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Developer appeals dismissal of suit vs. conserved CU

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YUMA, Ariz. (3/19/12)--A Yuma, Ariz., real estate developer is appealing a federal judge's dismissal of his breach of contract lawsuit against Yuma-based AEA FCU, which is under conservatorship by the National Credit Union Administration (NCUA).

An attorney for Todd Burch, who is seeking $34 million from the credit union, filed a motion to appeal the lower court's decision to the U.S. Court of Appeals for the Ninth Circuit ( March 15).

On March 6, U.S. District Judge Frederick Martone had denied the suit, rejecting Burch's bid to prevent NCUA from selling his real estate projects and letting stand AEA's counterclaims to receive money the credit union says is owed by Burch.

Burch, who is developer of a housing subdivision and an assisted-living condominium, filed a lawsuit on Sept. 22, alleging fraudulent misrepresentation , breach of contract and defamation.  It alleged that AEA FCU cut off  his line of credit and sued him to collect on his loan even though the credit union's loan officer promised it would continue to fund his projects. Burch filed for bankruptcy in the spring of 2010 with an estimated debt of $17.5 million, said the Sun.

William Liddle, the credit union's former vice president of lending, recently pleaded guilty to more than 50 counts of fraud related to his role in an alleged $50 million kickback scheme that led to loan portfolio problems that prompted the conservatorship by NCUA.  Another real estate developer, Frank Ruiz, pleaded guilty in June to one count of conspiracy and one count of transactional money laundering for receiving millions of dollars in fraudulent business loans from Little (Yuma Sun March 12).

AEA FCU, with $229 million in assets, was placed into conservatorship in December 2010 after the fraudulent loans were discovered.  Last August, NCUA said the credit union's financial situation was improving (News Now Aug. 3).

Advisory committee announced for 2012 CUNA ELL

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MADISON, Wis. (3/19/12)--Five volunteers will serve on the 2012 CUNA Experience Learning Live! (ELL) Advisory Committee, announced the Credit Union National Association (CUNA).

They will help shape the direction and content of CUNA Experience Learning Live! held Sept. 30-Oct. 3 in Denver. The conference, which meets annually, is designed for training professionals to gather ideas to improve the educational cultures at their credit union. Participants will learn how to maximize staff energy, strengthen volunteer dedication and increase the overall knowledge of their members.

The new Advisory Committee members are:

  • Tobi Collins, Educators CU, Racine, Wis.;
  • Kristyn Dix, Kemba CU, Cincinnati;
  • Melissa Harper, Magnolia FCU, Jackson, Miss.;
  • Meggy Kutz, Summit CU, Madison, Wis.; and
  • Shani Vance, SunCoast Schools FCU, Tampa, Fla.
Committee members will assist in the planning and staging of CUNA Experience Learning Live! Their duties include developing relevant topics for credit union training and human resource professionals; identifying speakers that excel at delivering the confirmed topics; providing feedback and suggestions for potential networking and other benefits for attendees; encouraging credit union training professionals to attend and network; and serving as conference hosts by welcoming attendees, introducing speakers and facilitating communication during the conference.

Advisory Committee members receive complimentary registration to the conference. Committee members were chosen from a large pool of qualified applicants across the nation. Applications for the 2013 ELL Advisory Committee can be found at the link.

Another guilty plea in St. Paul Croatian FCU fraud

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CLEVELAND, Ohio (3/19/12)--A Kirtland, Ohio, man is the latest person to be sentenced for his role in the $2.5 million fraud ring that brought down St. Paul Croatian FCU in one of the nation's largest credit union failures in 2010.

John Cendol Jr., 48, was sentenced Thursday by U.S. District Judge Christopher A. Boyko in Cleveland to two weeks in prison and ordered to pay $260,000 in joint restitution to the Eastlake, Ohio-based credit union. He had pleaded guilty to one count of bank fraud. He was one of several defendants charged with allowing illegal transfers into their loan accounts at the credit union. 

At least 17 people have been charged in the fraud. Court records indicated that more than 1,000 fraudulent loans totaling more than $70 million were made to 300 account holders between 2000 and 2010 (News Now Feb. 28 and May 17).  The loans were instrumental in St. Paul Croatian being placed into conservatorship on April 23, 2010 and closed the following May 1.  The failure cost the National Credit Union Share Insurance Fund $170 million.

Two key figures in the case are awaiting sentencing: They are Anthony Raguz, 51, former CEO of the defunct credit union, who pleaded guilty to issuing the loans and accept more than $500,000 in bribes, kickbacks and gifts from those who obtained the loans (News Now  March 8), and Koljo Nikolovski, 49, of  both Eastlake and Skopje, Macedonia, who pleaded guilty to 18 counts of bribery, bank fraud and money laundering.  Raguz is scheduled for sentencing on June 11, and Nikolovski's sentencing has been set for April 23.

Eddy Zai, 43, a Cleveland area financier, was charged in February with 34 counts of obtaining fraudulent loans, making him the single largest recipient of the alleged fraudulent loans (News Now Feb. 9).

Others charged included:

  • Rose Ann Nikolovski, 48, Eastlake;
  • Marko Nikoli, 33, Eastlake;
  • Ruth Cendol, 55 of Kirtland;
  • Daniel Kocher, 72, of Euclid;
  • Edward Watral, 37, Creston;
  • Jennifer Cerjan, 33, Orrville;
  • Arben Alia, 34, of Eastlake;
  • Ilir Marku, 34, Willowick, Ohio;
  • Vaso Shani, 36, Eastlake;
  • Alban Sulkaj, 35, Clinton Township, Mich.;
  • Zoge Ahmetaj, 68, Eastlake;
  • Oerim Ahmetaj, 74, Eastlake; and
  • Skender Demiri, 36, North Ridgeville, Ohio (News Now March 4 and May 17).

Survey 30 of N.C. state CUs would switch to fed charter

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RALEIGH, N.C. (3/19/12)--Nearly a third of North Carolina's 48 state-chartered credit unions say they may switch to a federal charter if a dispute about the disclosure of CAMEL scores and the use of dual exams between state and federal regulators is not resolved, the North Carolina Credit Union League revealed Wednesday.

The league surveyed all but two of the 48 state-chartered credit unions in the state on the impact dual exams likely would have.

These most recent developments occurred after the Raleigh, N.C.-based State Employees' CU (SECU) received authorization from its state regulator and disclosed its state-issued CAMEL score (News Now Jan. 31).

The National Credit Union Administration (NCUA) has disputed the disclosure of the credit union's CAMEL rating, for several reasons, saying the state provides the rating to the NCUA, which treats it as confidential information. The NCUA discontinued its coordinated examinations with the state regulator, the North Carolina Credit Union Division (NCCUD), opting instead to begin separate exams for state-chartered federally insured credit unions in the state. In other states, the NCUA routinely conducts joint safety and soundness examinations with the state regulator.

A Dec. 6 letter from NCUA to NCCUD alleges that the North Carolina Credit Union Administrator announced that NCUA had initiated the process of termination of National Credit Union Share Insurance Fund insurance of SECU share accounts, and that confidential exam documents had been leaked.

League survey results indicate that 30% of the 39 credit unions responding are "very" or "somewhat" likely to convert to a federal charter if the situation is not resolved and the two- examination structure is maintained in future years. An additional 38% of respondents say they are undecided about a potential charter switch, and less than a third (31%) respond that it is "unlikely" they will convert.

The league also asked credit unions if they planned to switch charters if the three-month old dispute was resolved prior to 2013. More than 80% responded they were "very" or "somewhat" unlikely to convert if the two agencies began working together again.

"The results speak for themselves," noted NCCUL President/CEO John Radebaugh. "Credit unions appreciate the value of the dual charter, but they do not appreciate the regulatory and operational burden they've been placed under. Clearly, credit unions want a resolution to this situation, and they are willing to reconsider their chartering status if the regulators can't find a way to resolve their differences."

The survey also asked credit unions about the operational impacts and regulatory burden an added in-person examination presented.

Taken together, the league said the survey results reveal some troubling conclusions:

  • Left unresolved, the dual exam structure threatens to further erode the value of the state charter in North Carolina.
  • Conflicting examination findings and the lack of a working relationship between NCUA and NCCUD have further complicated an already complex operational environment.
  • The credit unions with the fewest staff resources and the greatest day-to-day operational challenges have been hit the hardest.
  • The dual examination structure continues to place further regulatory and operational burdens on credit unions.
The CAMEL rating system is NCUA's method of evaluating the health of credit unions. The rating, adopted by the NCUA in 1987, is based upon five critical elements of a credit union's operations: (C) Capital, (A) Asset quality, (M) Management, (E) Earnings and (L) Asset- liability management.

To see the North Carolina league survey results, use the link.

CU System briefs (03/16/2012)

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  • WHEELING, W. Va. (3/19/12)--A man convicted of robbing First Choice American Community FCU, Elm Grove, W. Va., and banks in two other states was sentenced to 12 years and seven months in prison by a federal judge last week (Associated Press March 14). Jeremy T. Dugan pleaded guilty to robbing First Choice American Community FCU; First Commonwealth Bank, Oakdale, Pa.; and PNC Bank, Perryville, Md. Dugan also will forfeit about $8,300 stolen from the banks. After he completes his sentence, he will spend three years on supervised release …
  • AKRON, Ohio (3/19/12)--A Columbus, Ohio, man was sentenced last week to 20 years in prison for the armed robbery of an Akron credit union and  sandwich shop last year (Akron Beacon Journal March 13). Phillip J. Bloodworth and an accomplice allegedly attempted to rob Buckeye State CU two days after Bloodworth allegedly robbed Penn Station East Coast Subs Shop. Bloodworth was convicted of two counts of aggravated robbery, a gun specification and other weapons offenses. In the credit union robbery attempt, a security guard drew his gun and the suspects fled …
  • BALTIMORE (3/19/12)--A Maryland man was sentenced to 13 years in prison for a crime spree in South Dakota last year that included the robbery of the Brookings, S.D., branch of Huron, S.D.-based Dakotaland FCU. Gary Allen Densmore, formerly of Glen Burnie, Md., had pleaded guilty to the robbery in May. He was sentenced in a Baltimore court to 157 months in prison--97 for three counts of bank robbery and 60 for violating a supervised release on previous conditions.  The credit union was robbed on Feb. 14, 2011. Densmore was arrested on the following March 3 in a stolen car in Savage, Minn. The crime spree included robberies in Maryland, Wisconsin and Iowa in February and March 2011 ( March 15) …
  • SEATTLE (3/19/12)--Salal CU, Seattle, announced that Russell Rosendal has been selected as its new president/CEO. Rosendal, formerly the credit union's chief financial officer (CFO), joined the credit union's staff in September 2009.  Rosendal has more than 25 years'  experience in the financial industry. He has served as executive vice president/CFO at both Cascade Bank in Everett and Foundation Bank in Bellevue, and as vice president of finance, planning and analysis for Washington Mutual before joining Salal.  Since he joined the credit union, it has grown to $344 million in assets from $245 million. "Salal CU has a culture of risk awareness," said Rosenthal. "We do our research and our due diligence, and when we've established the best course of action, we move aggressively. Our members know their best interests guide our every move and decision," he added …
  • RALEIGH, N.C. (3/19/12)--Phil Greer, senior vice president of loan administration at State Employees' CU (SECU) in Raleigh, N.C., died March 9 at the age of 63.  Greer was with the $13.5 billion asset SECU for 32 years and was responsible for all lending functions there, said the North Carolina Credit Union League in its Weekly Update (March 16).  Greer served for nine years as a member of the Executive Committee for the CUNA Lending Council, including two years as chairman.  He also served as a member of the Credit Union National Association governmental affairs subcommittee for consumer protection.  Greer was a past member of the Fannie Mae and Freddie Mac Credit Union Advisory Boards. He is survived by his wife, two daughters and five grandchildren …

Fifteen to crash Illinois league convention

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NAPERVILLE, Ill. (3/19/12)--Fifteen credit union staff will crash the Illinois Credit Union League's (ICUL) 82nd Annual Convention next month.

The initiative is part of an effort to attract young credit union professionals under age 30 to the event, under the guise of The Cooperative Trust (formerly The Crash Network), a grassroots organization comprising hundreds of young credit union professionals.

The idea behind Crash Illinois, like other Crash events, is to create a low-cost event within and alongside major credit union conferences, such as ICUL's Convention.

This year's credit union "Crashers" are:

  • Kevin Quinn, NuMark CU, Joliet;
  • Jessica Hamling, Blackhawk Area CU, Savanna;
  • Elizabeth Schroeder, Kaskaskia Valley Community CU, Centralia;
  • Scott Muniz, Maroon Financial CU, Chicago;
  • Mallory Eckstein, Members Choice CU, Peoria;
  • Ashley Wilson, Staley CU, Decatur;
  • Alex Swigert, SJH EFCU, Springfield;
  • Jon Norman, Alton Bell Community CU, Alton;
  • Serina Wolber, Cornerstone CU, Freeport; and
  • Amber Wilson, Members First Community CU, Quincy.
Five crashers were from Baxter CU, Vernon Hills:

  • Jorge Hurtado;
  • Lidya Garcia;
  • Jordan Koczot;
  • Shawna Becker; and
  • Taylor Murray.
Sponsored by ICUL and CUNA Mutual Group, Crash Illinois will help young credit union professionals attend the full convention and additional mentor sessions with industry thought leaders each day and build relationships with other young credit union professionals.

To be held April 26-28, ICUL's 82nd Annual Convention will tout many changes and highlights. The theme is "Get in the Game!"

Brent Dixon, young adult adviser at the Filene Research Institute, is the founder of The Crash Network, which has evolved into The Cooperative Trust. This effort began informally as a revolutionary conference for young professionals under age 30 that met around other conferences since 2012.

At the ICUL Convention, Dixon will present two sessions for attendees: "Attracting and Retaining Younger Members" and "Design Thinking: A Human Centered Approach to Innovation."

Connie Payton, wife of the late football legend Walter Payton, will keynote with "Family Values, Teambuilding, Embracing Life."

CUNA Mutual names Godlasky to board

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MADISON, Wis. (3/19/12)--CUNA Mutual Group has appointed Thomas C. Godlasky--who has a 31-year tenure as an insurance executive--to its board of directors.

Godlasky most recently served as CEO of Aviva North America, where he conducted oversight of an operation exceeding $350 million in revenue and more than 5,000 employees. His responsibilities included the strategic management and leadership for the second largest property and casualty company (Aviva Canada) and the second-largest life and annuity company (Aviva USA) within Aviva.

Some of Godlasky's most notable achievements as CEO include post-acquisition integration of AmerUs Group into Aviva plc, creating a pan-regional headquarters for the North American businesses and doubling the size of the company's U.S. business within two years.

Other CUNA Mutual Group board members include:

  • Alan Peppers (chairman), president/CEO, Westerra CU, Denver;
  • Joseph J. Gasper, retired president/chief operating officer, Nationwide Insurance;
  • Loretta Burd, president/CEO, Centra CU, Columbus, Ind.;
  • Eldon Arnold, retired president/CEO, CEFCU, Peoria, Ill.;
  • Bert J. Hash Jr., president/CEO, Municipal Employees CU of Baltimore, Inc.;
  • Farouk D.G. Wang, retired director, Buildings & Grounds Management, University of Hawaii;
  • Larry T. Wilson, president/CEO, Coastal FCU, Raleigh, N.C.;
  • James W. Zilinski, retired chairman, president/CEO, Berkshire Life Insurance Co.;
  • Robert J. Marzec, retired audit partner, PricewaterhouseCoopers;
  • M. Victoria Wood Miller, retired executive vice president and chief financial officer, Turner Broadcasting System Inc.;
  • Randy M. Smith, CEO, Randolph-Brooks FCU, Live Oak, Texas; and
  • Jeff Post, president/CEO, CUNA Mutual Group.

New Mexico CUs meet with candidates

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State Rep. Martin Heinrich (D-N.M.), right, chats with White Sands FCU CEO William Jacobs, left, and Sandia Area FCU Vice President of Marketing Jeff Cain at a town hall for candidates for a U.S Senate seat and hosted by the Credit Union Association of New Mexico. (Photo provided by the Credit Union Association of New Mexico)
ALBUQUERQUE, N.M. (3/19/12)--New Mexico credit union representatives from around the state met with candidates vying for a U.S. Senate seat at a town hall hosted by the Credit Union Association of New Mexico Wednesday.

At the town hall were State Rep. Martin Heinrich (D-1), former State Rep. Heather Wilson (R), and state auditor Hector Balderas (D). They are running for the seat of Jeff Bingaman (D), retiring senior U.S. senator from New Mexico.

About 25 people, including credit union board members, CEOs and staff, listened to presentations from the candidates and asked questions.

Among the topics they addressed were the Dodd-Frank Act, member business lending and taxation of credit unions.

The candidates discussed their views and records on issues affecting credit unions and their members. All three said they are long-time credit union members.

This was the first step in the candidates' quest to gain the credit union movement's endorsement in the race.

Former CUNA Board member Cornelia Downs dies

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PANAMA CITY, Fla. (3/19/12)--Cornelia (McCall) Downs, retired CEO of Panama City, Fla.-based NCSC FCU (now Innovations FCU), died Wednesday. She was 78.

Downs was CEO of the credit union for about 34 years, retiring in 1996.  She served on the board of directors for the Gulf Coast Chapter of Credit Unions and held numerous offices, including president of the chapter. 

Downs served on the Florida Credit Union League (now the League of Southeastern Credit Unions) board of directors and became the league's first woman chairman. She served credit unions for many years and held various positions on the Credit Union National Association Board.

She is survived by three children, six grandchildren, and two great-grandchildren. Funeral services were held Saturday.

Pa. CUs discuss key issues with congressmen

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HARRISBURG, Pa. (3/19/12)--While many of the nation's credit unions are in Washington, D.C., to meet with their congressional representatives this week, credit unions in Pennsylvania have been busy pressing their key issues with their congressmen on the home front in two recent meetings.

U.S. Rep. Mike Fitzpatrick (R-Pa.), center, poses with Pennsylvania credit union leaders and hosts during a meeting hosted by American Heritage FCU, Philadelphia, Wednesday. (Photo provided by the Pennsylvania Credit Union Association)
American Heritage FCU, Philadelphia, hosted a meeting at its headquarters Wednesday for U.S. Rep. Mike Fitzpatrick (R-Pa.), who represents the 8th District, said the Pennsylvania Credit Union Association (Life is a Highway March 15).  Representatives of six credit unions and several related organizations attended.  Fitzpatrick and the group discussed issues credit unions are facing including:

  • Member business loans;
  • Supplemental capital;
  • Growing regulatory burden; and
  • Consumer Financial Protection Bureau oversight.
Fitzpatrick also fielded questions from attendees on rising healthcare costs, the presidential election, concerns on the role of the government, and assisting small business growth.

Seven credit unions in Wilke-Barre, Pa., met Thursday with their new congressman, U.S. Rep. Tim Holden (D-Pa.), from the 17th District (Life is a Highway March 16).  The introductory meeting allowed Holden to learn more about credit unions in the region and their legislative and regulatory concerns, said PCUA. He answered questions from 30 people attending.

When asked by PCUA President/CEO Jim McCormack why he liked credit unions, Holden answered, "Credit unions are all I've known as a kid when getting my first auto loan. They have supported people when they couldn't access credit."  Holden added that "credit unions give people a chance when many financial institutions, especially today, have used regulatory excuses not to lend or reach out to better individuals' situations."

McCormack said Holden has supported credit unions since H.R. 1151, the Credit Union Membership Access Act; supports credit unions on interchange concerns; and is a co-sponsor of member business lending legislation.

The Credit Union National Association (CUNA) and credit unions are pressing Congress to lift the cap on credit unions' member business loans to 27.5% from 12.25%. Lifting the MBL cap would inject $13 billion into the economy for new small business loans and help create 140,000 new jobs, without cost to the taxpayer, says CUNA.

Right thing to do--senator on N.J. public funds

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New Jersey State Sen. Bob Singer (R) discussed municipal deposits in credit unions at Tuesday's South-Central Chapter of Credit Unions meeting. (Photo provided by the New Jersey Credit Union League)
EATONTOWN, N.J. (3/19/12)--New Jersey State Sen. Bob Singer told a group of credit unions last week that allowing credit unions to receive municipal deposits was the "right thing to do."

Singer, a Republican who spoke Tuesday at the South-Central Chapter of Credit Unions, played a major role in passing state legislation that allows credit unions to enter the $14 billion municipal deposits market, said the New Jersey Credit Union League (The Daily Exchange March 14).

"What we did for credit unions last year was the right thing to do," Singer told the group. "Hopefully credit unions can drive more competition and ultimately help taxpayers."

His key point to credit unions was to make sure they get themselves listed as an eligible depository with local public entities. "You should do it at the organizational meeting, but if they tell you they can't add you later, they are wrong. They can add you later," he said.

Singer noted that credit unions should be strategic in evaluating public funds opportunities and understand what they're getting into. Many municipalities have policies to put some public funds with any institutions based within their borders, so credit unions should be particularly active in their own municipalities, he advised.

New Jersey recently passed a law enabling the state's municipalities to make public funds deposits into credit unions. The measure was supported by the league.