Court overturns couple's embezzlement convictions because they embezzled from a federal credit union, not a bank

The Massachusetts Appeals Court ruled today a state law on bank embezzlement should not have been used to prosecute a Worcester couple convicted of staging a fake robbery so that they could make off with money from the credit union where the wife worked.

The court said state law specifically refers to banks, not federal credit unions, such as the Wyman-Gordon Federal Credit Union where they staged a fake robbery in 2002. The court cited a 1903 ruling by the US Supreme Court that, in fact, states could not enact criminal laws related specifically to financial institutions with federal charters.

The court noted that state and federal law would not have stood in the way of charging the couple with the lesser crime of larceny in a Massachusetts court.

The husband had been sentenced in 2010 to 10-12 years in prison; his wife, who called 911 to report the "robbery" and had her hands lightly tied when police arrived, was sentenced to 4-7 years. The court did uphold the husband's conviction for counterfeiting, and sent his case back to a lower-court judge for resentencing.

• Complete ruling, Commonwealth vs. George Labadie and three companion cases