a false claim to the Department of Housing and Urban Development's HOME Program for $10,000.
All three were arrested on the charges on Friday, July 7, 2006, and were arraigned before U.S. Magistrate Judge Kenneth P. Neiman. They were each released pending trial on a $100,000 unsecured bond. If convicted on these charges, each defendant faces up to 30 years' imprisonment, to be followed by 5 years of supervised release, and a $250,00 fine.
The case was investigated by the U.S. Internal Revenue Service, Criminal Investigation for New York and New England, the Federal Bureau of Investigation and the Department of Housing and Urban Development's Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Karen Goodwin in Sullivan's Springfield Office.
The details contained in the Indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Source: U.S. Attorney