Exchange Bank of Missouri, headquartered in Fayette, is being sued in federal court by its bond company, Great American Alliance Insurance Company, stemming from a nearly $2.4 million embezzlement scheme by former employee Megan Lea Dougherty over a 15-year period.

The suit was filed on September 29 in the U.S. District Court for the Western District of Missouri. Great American is asking a federal judge to void the bond, alleging the bank made misrepresentations on the bond application regarding audit practices, segregation of duties, and other internal controls, according to online court documents obtained by this newspaper.

The lawsuit centers on $2,393,288 that Dougherty admitted to embezzling from Exchange Bank between January 1, 2009, and October 17, 2023. She pleaded guilty in federal court in July 2024.

As was previously reported by the Advertiser, Dougherty began working in the bank’s IT and customer service department in 2008. She detected a lack of internal controls and began removing small amounts of money from customer accounts and depositing them into her own savings account, then transferring the funds to her checking account. Eventually, she also transferred stolen funds into the checking accounts of family members. Dougherty then switched to taking from customers’ certificate of deposit accounts.

According to the plea agreement, she admitted to falsifying the description of these transfers in the bank’s computer systems to conceal her theft. She also rotated the accounts from which she took funds to avoid detection, and would steal from one account to reimburse another, also to avoid detection.

When the bank discovered the theft, Dougherty was actively stealing from seven different bank customers, some of whom had multiple accounts affected. Records reveal that more than a dozen other customers were also victims, but those accounts were reimbursed when Dougherty moved on to victimizing new accounts.

Dougherty told investigators she targeted customers who knew and trusted her. The records show that she stole a total of $2,393,288 from customers’ accounts.

Under the terms of the plea agreement, Dougherty was to forfeit to the government her interest in nine parcels of real estate in Howard County and a money judgment of $2,393,288.

The lawsuit filed in September by Great American Alliance Insurance Company said the systems in place that allowed Dougherty to embezzle the money were not represented in the bank’s bond application. The bond company is asking the federal judge to rescind the bond and declare that there is no coverage for the bank’s claim, seeking to declare the bond void.

Great American cites in its complaint that Exchange Bank employees were required to take vacations without any access to bank systems, that users of its real-time banking platform could not waive customer penalties, and that duties were sufficiently segregated to prevent any single employee from controlling a transaction from start to finish. The suit contends those statements were false and that Dougherty’s access, even while on vacation, and the ability to waive early-withdrawal penalties, made the scheme possible.

Great American points to a forensic fraud report the bank submitted with its claim, stating investigators tallied 544 transfers totaling $2,106,232.56 from 42 customer accounts, plus $101,760.32 in cashier’s checks deposited into Dougherty’s accounts.

St. Louis attorney James C. Morris of Gordon Rees Scully Mansukhani, LLP, filed the suit on behalf of Great American.

Exchange Bank declined to comment on the lawsuit.