LindaReynolds, CEO of the NAFCU Federal Credit Union of the Year for2011, has been accused of fraud and misappropriation of funds.

Reynolds had been CEO at Pinellas Federal Credit Union since 1996 until she was recentlyfired. The 13,000-member, $84 million credit union in Largo,Florida, won NAFCU's award as Credit Union of the Year for CUsunder $150 million in assets last year and Reynolds had been namedCEO of the Year in 2009.

“Linda Reynolds has been a valuable asset to Pinellas FederalCredit Union, demonstrating exemplary leadership skills and ardentdedication that is an inspiration to her colleagues,” said FredPetty, PFCU board chairman in a credit union newsletter announcingthe award in 2009.“This award is a testament to her outstandingservices on behalf of our members.”

In documents filed Jan. 5 in federal court, the credit unionalleged that Reynolds had misappropriated CU funds by hiring familymembers and friends as contractors and paying far higher thanmarket rates.

She also was charged with fraud, constructive fraud, breach offiduciary duty and unjust enrichment. The filings also asked thecourt to permit it to freeze the accounts of Reynolds and relativesat the credit union.

In her formal reply, Reynolds denied the charges and countersued credit union board members charging that the failure torelease the funds is civil theft. She also claimed in her denialthat the credit union leadership knew and approved of her choicesfor contractors.

“Plaintiff, acting through its operations director and/or ITtechnician, hired Defendant's son to perform cabling work for it,knowing he was Defendant's son and after approving a proposal hesubmitted to do the work at below market rates,” Reynolds wrote inthe reply. “In addition, the Chairman of Plaintiff's Board ofDirectors, Jack Bowman, was aware of and never objected to thearrangement,” she added in the filing.