Former Falmouth Bank President Sentenced to 78 Months for Embezzlement

COVINGTON—The former president and chief executive officer of a Falmouth, Ky. bank was sentenced to 78 months for embezzling more than two million dollars from her bank.

U.S. District Court Judge Danny C. Reeves sentenced Donna J. Wood, 51, for embezzlement. Reeves also ordered Wood to pay full restitution.

Wood previously admitted that from March of 2003 until January 26 of this year she embezzled $2,244,506.44 from United Kentucky Bank in Pendleton County. Court documents state that Wood’s criminal actions caused 131 stockholders with the bank to suffer a financial loss. During the course of her scheme she stole approximately 70 percent of shareholders’ equity.

“Mrs. Wood continued her fraud year after year until it snowballed completely out of control and destroyed the bank, harmed the directors and shareholders and left a void in the community which no longer benefits from an independent community bank,” said Assistant U.S. Attorney Laura Voorhees in her sentencing memorandum.

According to the plea agreement, Wood transferred money belonging to the bank into accounts owned by her husband and her two sons. Wood then falsified bank records to conceal her criminal conduct from auditors.

Over the course of the fraud, Wood prepared approximately 94 false monthly bank reconciliation reports. Court documents say that Wood prepared bank records which dramatically overstated the bank’s capital and liquidity leaving the bank’s board of directors and auditors unaware of the bank’s dire financial state.

As a result of her fraud, the bank’s board of directors agreed to sell the bank to Bank of Kentucky on October 28 of this year.

Wood worked as the bank president for two years. Prior to that she had worked as the bank’s vice president since the bank opened in 1992.

Wood previously signed an agreement with the Federal Deposit Insurance Corporation which stipulates that she will never work in banking again.

Under federal law, Wood will have to serve at least 85 percent of her prison sentence and will be on supervised release for five years following her release from prison.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky and Elizabeth A. Fries, Special Agent in Charge of FBI’s Louisville Field Division jointly made the announcement today.

The investigation was conducted by the FBI. The United States was represented in the case by Assistant United States Attorney Laura K. Voorhees.