Daniel Johnson, a 37-year-old former credit union CEO from Centerville, Indiana, was sentenced to two years in federal prison and ordered to pay $285,855.66 in restitution after pleading guilty to two counts of bank fraud tied to falsified loan applications.

Johnson served as Chief Executive Officer and Manager of Richmond City Employees Federal Credit Union, a role that included authority over underwriting and processing member loans. While credit union staff may apply for loans, such applications must be reviewed and approved by the Board of Directors to protect member funds. Court records show Johnson exploited his position of trust to steer approvals and conceal the true purposes of the loans he requested.

On August 5, 2021, and September 16, 2021, Johnson submitted two secured loan applications, each for $150,000, claiming the money would be used to buy recreational vehicles. Investigators concluded he never intended to purchase those vehicles and instead misrepresented the nature of the transactions. The false submissions triggered a chain of decisions that left the credit union exposed to significant risk.

To hide the scheme, Johnson represented that the Board of Directors had approved the loans when it had not, and in the September application he forged his then-wife’s signature, making it appear as though she had requested the second loan. Those steps erased required checks and removed the protections typically afforded by the credit union’s governance. The forgery and misrepresentation converted what should have been secured, reviewed loans into effectively unsecured obligations.

After receiving proceeds from the loans, Johnson used roughly $65,697.98 to pay off previously secured loans, eliminating the credit union’s security interest in those obligations. He then diverted remaining funds to cover personal debts, including student loans, and to purchase a home. Those transactions further diminished any chance the credit union would be made whole through collateral or ordinary collection methods.

Combined, the two loans amounted to approximately $300,000 in what became effectively unsecured borrowing, and the credit union’s losses were estimated at $285,855.66. Prosecutors and investigators calculated the shortfall after tracing how Johnson rerouted loan proceeds away from the institution’s intended uses. The restitution figure reflects the measurable financial harm suffered by the institution and its members.

“As the Chief Executive Officer, Johnson was tasked with protecting money earned by hardworking public servants for the City of Richmond. Instead, Johnson chose to abuse this trust and line his own pockets through dishonesty,” said Tom Wheeler, United States Attorney for the Southern District of Indiana. “His actions not only violated the law but also undermined the integrity of the institution he was entrusted to serve. The U.S. Attorney’s Office and our law enforcement partners will continue to hold accountable those who exploit positions of authority for personal gain.”

“Credit union members rely on their leaders to safeguard their finances – not misuse them for personal gain,” said FBI Indianapolis Special Agent in Charge Timothy J. O’Malley. “This sentence demonstrates the FBI’s commitment to pursuing those who exploit financial institutions through fraudulent schemes.” These statements accompanied the formal announcement of charges and the subsequent sentencing hearing.

The FBI conducted the investigation that led to the indictment and guilty plea, and U.S. District Court Judge Richard L. Young imposed the sentence. Assistant U.S. Attorneys Adam Eakman and Kyle M. Sawa prosecuted the case on behalf of the government. The court ordered two years of supervised release to follow the prison term as part of the overall judgment against Johnson.

The legal outcome includes the two-year prison term, two years of supervised release, and the restitution payment of $285,855.66 tied to the bank fraud convictions. The case highlights the legal consequences that can follow when fiduciary duties are breached and member funds are misapplied. Individuals in positions of financial oversight face heightened scrutiny and clear accountability when records and governance are manipulated for personal benefit.

Editor’s Note: Richmond City Employees Federal Credit Union merged into Kemba Credit Union, of West Chester, Ohio, effective April 1, 2023.