Scott Credit Union had an employee who essentially created a pyramid scheme by taking out fake loans and then more fake loans to make payments on earlier fake loans. Theodore J. Longust, 51, formerly of Columbia, worked there nine years as the Business Relationship Manager, but in reality cost Scott Credit a cool $25.8 million with his fraudulent loans.
He was sentenced to 10 years and ordered to repay $14.1 million to Scott and its bonding company. Hmm, that means he has a net profit equal to $1.17 million for each of those years in prison. Not a lot of disincentive to be dishonest, except that he likely never saw all that money and just cost his employer in lost interest and potential business.
Acting U.S. Attorney James L. Porter previously went out of his way to reassure Scott customers: “While we are not in the business of giving the public financial or legal advice, the public should know that our investigation revealed that the safety and soundness of Scott Credit Union has not been adversely affected by the criminal conduct. We thank the employees of Scott Credit Union who fully cooperated in our federal investigation.”
Still, Scott lost $25.8 million before this guy was caught. It’s not too much of a stretch to think the checks and balances weren’t exactly what they should have been.
Plus, there is a cost to customers. It may be well hidden, but you can’t rob a business of $25.8 million without it hurting the credit union members or raising costs or denying someone a loan or scaring off future business.
Longust certainly did not commit a victimless crime by robbing a faceless financial monolith. People were hurt because he thought he was slick and entitled, and for too long he was.