ADJUDICATED

Former manager convicted of decade-plus, $750,000 embezzlement at Kansas credit union

Muddy River Credit Union Unknown charter · KS

A federal court convicted a 30-year credit union manager of falsifying records to hide a scheme that drained the institution's capital and forced it into a merger.

What happened

Rita Hartman spent roughly 30 years as manager of Muddy River Credit Union, a small credit union in Atchison, Kansas that served employees of a local foundry (the credit union was formerly known as Bradken Federal Credit Union and, before that, Atchison Casting Credit Union). According to the U.S. Attorney’s Office for the District of Kansas, from 2007 until her employment ended in January 2021, Hartman used a position that gave her control over the credit union’s cash handling and its books and records to divert funds for her own benefit and that of relatives.

Prosecutors said the scheme had two parts: taking approximately $346,000 in member cash deposits, and fraudulently crediting approximately $430,000 in deposits and loan payments to her own accounts or relatives’ accounts when no actual payment had been made. NCUA’s administrative order, issued after the criminal case concluded, describes a related concealment method: Hartman is said to have reported inflated cash deposit figures in the credit union’s regulatory reports while keeping a separate manual ledger that reflected the true, lower figures. A federal grand jury indicted Hartman in August 2023, and she pleaded guilty in January 2025 to one count of making false entries in federal credit union records, a federal offense under 18 U.S.C. § 1006.

The U.S. Attorney’s Office said the embezzlement wiped out the credit union’s capital, rendered it insolvent, and ultimately forced a merger into another credit union so that members could continue to be served. No information about individual members or their accounts is repeated here, consistent with this site’s policy on member confidentiality.

Where it stands

This matter is adjudicated: Hartman pleaded guilty and, on October 30, 2025, was sentenced to 63 months in federal prison, to be followed by supervised release, and ordered to pay $778,361.78 in restitution. Because there was a conviction, the underlying conduct described in the criminal case can be stated as fact, attributed to the court proceeding.

Separately, in December 2025 NCUA issued an administrative order permanently prohibiting Hartman from participating in the affairs of any federally insured depository institution. That NCUA order was issued on a consent basis: per the order’s own language, Hartman neither admitted nor denied the administrative findings in agreeing to the prohibition. The prohibition is a separate, additional consequence from the criminal sentence rather than a restatement of it — but the underlying facts it recites track the criminal case, which was independently proven through the guilty plea.

No further proceedings are expected in the criminal matter. This page will be updated if that changes.

Questions this raises for your committee

The facts above are specific to this one credit union. The questions below are general ones, worth asking at any credit union regardless of size — they are not a claim about what this credit union’s own supervisory committee did or did not do, which this page has no way to know.

Timeline

2007-01-01 Prosecutors say the embezzlement scheme began around this time; the credit union's manager had already been in the role for years and remained there until 2021.
2021-01-01 The manager's employment at the credit union ended, which the U.S. Attorney's Office and NCUA identify as the end of the charged conduct.
2023-08-23 A federal grand jury returned an indictment charging the former manager with embezzlement-related conduct. ^[2]
2025-01-30 The former manager pleaded guilty to one count of making false entries in federal credit union records, per the NCUA administrative order's account of the criminal case. ^[3]
2025-10-30 A federal judge sentenced the former manager to 63 months in prison and ordered $778,361.78 in restitution.
2025-12-25 NCUA issued an administrative order prohibiting the former manager from working at any federally insured depository institution. ^[3]

Questions this raises for your committee

At your credit union, does one person control both the cash-handling side of an operation and the general ledger entries that would show a shortfall — and if so, who else independently reconciles the two?

In this case, prosecutors said the manager both handled cash deposits and had the authority to make the ledger entries that concealed the resulting shortfalls. Separating custody of funds from the authority to record and correct entries about those funds is a basic control, but it's easy to erode at a small credit union with few staff.

If your credit union's regulatory reports showed a persistent, unexplained gap from an internal ledger or subsidiary record, would anyone outside the affected department be positioned to notice?

This case involved routine reports to regulators that, according to NCUA, didn't match a separate internal manual ledger the manager also kept. A committee that only reviews summarized regulatory filings, without ever comparing them to underlying source records, may not be positioned to catch a gap like that.

Does your supervisory committee's audit plan include a specific procedure for verifying that reported cash deposits match what members' individual accounts and receipts actually show, rather than relying on management's own reconciliation?

NCUA's 'Other Supervisory Committee Audit' minimum procedures exist precisely because manager-prepared reconciliations can be the thing that needs independent verification, not the thing that stands in for it.

Has your committee ever discussed what would happen to your credit union's capital position if a single long-tenured employee's misconduct went undetected for a decade or more?

The U.S. Attorney's Office said this scheme depleted the credit union's capital to the point of insolvency and led to a merger into another institution. Long tenure and trust are common risk factors precisely because they reduce the rotation and scrutiny that might otherwise surface a problem sooner.

Sources

primary Former credit union manager sentenced to prison for decade-plus embezzlement scheme — U.S. Attorney's Office, District of Kansas, 2025-10-30
primary Former state credit union advisor indicted, accused of embezzling money from credit union — U.S. Attorney's Office, District of Kansas, 2023-09-11
primary Administrative Order: In the Matter of Rita Hartman — National Credit Union Administration, 2025-12-25
secondary Former Kansas mayor, bank manager sentenced for decade-plus embezzlement scheme — KSN News, 2025-11-06
secondary 71-year-old to serve 5-plus years in prison for stealing $750K from credit union she managed — Lawrence Journal-World, 2025-11-06

Update log

2026-07-23 Page created following the October 2025 federal sentencing and the NCUA's December 2025 administrative prohibition order.

First published 2026-07-23 · Last reviewed 2026-07-23

This is not legal, accounting, or compliance advice. Verify against the official source and your own professional advisors.