Jury to consider damages for Santa Fe business

Rodeo Electrical Services alleges ex-bookkeeper embezzled $400K

A jury trial is scheduled to begin Tuesday in a Santa Fe business’s lawsuit accusing a local bank of failing to prevent the alleged embezzlement of about $400,000 from its account by one of the business’s own employees.

A judge already has issued a default judgment against defendant Sunflower Bank, leaving jurors to decide how much in damages it might owe Rodeo Electrical Services.

Rodeo alleges in its 2020 complaint in state District Court that Sunflower Bank allowed a bookkeeper to treat the company’s account “as her own personal piggybank.”

“Sunflower should have raised the alarm, but failed to, when the modestly paid company bookkeeper, who had previously only deposited small payroll checks, suddenly began making numerous large transactions of thousands of dollars through company checks made out to her personally,” the lawsuit states.

A federal grand jury indicted the employee, Charity Felch, on seven charges in 2021: five counts of bank fraud and one count each of aggravated identity theft and access device fraud. She was scheduled to stand trial in December in U.S. District Court in Albuquerque, but the trial was reset for March, according to online court records.

Felch, who earned $14.50 per hour, deposited non-payroll checks from the company into her own account at Sunflower Bank that would have added up to an annual take-home salary of $193,000,

Rodeo Electrical Services alleges in its lawsuit. In March 2020 alone, the complaint says, she deposited checks to herself worth more than $32,000. It alleges she embezzled a total of $400,000 from the company over about three years.

Attempts to reach Felch and her husband, Matthew Felch, who also is named as a defendant, were unsuccessful Friday.

A spokeswoman for Sunflower Bank, which operates in some New Mexico cities as First National, declined to comment Friday.

Court records show the case has been set and reset for trial several times since the lawsuit was filed, due in part to what a judge determined were delays caused by the bank.

State District Judge Kathleen McGarry Ellenwood granted a default judgment in May in favor of the company and its owner, Scott Rosenberg. According to her order, she found the bank repeatedly failed to provide required information, even though it was subjected to a fine that started at $1,000 per day and eventually increased to $10,000 per day while the information was outstanding.

An attorney representing the bank said she was responsible for the noncompliance and said the bank hadn’t been aware of the failures or increasingly severe sanctions, according to the judge’s order.

Sunflower Bank appealed the default judgment to the New Mexico Court of Appeals, which denied the appeal, saying it was premature because the amount of damages the bank faced had not been decided.

Because the judge already has entered a judgment against the bank on liability, jurors will be tasked primarily with determining how much in damages, if any, the bank owes the electrical services company and its owner.

In addition to actual damages, Rosenberg is seeking compensation for emotional distress, saying the ordeal has caused him anxiety, depression and created problems in his relationships.

As a result of the alleged embezzlement, he’s “seen the reward of years of labor vanish ... and feels he may never recover,” the lawsuit says, adding, “these events run through his mind like a broken record, making him sick to his stomach and fearful of the future.”

Rodeo Electrical Services has been in business in Santa Fe for over 30 years, according to the complaint. Rosenberg purchased it in the early 1990s and had used Sunflower Bank for about a decade.

Rosenberg hired Felch in 2017, the suit says. It accuses her of stealing from the company within her first year, first by using the company credit card to pay for personal expenses and then by writing company checks to herself and forging Rosenberg’s signature.

She covered her tracks by listing the checks as payments to suppliers and “other typical payees,” the lawsuit alleges.

“The thefts were committed in plain sight of Sunflower Bank,” the lawsuit says, adding tellers and managers “should have recognized the suspicious transactions but instead turned a blind eye and allow the fraud to continue unchecked for years.”

“Such shocking failure to recognize [and] report suspicious activity indicate a willful and intentional disregard of the bank’s duties as well as the possibility that the bank personnel on the inside helped the Felches to evade scrutiny,” the complaint alleges.

Rosenberg discovered the alleged embezzlement in 2020, during the coronavirus pandemic, when

Felch was self-quarantining after vacationing in California, the lawsuit says.

Bank officials, including a vice president, were dismissive when he brought it to their attention, the lawsuit says, and told him “he had no recourse for the forged checks and ... the Bank had no obligation to address any of the fraud.”