A Spencer woman charged with financial institution fraud and money laundering will likely face a federal court date in Sioux City instead of state allegations at the Clay County Courthouse.
A 2 p.m. arraignment has been set Tuesday, Dec. 4, at the Federal Courthouse in Sioux City for Linda Lee Zech, 53, who handled transactions as the sole full-time employee at the Eaton Employees Credit Union in Spencer.
U.S. Attorney Matt Dummermuth announced the fraud and laundering charges based on suspicion that Zech defrauded the Eaton manufacturing company's credit union for "hundreds of thousands of dollars."
"The information charges that Zech defrauded Eaton in a number of ways," the statement said. "In some instances Zech allegedly fraudulently dispersed credit union checks to family members and third parties. In other instances Zech is alleged to have made fraudulent credit union loans in the names of family members and third parties. In still other instances, Zech allegedly took cash deposited by credit union members."
If convicted on both federal charges, Zech faces a possible maximum sentence of 50 years imprisonment, a fine of $750,000 or twice the loss caused by Zech's conduct.
Clay County prosecutor Michael Houchins has previously said about $850,000 may have been embezzled from the workplace credit union.
He was overseeing the case when Zech was originally charged in January with the state charges of ongoing criminal conduct and first-degree theft. She could have faced up to 10 years in prison on the first-degree theft charge. The ongoing criminal conduct charge would have carried a 25-year sentence.
"The deposits of the credit union are insured by the FDIC, which is federal insurance," Assistant U.S. Attorney Sean Berry said Monday. "That provides federal jurisdiction for financial institution fraud where a credit union is a victim."
In a September interview, Houchins confirmed that he had been contacted by prosecutors in the U.S. Attorney's Office.
"They're looking at it," Houchins said at the time. "Frankly, one of the reasons that we're cooperating with the federal authorities is because of the federal sentencing guidelines, which may provide what we think would be an appropriate sentence."
The credit union is in the process of taking action to recover property, including vehicles, which may have been purchased with the credit union funds. Zech also would also be subject to three to five years of supervised release following any prison term.