A former Hammond bank employee pleaded no contest to a charge of felony theft in connection with the diversion of funds that should have gone to people who had made early cancellations of insurance polices, prosecutors said Wednesday.

Clarence E. Zahn Jr., 53, diverted about $180,000 for personal use, District Attorney Scott M. Perrilloux said.

Zahn, who also raised cattle, used the diverted money to buy feed, fencing, bull semen and other items related to his farm, Assistant District Attorney Don Wall said.

A judge ordered Zahn, who had worked at Central Progressive Bank on Oak Street in Hammond, to make restitution and fined him $2,500.

District Judge Robert Morrison also gave Zahn a five-year suspended sentence, placed him on probation for five years and ordered him to sign an agreement that he will never work for another bank or financial institution, Wall said.

Zahn, who operated the insurance premium finance division of the bank, ran into difficulties after the bank changed policies and had records transferred from his office to the bank’s main office, the prosecutor said.

The representative of a client of the bank subsequently contacted the bank to find out why no refund check had been issued to his company.

He was informed bank records showed the refund had been made, Wall said, adding the bank then couldn’t find a canceled check for the refund.

“That sent up a red flag, and they started looking at everything,” Wall said.