BOSTON (5/6/10)--A well-known community development credit union CEO, who is serving a 54-month sentence in the $2 million embezzlement of the now-defunct D. Edward Wells FCU, has lost her appeal in the U.S. Court of Appeals. Carol Aranjo, former CEO of the Springfield, Mass.-based credit union, and her husband, Alphonso Smith, who just finished serving a 12-month sentence, were convicted after a five-week jury trial of conspiracy to embezzle and make false entries, and other embezzling charges, according to the judgment rendered Monday by the U.S. Court of Appeals for the First Circuit in Boston. They also were ordered to provide restitution of $400,000 each, plus Aranjo was ordered to pay $1 million more in restitution, according to the court documents. In Monday's decision, the appellate court ruled that the lower court judge, U.S. District Judge Michael A. Ponsor, had "reasonable cause" to dismiss, over Aranjo's legal counsel's objection, an African-American female juror under the prosecutor's peremptory challenge. Aranjo's attorneys had argued that the dismissal of "seemingly the one African American woman on the jury panel" implicates both race and gender classes. They noted that a different juror, a male, probably was not African-American and there were "very few" women on the jury. The appeals court also rejected Smith's claim that a court verdict against his wife for embezzling the funds was not sufficient proof that he knew the funds she moved to his business were illegal. The court wrote that proof of the several transactions and their impropriety was "coupled with evidence" that Smith regularly received cashier's checks or made "withdrawals unsupported by funds in his personal account or others he controlled"; that his wife was involved in giving approval for such transactions; that some payments occurred immediately after he had conferred with her at the bank; and that the negative balances were sufficiently large that he had to know that his withdrawals were misappropriating bank funds..." The embezzlements were discovered when examiners from the National Credit Union Administration (NCUA) reviewing the credit union's books for between 1999 and 2002 found including an unusually high, undocumented loan to Friends of the Credit Union, whose treasurer was Smith. Aranjo refused to permit examiners to investigate or view financial information for the credit union. As a result, in February 2003, NCUA placed Wells into conservatorship. When the agency discovered several negative balances including Aranjo's and Smith's accounts, which had negative $71,000 and negative $88,000 balances, respectively, NCUA liquidated the credit union, according to the court document. Aranjo was active on a national level, at one time chairing the National Federation of Community Development Credit Unions and testifying before Congress on a grant program for community development financial institutions.