The original charge of fraud in 2009 involved a salesperson in the Gun Library in Hammond, Ind. who was accused of buying the same high dollar guns from friends, repeatedly, for kickbacks. I couldn't find a report of a conviction and the charges may have been settled with restitution.
Buying at inflated prices at other Libraries was also rumored to be taking place.

As said, there were most certainly honest and ethical managers in some of the Libraries.

Here's a thread from 2010
https://doublegunshop.com/forums/ubbthreads.php?ubb=showflat&Number=173197

https://sites.google.com/a/damascusknowledge.com/www/home