US District Court - Hawaii
US District Court - Hawaii
US District Court – Hawaii

BY MALIA ZIMMERMAN – HONOLULU – The financial safeguards at the OTS Employees Federal Credit Union were so weak, three of its four employees, including the chief executive officer, were stealing from the federally-insured financial institution.

Ironically, the three employees, Dona Takushi, Jenny Nishida and Nicole Cheung, who were caught embezzling a combined total of $487,000 from the credit union, were not conspiring with one another.

“There is no allegation that these three were conspiring together to steal the money. It was an unusual situation that in 20 years in law enforcement I have never seen where three individuals working shoulder to shoulder were stealing from the same credit union without the others knowing that they were doing that. It was the proverbial den of thieves,” said FBI Special Agent Tom Simon, who investigated the case.

An auditor from the National Credit Union Association, the regulatory board that oversees credit union agencies, noticed discrepancies in the credit union’s financials and alerted the board of directors in December 2012. The board hired a CPA to conduct a financial audit, the results of which were turned over to the FBI. The FBI completed its investigation in 7 months.

On Monday, Aug. 25, in Honolulu’s U.S. District Court, Cheung, a loan officer, was sentenced to 20 days in prison beginning Oct. 4 and was ordered to repay the bank’s insurance company $21,607. The 35-year-old mother of four admitted to embezzling nearly $17,000. She issued loans in her name and in the names of family members and on 54 occasions “paid down” her own credit card on the system without actually paying money. Cheung could have been sentenced to as much as 30 years in prison; federal guidelines recommended a sentence between 4 and 10 months.

FBI Special Agent Tom Simon
FBI Special Agent Tom Simon

Honolulu U.S. District Chief Judge Susan Oki Mollway said she was concerned about the 54 false transactions and Cheung’s loans. However, during sentencing she also took into consideration Cheung’s willingness to cooperate with the FBI investigation and the fact that she was the primary caretaker for four young children.

The other two defendants, Dona Takushi, 54, the CEO and manager who embezzled $120,000, and Jenny Nishida, 41, the bank teller who took over $350,000, will be sentenced in September.

“Nicole Cheung and two of her coworkers scammed TheBus credit union through an elaborate credit card scheme. Ms. Cheung was the least culpable of the three defendants. She only stole $17,000 while her co-workers made off with hundreds of thousands. The judge’s sentence today reflected that reality,” Simon said.

“To her credit, Nicole Cheung was cooperative with the FBI from the moment we approached her. She clearly accepted responsibility for her actions and that was a factor for the judge today in court. An important consequence of this conviction is that she is also going to be banned from the banking industry for life. That is a privilege that she won’t be able to take advantage of in the future,” Simon said.

The thefts were “an expensive lesson” for TheBus credit union about the importance of good internal controls and strong oversight from an engaged board of directors, Simon said.

“Hopefully the new management team at the credit union will take these lessons to heart,” Simon said.

The OTS credit union serviced employees and their families of the city's TheBus
The OTS credit union serviced employees and their families of the city’s TheBus

Newly appointed CEO, Gloria Omandam, testified in court Aug. 25 that the credit union, which provides banking services to employees of TheBus, does in fact have new safeguards in place.

Speaking to the judge about Cheung’s case, she said the theft was “devastating to the small credit union,” which serves employees of the city’s TheBus and their families. “The trust she stole cannot be repaid,” Omandam said, noting the theft “forever changed the credit union.”

The credit union also was forced to protect itself in a Cheung’s follow up bankruptcy case, Omandam said.

Cheung apologized in the courtroom for her crime, but upon leaving the U.S. District Court building, her husband, an employee of TheBus, began flipping off Hawaii News Now videographer Peter Tang.

Nicole Cheung’s husband, Jason Cheung, also grabbed his crotch several times and yelled out a string of profanity as he walked past the media with his wife and family members.

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