Former CEO of merged Indiana credit union sentenced for fabricating board approval on insider loans
Related party Governance oversight Fraud embezzlement
A federal court found that a former credit union CEO submitted fraudulent loan applications to himself and falsely claimed the board of directors had approved them.
What happened
Daniel Johnson served as CEO and manager of Richmond City Employees Federal Credit Union, a small, roughly $7 million institution in Richmond, Indiana that served city employees. According to the U.S. Attorney’s Office for the Southern District of Indiana, Johnson used his authority over loan underwriting to submit two fraudulent $150,000 secured loan applications in his own name, in August and September 2021, claiming the money was for recreational vehicle purchases he had no intention of making. On the second application, prosecutors say he forged his then-wife’s signature. In both cases, he falsely represented to the credit union that the board of directors had approved the loans — approval that, according to the U.S. Attorney’s Office, was never actually granted.
Prosecutors say Johnson used part of the proceeds to pay off existing loans (which eliminated the credit union’s security interest in that debt) and diverted the rest to personal expenses, including student loan payments and a home purchase.
Separately, NCUA placed the credit union into conservatorship in December 2022, citing unsafe and unsound practices; NCUA’s public materials on that action do not specify what those practices were, and this page does not assert a connection between the conservatorship and Johnson’s loans beyond what the sources state. The credit union, then reporting a capital ratio near 2.3 percent, was merged into Kemba Credit Union of West Chester, Ohio, in April 2023 and no longer exists as an independent institution.
Federal bank fraud charges against Johnson, along with a signed plea agreement, were filed in March 2025. He pleaded guilty to two counts of bank fraud.
Where it stands
This matter is adjudicated. Johnson was sentenced in January 2026 to two years in federal prison and two years of supervised release, and ordered to pay $285,855.66 in restitution, after his guilty plea. NCUA subsequently issued a conviction-based order, effective March 2026, permanently barring him from working at or serving any federally insured depository institution. Because this matter concluded with a guilty plea and sentencing, the findings described above are stated as fact and attributed to the court record and the U.S. Attorney’s Office. No further proceedings are expected in this matter.
Questions this raises for your committee
The distinctive feature of this case isn’t the loan amount — it’s what made the fraud possible: a false claim about board approval that apparently went unverified until after the funds were disbursed. That’s a control question every committee can ask about its own credit union, regardless of size. See the control lessons above.
Timeline
- 2021-08-05 Johnson, then CEO and manager of Richmond City Employees Federal Credit Union, submitted a fraudulent $150,000 secured loan application in his own name, according to the U.S. Attorney's Office.
- 2021-09-16 Johnson submitted a second fraudulent $150,000 loan application and forged his then-wife's signature on it, per the same source. In both applications he falsely represented that the credit union's board of directors had approved the loans.
- 2022-12-12 NCUA placed Richmond City Employees Federal Credit Union into conservatorship, citing unsafe and unsound practices. NCUA's public materials on the conservatorship do not specify the underlying cause. [3]
- 2023-04-01 The credit union merged into Kemba Credit Union of West Chester, Ohio, at NCUA's direction, ending its existence as an independent institution. [3]
- 2025-03-14 Federal bank fraud charges and a signed plea agreement were filed the same day in the U.S. District Court for the Southern District of Indiana. [4]
- 2026-01-07 Johnson was sentenced to two years in federal prison, two years of supervised release, and ordered to pay $285,855.66 in restitution, after pleading guilty to two counts of bank fraud.
- 2026-03-31 NCUA issued a conviction-based order permanently prohibiting Johnson from participating in the affairs of any federally insured depository institution. [2]
Questions this raises for your committee
When an officer or manager at your credit union applies for their own loan, who actually confirms board approval happened — does someone check the board minutes, or is the loan officer's word taken at face value?
In this case, the falsified element wasn't the loan itself but the claim that the board had signed off on it. A control that only checks whether a box was checked, rather than verifying the underlying board record, can be defeated by a single dishonest signature.
Does your credit union's loan policy route every insider loan — officer, employee, director, or immediate family — through a separate, documented approval trail that someone outside the lending chain can independently trace back to actual board minutes?
Insider loans carry elevated conflict-of-interest risk precisely because the person requesting the loan may also have influence over how it's recorded and processed. A trail that can be reconstructed independently of the person who benefits from the loan is the compensating control.
If a loan is originally issued as secured and its collateral terms later change (for example, being used to pay off other secured debt), does anyone independent of loan origination review that change?
Converting a secured position to an effectively unsecured one, without renewed scrutiny, is a pattern that shows up in several insider-loan cases. Independent review at the point of modification — not just at origination — closes that gap.
Sources
- primary Former Richmond City Employees Federal Credit Union CEO Sentenced to Two Years in Federal Prison for Bank Fraud — U.S. Attorney's Office, Southern District of Indiana, 2026-01-07
- primary NCUA Prohibits Two Individuals from Participating in the Affairs of Any Federally Insured Depository Institution — National Credit Union Administration, 2026-03-31
- primary Richmond City Employees Federal Credit Union Merges into Kemba Credit Union — National Credit Union Administration, 2023-04-03
- secondary Former Indiana credit union CEO charged with bank fraud — The Indiana Lawyer, 2025-03-14
- secondary Former Credit Union CEO Permanently Banned by NCUA for Loan Fraud Exceeding $600,000 — CUCollector, 2026-04-01
- secondary Struggling (Capital Below 3%) Richmond City EFCU Merged into Kemba Credit Union — CUToday.info, 2023-04-01
Update log
- 2026-07-23 Page created following NCUA's March 2026 prohibition order and the January 2026 federal sentencing.
This is not legal, accounting, or compliance advice. Verify against the official source and your own professional advisors.