Trial begins in million dollar fraud case

The trial into a case that saw more than $1,000,000 stolen from a Quinte area credit union began in Belleville on Monday.

Originally, Cheryl Drumm, Allan Lasher and George Misuraca were all charged in connection with the case, but only Drumm was arraigned at the Quinte Courthouse.

Misuraca had his charges withdrawn after he paid civil restitution in the case and Lasher’s charges are also expected to be pulled in August, once he finishes a civil restitution payment of his own.

Drumm, meanwhile, pleaded not guilty to fraud over $5,000, theft over $5,000 and laundering proceeds of crime.

In her opening statement, Assistant Crown Attorney Jodi Whyte says she intends to prove that between January 2010 and December 2014, Drumm manipulated company software and transferred funds to benefit both herself and the co-accused, to the tune of more than $1.6 million, when she was an employee at the former Bayshore Credit Union.

Bayshore has since amalgamated with Quintessential Credit Union to become Quinte First Credit Union.

Whyte is alleging that, since Drumm was an employee of the credit union and couldn’t deal with her own account, one of the ways she manipulated the software was to put funds into her granddaughter’s account and then transfer that money to herself.

Former Bayshore Credit Union CEO Joe Bell was the only witness who made it to the stand on Monday.

He outlined some of the basic operations of the institution, how cheques are cashed and money is moved between various financial institutions, and began to tell the story of how the accounting discrepancies were noticed in the first place.

Bell, who now works with the amalgamated Quinte First Credit Union, says they were tipped off to something wrong when Central One Credit Union, which handled Bayshore’s accounts, told them they had gone over the limit on an operating line of credit.

He told court that his first assumption was some sort of error with the credit union’s system, but a further investigation showed multiple instances of certified cheques being recorded as “duplicated” and being linked to Drumm, whose main job was to process paper or electronic transactions, such as cheques or electronic transfers, including pay cheques, pension payments and others.

Bell says those duplicated amounts were found to be false and Drumm was suspended with pay, pending an internal review of the situation.

During the afternoon session, Whyte presented close to a dozen records of account activity, showing that pay cheques and pension payments from other credit union members had been funnelled into the account of Drumm’s granddaughter and then covered through Bayshore’s hold account.

Those records also included an employee number linked to Drumm, alleging she overrode some automated systems, in order to put the money transfers through.

When asked by Justice Tausendfreund why those transactions wouldn’t have been recognized earlier, Bell said that things “clearly weren’t scrutinized as closely as they needed to be.”

Bell added that their internal audit procedures have been “changed dramatically” and they changed some of their systems to ensure that transactions can’t be manipulated any longer.

Bell expected to return to the stand on Tuesday afternoon when the trial resumes, with the crown also planning to call another former employee of Bayshore, who was Drumm’s supervisor at the time of the incidents in question.