Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 8, 1991 TAG: 9102080397
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: LESLIE TAYLOR STAFF WRITER
DATELINE: LENGTH: Long
Her 74-year-old mother lies in a Roanoke hospital, recovering from heart surgery to repair an ailment that Klester says worsened when more than $156,000 turned up missing from her parents' accounts at Charter Federal Savings Bank.
Klester's suspicion about the missing money was confirmed Thursday - that the money was a small portion of the $2.5 million Perry admits to embezzling from Charter Federal.
"My mother's been very worried. I'm surprised there weren't some other people who didn't have heart attacks," Klester said.
Perry pleaded guilty in U.S. District Court on Thursday to charges of embezzling money from Charter Federal. Under a plea agreement, two other charges - making false entries and laundering money - were dismissed.
The former vice president in Charter Federal's downtown Roanoke office was indicted in October. The indictment said that from 1981 to May 1990, she made unauthorized withdrawals from the accounts of 47 customers and transferred the money into 20 single and jointly held accounts in her name and in the names of relatives and friends.
The indictment listed the accounts of the customers, most of them elderly, from which Perry withdrew money.
Klester's father was a loyal customer. Perry fostered a friendly relationship with him, Klester said, spending time with him during bank visits and sending him gifts.
Soon after her father's death in 1988, Klester's mother began receiving odd phone calls from someone who represented himself as a Charter Federal employee. The caller, a man, told Klester's mother that her accounts were overdrawn by as much as $8,000.
"The phone calls upset my mother," Klester said. "My mother was confused, but I smelled something wrong. She started taking heart pills, she was so worried someone was trying to get information from her. It was as if someone was trying to find out how much attention she was paying to her account balances."
Perry's attorney, Jonathan Rogers, said Thursday that he intends to ask that she not receive any prison time but be placed on probation. She could receive a maximum 20 years in prison, $1 million fine or both.
"I hope she does time," Klester said. "She's caused a lot of pain to my mom and to others."
Authorities maintain that Perry, 46, is responsible for Virginia's largest bank embezzlement since 1956.
"I hope she gets 99 years," said Charlie Paxton. Perry took $64,000 from Paxton's savings account.
Hartie Price sounded surprised, but pleasantly so, when told of Perry's guilty plea. "I haven't had time to have any feeling at all," Price said. "But she's somebody who still needs to be in prison."
Perry's scheme baffled customers. And it has forced Charter Federal to file suit against its insurer to collect the money Perry bilked from the thrift and gave to charities, to street people, to her church and to friends.
Charter Federal is suing its fidelity insurer for payment of money Perry embezzled. The bank reimbursed all 47 accounts soon after the fraud was discovered.
In a lawsuit filed in federal court in Roanoke, Charter Federal charged that because the Dearborn Insurance Co. of Chicago has refused to pay, the bank has been unable to recoup the embezzled money. The bank is asking the court to award it $3 million in costs and attorneys' fees and $1 million in punitive damages.
Perry's guilty plea "certainly supports our claim," said Thomas Leggette, a Roanoke attorney representing the bank.
"We are pleased that Cheryl Perry's guilty plea has made the truth known," said E.L. Byington Jr., Charter Federal's chief executive officer.
"We only wish that it had come earlier," Byington said in a written statement. "That would have spared us the additional burden of time and expense required to reconstruct the crime. It also would have permitted us to move more quickly to make our customers whole."
Court testimony Thursday indicated that Charter Federal spent $7,100 to research Perry's activities.
Perry made unauthorized withdrawals from accounts by creating false checks and signing her name to them. Tim Burke, an FBI agent who headed the investigation into Perry's activities, testified Thursday that the embezzlement went undetected for so long because most of the accounts she targeted were certificates of deposit or dormant savings and checking accounts.
"These were accounts with limited activity," Burke said.
Perry embezzled money by arranging for certain customers to have their monthly statements mailed to her at the bank rather than to their homes.
Perry went so far as to instruct bank employees to hold her mail while she was on vacation so that the embezzlement could not be detected, Burke said. She concealed the unauthorized withdrawals by creating false monthly statements of customers' accounts that showed false account balances, he said.
Perry created false deposit slips to document deposits of the money she had withdrawn from customers' accounts and put into accounts in her name and names of family members. She used accounts listed under the names of her husband, mother, father, daughter, two brothers, stepson, stepdaughter, sister-in-law and two friends.
Deposits into those accounts ranged from $50 into an account in the name of Glenn Benson, Perry's brother, to $1 million in a joint account with her husband, Noah Perry.
Perry used her "authoritative management style" to manipulate employees into allowing her to use their teller stations, Burke testified. Perry would forge bank tellers' initials in processing the fraudulent transactions, he said.
"They felt their continued employment status rested upon her being allowed to use their teller stations," Burke said.
Any daily money shortages or overages at teller stations were handled within the bank branch rather than reported to headquarters, as company policy required, Burke said.
Perry also embezzled funds by taking straight cash from accounts, Burke testified.
Burke said he learned of Perry's embezzlement when a bank official contacted him about an unauthorized withdrawal reported by a customer. The customer told the bank official that Perry was responsible.
Perry was interviewed about the embezzlement. She told Burke she was physically ill from concealing her activities and was relieved that it had been discovered, Burke said.
"She said she never had any intention of repaying the money," Burke said. Perry has yet to turn over records of her embezzlement scheme.
by CNB