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CU files suit against CUMIS

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MADISON, Wis. (12/8/09)--A Maryland-based credit union affected by fraud at U.S. Mortgage/CU National Mortgage Corp. has filed a civil suit against CUNA Mutual Insurance Society (CUMIS) to recover losses under a bond issued by CUMIS. In the complaint, Education Systems FCU, Greenbelt, said it purchased the bond to protect it from losses incurred under events such as the CU National Mortgage Corp. fraud. However, “the specific circumstances of this claim aren’t covered by our bond,” Phil Tschudy, CUNA Mutual Group media relations manager, told News Now. “We believe other entities have liability for the losses the credit unions have suffered and we are continuing to look for ways to assist the affected credit unions in seeking compensation for those losses,” he added. Madison, Wis.-based CUMIS filed two declaratory judgment actions in June and August in Wisconsin state court asking the court to declare that the bond did not cover the losses suffered by Education Systems FCU. Education Systems FCU said it was served with the August 31 action on Nov. 23. “The declaratory judgment action we filed seeks only to have the court resolve the question around coverage,” Tschudy said. “The action doesn’t seek damages against the credit union. “We were hoping not to have to move forward with the litigation and have been working toward that end,” he added. “However, in fairness to all of our policyholders, we need to abide by and defend the limits of our coverage to avoid having some credit unions subsidize the inactions of others. We remain hopeful this can be resolved in a manner that is fair for everyone." Education Systems FCU experienced losses when a servicing contractor hired to collect mortgage loan payments sold the loans to a third party without Educational Systems’ authorization and kept the proceeds, the complaint said. Education Systems FCU was one of 19 credit unions defrauded by CU National Mortgage, which closed this year after filing for bankruptcy in February. Its president, Michael McGrath, pleaded guilty in June to defrauding about $139.6 million from the credit unions and Fannie Mae. McGrath admitted to conspiring with others to fraudulently sell credit union loans and use the proceeds to finance U.S. Mortgage's operations and investments for himself and the company (News Now June 12).

Ohio league CUs support public funds bill

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DUBLIN, Ohio (12/8/09)--The Ohio Credit Union League and Ohio credit unions are meeting with state legislators to generate support for legislation that would allow Ohio credit unions to become eligible depositories for public funds. The bill, H.B. 317, is jointly sponsored by Ohio Majority Floor Leader Tracy Maxwell Heard (D-Columbus) and State Rep. Peter Ujvagi (D-Toledo) and 20 co-sponsors (eLumination Dec. 4). The bill would include credit unions as eligible depositories for state, communities, schools and other public entities. Under the bill, credit unions also could participate in the Ohio Department of Development’s Minority Business Enterprise Program and Capital Access Loan Program for small businesses. Credit union members would have access to linked deposit programs from the Treasurer of State, including GrowNow, SaveNow, Ag Link, ECO Link and Bid Ohio, the league added. Credit union leaders have met with State Rep. Nancy Garland (D-New Albany), a co-sponsor; State Rep. Ted Celeste (D-Grandview Heights), and State Sen. Tom Patton (R-Strongsville). During a meeting with Ujvagi, credit union leaders thanked him for supporting the legislation.

Texas Project NEFE Network reflects on success

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FARMERS BRANCH, Texas (12/8/09)--The need for financial education programs and delivery channels has increased significantly in recent years, and the Texas Credit Union Foundation (TCUF) has remained at the forefront of this necessity, most recently by raising awareness of the National Endowment for Financial Education (NEFE) program, said the Texas Credit Union League. The Third Annual Project NEFE Network meeting held last month in Dallas brought more than 75 Project NEFE Network members together for an all-day event that reflected on the accomplishments in 2009, recognized efforts being made by program advocates statewide, and prepared for the years ahead (LoneStar Leaguer Dec. 3). “Texas was the first state to launch the newly revised NEFE program in 2007 and since its implementation, the results made possible through statewide support across all institutions, from credit unions to community colleges, are genuinely impressive,” noted Courtney Nickles, TCUF executive director. Staci Zale, TCUF associate director and Project NEFE Network liaison, confirmed the results through a presentation that revealed:
* As of Nov. 19, more than 71,800 NEFE High School Financial Planning Program (NEFE HSFPP) students guides have been provided through Texas; * An HSFPP online training video will be coming in 2010, through support and assistance from members statewide; * The “Make the Difference” campaign, through which events in communities are held to benefit students and young adults as they pursue financial education awareness, successfully gave out 18 grants through the program; and * In 2009, TCUF provided $40,000 in financial literacy grants, contributing to the $184,000 in general grants provided for the year.

Broker for liquidated CU accused of fraud

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NEW LONDON, Conn. (12/8/09)--A late New London, Conn., stockbroker linked to the disappearance of $12 million from a defunct Connecticut credit union has been accused of fraud, according to documents filed with a securities firm regulator. Edwin F. Rachleff, a former employee of A.G. Edwards, is accused of misappropriating $7.5 million from one of his clients, according to online records from the Financial Industry Regulatory Authority (FINRA). FINRA is an independent regulator for securities firms in the U.S. Rachleff, who committed suicide in August 2008, handled investments for New London Security FCU, New London, Conn. The credit union was liquidated in July 2008 by the National Credit Union Administration (NCUA). Authorities did not tie Rachleff’s death to the credit union’s failure. Rachleff’s estate was sued by NCUA in March for $11.8 million in losses. The suit alleged that Rachleff created fraudulent account statements (News Now Aug. 4, 2008 and March 12).

CU System briefs (12/07/2009)

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* NEW BEDFORD, Mass. (12/8/09)--Southern Mass CU (SMCU) recently had a groundbreaking ceremony for the credit union’s first branch in 80 years. The building, located in New Bedford, Mass., will have four teller stations, three drive-up teller lanes and a drive-up ATM. It is expected to be finished next summer (SouthCoastToday.com Nov. 30). The credit union, founded in 1922 as Southern Massachusetts Telephone Workers’ CU, had office space in an older telephone building until it moved its headquarters to a new location in Fairhaven, Mass., in 1991. The credit union has $157 million in assets ... * NEWARK, Del. (12/8/09)--Louviers FCU has opened the first student-run credit union at Newark High School in Delware (Delaware Online Dec. 3). The credit union will offer auto loans and free checking to faculty, students and immediate family members. The credit union also will help students studying banking in school. Six tellers work at the credit union, which is open three days per week. Louviers, based in Newark, Del., has $181 million in assets ... * SUITLAND, Md. (12/8/09)--Andrews FCU, Suitland, Md., joined with Armed Forces Financial Network to present $3,000 in holiday gift cards to Joint Base Andrews Fisher House. Andrews FCU also presented another $3,000 in gift cards for a total of $6,000. The cards will be distributed to families at Fisher House while their loved ones are treated at a local medical center. “We hope these gift cards will help defray some of the personal expenses incurred by these families and make their stay more comfortable,” the credit union said. Andrews FCU has $841 million in assets. From left are: Chris McDonald, Andrews FCU president/CEO; Janet Grampp, Joint Base Andrews Fisher House manager; and Rosalind Bishop, Andrews FCU branch manager. (Photo provided by Andrews FCU) ...

W.Va. league CUs work with those ignored by banks

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CHARLESTON, W.Va. (12/ 8/09)--With 27% of West Virginia households unbanked or underbanked, according to a Federal Deposit Insurance Corp. (FDIC) survey, credit unions are stepping up to work with families ignored by the banking industry, said the West Virginia League. Credit unions are banks’ archrivals, West Virginia Credit Union League’s Rich Schaffer told The Charleston Gazette (Dec. 5). “Credit unions continue to work with struggling families who are often ignored by the traditional banking establishment,” Schaffer added. “Now, more than ever, credit unions are available to serve as an alternative to paying high fees for basic financial services.” The FDIC survey identified households as unbanked it they didn’t have a checking or savings account, the newspaper said. Households were defined as underbanked if they had a financial account but relied on check-cashing services, non-bank money orders, payday loans, rent-to-own agreements or pawn shops at least once or twice a year, or refund-anticipation loans at least once in the past five years, the paper added. The majority of the state’s unbanked are low-income people, and most poverty is found in rural counties, Sally Cline, West Virginia banking commissioner, told the paper. To read the article, use the link.

Hit man at CU gets death sentence

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NEWPORT NEWS, Va. (12/8/09)--A hired hit man convicted in July of the murder of a naval officer outside a Virginia credit union in 2007 was given the death sentence Friday in U.S. District Court. In July, a U.S. District Court jury ruled that David A. Runyon, 37, met the criteria to be considered for execution for his role in the April 2007 shooting death of Navy Communications officer Cory Allen Voss, 30, which took place outside a Langley FCU ATM in Newport News. The murder was designed to look like a random robbery that went awry, authorities said (Daily Press July 23). In August, the same jury that found Runyon guilty also recommended he receive the death penalty. When U.S. District Court Judge Rebecca Beach Smith asked Runyon--a former police officer and U.S. Army soldier--if he wanted to say anything before she handed down the sentence, he answered, “No, Ma’am” (Daily Press Dec. 5). Last year, Voss' wife, Catherine Ann Voss, pleaded guilty to masterminding the plot so she could be with her boyfriend and collect roughly $500,000 in Voss' death benefits. In November, she was sentenced to four life terms (News Now July 24). Police say surveillance footage shows Runyon holding Voss at gunpoint. Voss went to the ATM at about 11 p.m. April 29. His wife reported him missing the next morning, and police found his body in the driver's seat of his pickup truck (News Now Dec. 18). A man convicted of being an accomplice in the murder of Voss was sentenced in November to three life terms in prison. Michael A. Draven, 29, was sentenced Nov. 17 in federal court in Virginia, after being found guilty July 17 of conspiracy to commit murder for hire, carjacking resulting in death, and murder with a firearm in relation to a crime of violence (States New Service Nov. 17).

Delfin leaving NCUF to head Americas Charities

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WASHINGTON (12/8/09)--National Credit Union Foundation (NCUF) Executive Director Steve Delfin is leaving the foundation to become president and CEO of America's Charities effective Jan. 4, NCUF Chairman Allan Kemp McMorris has announced. The NCUF board will initiate a search for Delfin’s replacement in the near future, added McMorris, who also is CEO of Oakland County CU, Waterford, Mich. The board has appointed Tom Candell, foundation managing administrative director, to serve as interim executive director while the board conducts the search for a permanent replacement. The NCUF board will focus on the process and procedures for the search at its next meeting in early January. Candell has been with the foundation for the past four years. Previously he was senior financial director for Meriter Hospital in Madison, WI. He has spent much of his career as a chief financial officer for nonprofits. McMorris thanked Delfin for his service and the work the foundation has accomplished since Delfin joined the organization five years ago. “The foundation during Steve’s tenure has stood out for the caliber of its development work and thought leadership, especially on such issues as serving the underserved and emerging markets, and strategic philanthropy. On behalf of the NCUF board of directors, we want to thank Steve for all of his contributions, and we wish him the best in his next endeavor,” he said. Delfin said his decision to leave was based on the specific opportunity with America’s Charities, a federation of 180 national and local nonprofits that work with employers and employees to improve the effectiveness of their workplace charity donations using payroll deductions. “This was a very difficult decision because the work we are doing at NCUF is so important. But I’ve always had a passion for and have stayed engaged in expanding strategic workplace philanthropy.” Credit Union National Association (CUNA) President/CEO Dan Mica also wished Delfin well and recognized key accomplishments that took place during his five-year tenure, particularly the organization’s work around REAL Solutions. “Since January 2007, when NCUF took on REAL Solutions as its ‘signature’ program, the initiative has grown to encompass 33 states, with over 800 participating credit unions. It has tremendous potential for even more growth and sustainability,” Mica noted. During that five-year period NCUF also nearly doubled the number of Development Educators through its Credit Union Development Education Program, initiated an Innovation Grants Program that more strategically aligns NCUF grants to credit unions and credit union organizations to REAL Solutions strategic goals and objectives, helped raise and distribute more than $4 million for financial education programs like the PBS BizKid$ TV series, and raised another $4 million-plus for credit union disaster relief.