Credit union watches elderly woman's account drain, then taps it to pay off drug-using son's bogus charges

There's no question that Arizona Federal Credit Union officials knew Anna Kroger's middle-age son racked up $160,000 in bogus credit-card charges and bank withdrawals.

They met with her after months of unusual financial activity.

They froze her savings and credit accounts.

They advised Arizona Adult Protective Services to the suspected fraud and financial exploitation.

Then credit union officials helped themselves to Kroger's money, raiding her frozen accounts of thousands of dollars.

While Kroger and her caretakers were locked out, credit union officials used their internal access to withdraw $30,000 for a slew of charges they knew she didn't make, interviews and court records show.

And there is nothing her court-appointed guardians or the court can do to get the money back.

Maricopa County Superior Court Commissioner Thomas Marquoit described the case as "distasteful," but said the credit union did nothing illegal.

"It is not lost on this court that (Arizona Federal Credit Union), holding their 79-year-old client who lives in an assisted living facility responsible for fraudulent charges, is at the very least distasteful," Marquoit wrote in a March 1 ruling. "But there is no legal recourse available."

Credit union officials refused to discuss the case.

What happened to Kroger sounds a warning for consumers on the limited obligation a bank or credit union has to protect them. Marquoit summed it up starkly in his ruling, saying banks aren't police agencies and don't have a duty to prevent large financial transactions — even suspicious ones.

"There is generally no fiduciary relationship between a bank and a depositor under Arizona law," Marquoit wrote. "A bank owes no more than an ordinary duty of care to its customers."

In other words, banks don't have to act in the best interest of their customers. And consumers cannot rely on banks to intervene in fraud cases, particularly when they involve someone authorized to access the account.

Woman's guardians 'shocked'

Kroger's situation was complicated because she had turned over control of her finances to her son in 2015, giving him power of attorney.

The document, witnessed by two Arizona Federal Credit Union officials, granted Kroger's son "full and unlimited power to act on my behalf in the same manner as if I were personally present."

The credit union agreement Kroger signed when she opened the account in the late 1960s also gave the bank authority to tap her accounts to cover unpaid credit-card balances and overdrafts. When her credit card went past due, officials paid it.

Mary Elizabeth Roberts, manager of Arizona Federal Credit Union's Scottsdale branch, was one of the witnesses on Kroger's power of attorney. She met with Kroger in 2017 about unusual charges. She also told Adult Protective Services that she believed Kroger's son was exploiting her, court records show.

Roberts referred all questions to the credit union's lawyer.

General counsel John Hedblom said he could not comment on "confidential member matters." He declined a waiver that would have allowed credit union officials to speak about Kroger's case. He also would not discuss information in court documents, which are public records.

"We're not going to have any comment," Hedblom said.

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Kroger's court-appointed guardians said they were stunned by the credit union's actions. They said credit union officials stymied their intervention on Kroger's behalf and withdrew money from her account after being advised the charges were in dispute.

They said Arizona Credit Union declined to turn over bank statements, delayed information about the fraud investigation and held one of Kroger's accounts open to serve as collateral for the fraudulent charges.

"I'm shocked that they were able to freeze her accounts and then pay themselves," said John Tully, owner of Camelback Fiduciary LLC, which now serves as Kroger's guardian. "They did it for themselves and they did it for other credit cards."

Financial patterns change dramatically

Kroger's accounts began draining in 2016. But credit union officials took no action for months as daily withdrawals accelerated and tens of thousands of dollars were lost.

For years, Kroger's banking habits were conservative and routine, with nearly clockwork withdrawals. Every month, she took similar amounts from her Arizona Federal Credit Union accounts with little deviation.

Kroger, who spent 37 years working for the Arizona National Guard, took $490 each month from an Individual Retirement Account and $750 from a general account.

That changed after her son, Val Bichekas, took over her accounts. Then it no longer was clockwork; the withdrawals came so fast the hands flew off the clock.

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Bank records show in June 2016, withdrawals from Kroger's so-called "everything account" increased to $14,750 from $750. A month later, $14,250 was withdrawn.

From August 2016 to April 2017, withdrawals ranged from $6,000 to $21,000 a month.

Credit union records show transactions occurred almost daily. Bank statements from April 2017 show how fast money was coming out: $1,500 was withdrawn on April 3. Same for April 4, 5, 6, 7 and 8.

No money was taken out on April 9. It was a Sunday. But $2,000 was withdrawn on Monday. Eight more withdrawals occurred before the end of the month. All told, $19,748.77 was withdrawn in 30 days.

Bank records show Kroger's "everything account," which had a $105,000 balance in May 2016, was down to $10,215 a year later.

Charges mount on credit cards

Where did the money go? Kroger's credit-card statements tell part of the story.

As her "everything account" balance dwindled, charges started adding up on her Arizona Federal Credit Union-issued Visa card and on her Discover card.

Food City, Fry's Food and Drug, Safeway, Target and Walmart; bars, gas stations and Lyft; restaurants, hotels and resorts.

Thousands of dollars in cash advances were taken from multiple ATMs, often on the same day.

Credit-card statements show that during the first week of April 2017, 15 separate charges at Fry's, Food City, Target and Walmart totaled $10,537.10.

In June 2017, Kroger's Discover card was billed $2,900 by Alliance Bail Bonds in Phoenix.

Where was Kroger during all of this activity? Not buying lingerie at Victoria's Secret or perfume at Sephora, as her card indicated. She also wasn't doing overnights in Los Angeles.

"She wasn't out there making these charges," said Tom Asimou, a lawyer for Camelback Fiduciary.

Asimou and Tully said Bichekas made the charges at the stores to feed his methamphetamine addiction. They said he likely bought items that he could sell or return for cash.

"This is a very, very sweet woman," Asimou said. "It wasn't right that this happened."

Red flags fly 12 months later

Twelve months after the unusual withdrawals and charges started, credit union officials said they noticed for the first time "out of pattern" transactions on Kroger's account and credit cards and restricted access to the funds.

Bank officials said they instructed Kroger to go to her local branch and discuss the situation with a branch manager, according to memos contained in the court record.

Roberts, the Scottsdale branch manager, met with Kroger on June 2, 2017. Roberts reported to the bank's risk management department that Kroger said she hadn't authorized the charges and that her son was abusing his power of attorney.

Court records show Roberts told Kroger that the credit union could not guarantee her any refunds for withdrawals she had not authorized. And the risk department wanted to know if Kroger would pay off the overdue amount on the credit card.

Roberts met with Kroger again on June 6. Kroger asked the credit union to revoke her son's power of attorney, which she said was supposed to be temporary, according to an August 24 memo by Hedblom, the credit union's lawyer.

"We advised that she would have to prosecute her son to go after the third parties who received her funds without her approval," Hedblom wrote. "But she would not agree to prosecute her son."

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Even if she had been willing, it turned out there was nothing she could have done.

Kroger's son had died the previous day. He was alone in his home. Drugs and drug paraphernalia were found along with his body.

Bichekas, 52, was a football phenom at Gilbert High School in the 1980s and was a starting guard for the University of Arizona Wildcats.

As an adult, Bichekas did security work for several top heavy-metal rock bands, including Ozzy Osbourne, Guns N' Roses, Skid Row and Black Sabbath.

The Maricopa County Medical Examiner concluded that Bichekas died June 5 of an accidental methamphetamine overdose.

Credit union makes its own withdrawal

Court records show Roberts spoke to Adult Protective Services on June 10. Asimou said Roberts told investigators that she believed Bichekas exploited his mother; that he used her Visa card and frequented the credit union regularly.

Maricopa County Superior Court's probate division appointed Camelback Fiduciary to oversee Kroger's finances later in the month. Asimou and Tully said they immediately ran into roadblocks at the credit union. They said Roberts wouldn't turn over account statements and then stooped responding to emails.

Even as Kroger's caretakers attempted to dispute the credit charges, Arizona Federal Credit Union used Kroger's account to pay off her credit-card debts.

Court records show the credit union allowed Discover to withdraw a total of $14,000 from her account in July and August.

"If the account was frozen, why were they taking money out?" Asimou said. "It was more of a slushie as opposed to frozen. It was frozen for everything except (Arizona Federal Credit Union)."

In August, the credit union's risk department offered to settle the Visa debt for $15,413. Asimou said he advised the credit union that he intended to dispute the charges as fraudulent.

"Mr. Hedblom asserted that it is AZ Federal's position that Anna must pay for the credit card debt," Asimou said in court filings.

Asimou said the credit union also blocked Camelback Fiduciary's attempts to close Kroger's account.

The credit union maintained that based on Kroger's membership agreement, it had the authority to hold open Kroger's account to pay for the credit-card debt. In letters, Hedblom said the bank had the right to seize the money.

Asimou said he was still trying to negotiate when Camelback Fiduciary received bank statements showing the Visa credit-card balance had been zeroed out in October. The $15,400 had been withdrawn from Kroger's account.

Discover took another tack. After reviewing Kroger's charges, Asimou said the company offered to give the money back. He said the company agreed the charges were fraudulent and agreed Kroger shouldn't be held responsible.

"Discover has been stand-up from the get up," Asimou said. "They did the right thing."

'No one to hold legally responsible'

Camelback Fiduciary said its only recourse was to sue Arizona Federal Credit Union.

In December, Asimou asked the court's permission to file a claim against the credit union.

Legal actions cost money. And any lawsuit on Kroger's behalf potentially could drain her remaining assets. Because Kroger is officially a ward of the state, and Camelback Fiduciary was appointed by the court, Asimou said the court needed to weigh the pros and the cons.

Asimou argued in motions that Arizona Federal Credit Union should have known that Kroger was physically and cognitively impaired when she signed the power of attorney. He also said the credit union should have immediately flagged her account when the first charges started stacking up in June 2016.

Asimou accused the credit union of failing to investigate the unusual activity in Kroger's account. He said it should be responsible for the credit charges and for the $130,000 in withdrawals Bichekas made from his mother's accounts.

The judge disagreed. But not without terse words for the credit union.

"Counsel for the petitioner expressed disgust and disenchantment at AZ Federal's conduct," Marquoit wrote in his motion, adding that Camelback Fiduciary "acted in a good faith attempt to take care of the ward (Kroger)."

Marquoit said there was no way to hold the credit union responsible and that any lawsuit would dilute Kroger's assets further. He said nothing legally prevented the credit union from ignoring its "self-imposed restriction at any time to pay themselves or a secured creditor."

Arizona Federal Credit Union relied on the power of attorney Kroger granted to her son and had no way of knowing the transactions were fraudulent, Marquoit said.

"The charges at issue were out of the ordinary, but that does not mean that they were textbook illegal," Marquoit wrote. "The ward is a victim of a crime by her son, and because he is dead, there is no one to hold legally responsible."

An account has been set up to aid Anna Kroger at Arizona Bank and Trust. Donations can be made to: Anna B. Kroger, account number 9361190376, routing number 122106015.

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