Joyce Judy, the former president of Arkansas Employees Federal Credit Union who in August pleaded guilty to bank fraud, was sentenced Wednesday to 26 months in federal prison.
Judy stole $500,000 from an AEFCU customer with the promise of moving it into a super-safe, high-yielding CD – but instead combined it with another $500,000, mostly borrowed, in order to invest in the Iowa Speedway.
The investment, court records indicate, turned out to be an international scam.
Judy, 57, wept as she told U.S. District Judge Leon Holmes that she was sincerely sorry for abusing a customer, the AEFCU board of directors that had hired her and coworkers who trusted her. Her eagerness to make a promising investment "made me become something I am not," she said. "I lost my job. Well, really, I lost 30 years of my life, because that’s how long it took me to get where I was."
According to defense attorney Erin Cassinelli of Little Rock, Judy and her husband owned their North Little Rock home outright and were essentially debt-free before she mortgaged everything of value in order to make an investment that turned out to be a scam.
Judy and Cassinelli asked the court not to send her to prison, in part because she has had repeated bouts with cancer and in part so that she could continue to work to help her husband repay the loans – most of them to AEFCU.
"I want to make it up," Judy told Judge Holmes. "I want to work and pay back this debt."
Assistant U.S. Attorney Karen Whatley acknowledged that Judy had herself been a victim, and she said that Judy had cooperated with investigations into the investment scam in Texas and North Carolina.
"But making bad decisions on her own finances is one thing; taking someone else’s money for her own benefit is another," Whatley told the judge.
The government recommended the 26-month sentence, which is a "downward departure" of 20 percent from the minimum of 33 months recommended by the federal sentencing guidelines, and Holmes said he agreed that it would be an appropriate sentence in Judy’s case.
Holmes said he didn’t think any prison time was necessary to keep Judy from committing another crime, and he understood that she had expected to be able to replace the customer’s stolen money in short order. But neither of those situations is unusual in white-collar crimes, he said.
After serving her time – Holmes recommended the Carswell Federal Correctional Facility at Fort Worth, Texas, which has a medical unit – she will be subject to three years of supervised release. She is also responsible for mandatory restitution of $500,000, to be paid to Cumis Insurance Society, AEFCU’s bonding company. Holmes imposed no fine.
Cumis has filed a civil case against Judy in Pulaski County Circuit Court seeking the same $500,000 that has been ordered as restitution, plus some lost interest and other costs.
Victim?
As Arkansas Business reported in September, Judy was persuaded to make a $1 million investment by a retired racecar driver from North Carolina named Bob Schacht. The money she invested, half stolen from a client and half raised through loans and mortgages, was ultimately wired out of the country.
After the sentencing hearing, Cassinelli said it was still not clear whether Schacht was also a victim or participant in the scam.
When Judy pleaded guilty on Aug. 2, prosecutors said she thought she was investing in the Iowa Speedway. But Cassinelli told ArkansasBusiness.com that the investment was actually a two-step deal in which investors were going to make a quick profit that they could then invest in the racetrack.
While there are believed to be multiple victims of the scam, Cassinelli said she believed Judy was the only connection to Arkansas.
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