PORTLAND, Maine — A former chief financial officer of the Portland police department’s credit union waived indictment and pleaded guilty Friday in U.S. District Court to making false credit union entries between 2009 and 2013 to help keep the institution afloat, according to court documents.
William J. Murphy, 75, of Gray illegally filed reports with the National Credit Union Administration to make it look like the credit union’s net worth was healthier than it actually was so that regulators would not shut it down, according to prosecutors.
A sentencing date has not been set and Murphy remains free on personal recognizance bail.
Murphy told a federal agent in May that he knew if the credit union’s net worth fell below 6 percent, the association would become more involved in the day-to-day operation of the credit union, the court document said.
If the net worth was at or below 4 percent, the credit union would lose its charter and no longer be allowed to operate.
Federal regulators learned about Murphy’s false reports after an auditor discovered suspicious activity by the credit union’s manager, who was not named in court documents.
“In an effort to increase the net worth, the manager [of the credit union] moved money out of certain members’ accounts at the end of the month and moved the money back at the beginning of the next month,” the prosecution version said. “[Murphy] thought that the manager moved three or four checks per month. After the manager moved the funds, [Murphy] drafted the report.”
Further investigation also uncovered that the manager had embezzled more than $400,000 between July 1, 2009, and Nov. 26, 2013, according to prosecutors.
That theft is unrelated to the charge to which Murphy pleaded guilty, according to court documents.
It could not be determined Monday if charges have been filed against the former manager.
Murphy, who worked at the credit union as chief financial officer, a loan officer and the bookkeeper, faces up to 30 years in prison and a fine of up to $1 million.
The credit union was acquired on Dec. 1, 2014, by the TruChoice Credit Union in Portland.