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Former Credit Union Officer and Family Indicted in Fraud Scheme

The former executive director of the D. Edward Wells Federal Credit Union (’Wells’), along with her husband and son, were charged with embezzlement, tax fraud and other crimes relating to the failure of the credit union in the spring of 2003.

Carol Aranjo, 65, Springfield, Massachusetts, her husband, Alphonso Smith, 67, Springfield, Massachusetts, and their son, Douglas Smith, 46, Chicopee, Massachusetts, were charged in an eighty-six count Indictment with conspiracy to embezzle money from the D. Edward Wells Federal Credit Union and to prevent detection of the fraud. The three were also charged with filing false tax returns by failing to report the embezzled funds as income.

The Indictment also charges Alphonso Smith with defrauding three commercial lending institutions by submitting fraudulent loan applications and false verifications of employment in order to obtain mortgage loans.  In connection therewith, the indictment alleges that, on July 23, 1999, Alphonso Smith obtained a Wells cashier’s check for $24,204.03 to pay the closing costs for the purchase of 2303 Wilbraham Road, Springfield, Massachusettss, funding the purchase with a Wells loan made without application, credit check or loan officer approval.  Although it was classified on Wells books and records as a second mortgage, no mortgage was ever recorded.  On March 15, 2002, Alphonso Smith applied for a loan from GMAC to refinance an existing mortgage on the 2303 Wilbraham Road property without disclosing the unrecorded Wells mortgage or arranging for it to be paid.  According to the indictment, Carol Aranjo also obtained a cashier’s check classified as a mortgage loan but for which no mortgage was recorded.  When she sold a condominium she owned at 60 Greenwood Terrace, Chicoppe, Massachusetts, according to the indictment, no portion of the proceeds were used to pay of an unrecorded Wells Mortgage on the property.

On February 22, 2002, according to the indictment, Douglas Smith obtained a Wells cashier’s check for $22,162.85 without making any payment for the check and utilized it to purchase 37 Lafayette Street, Springfield, Massachusetts.  Alphonso Smith and Carol Aranjo gave false information about the balances in Alphonso Smith’s Wells accounts in an application for a mortgage from Wells Fargo Home Mortgage Company to finance Alphonso Smith‘s purchase of the 37 Lafayette Street property from Douglas Smith.

All three were arrested on the charges on Friday, July 7, 2006, and were arraigned before U.S. Magistrate Judge Kenneth P. Neiman. They were each released pending trial on a $100,000 unsecured bond. If convicted on these charges, each defendant faces up to 30 years’ imprisonment, to be followed by 5 years of supervised release, and a $250,000 fine.