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CU System briefs (03/30/2010)

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* PENSACOLA, Fla. (3/31/10)--Pensacola police and the Santa Rosa Sheriff's Department are looking for the former boyfriend of a woman who was carjacked at a credit union's night deposit early Sunday morning. Sarah Magnes, 21, was one of two pizza parlor employees making a night deposit at Pen Air FCU in Tiger Point. The first car pulled away. After Magnes deposited the funds, a masked man put a gun to her head, demanded money and, when she said she had just deposited the funds, he stole her car. Gulf Breeze police spotted the stolen car and gave chase, joined by Pensacola police. The suspect, Tirek Robinson, 22, allegedly jumped from the stolen vehicle just before it went into the bayou. He was still at large Tuesday (Northwest Florida Daily News March 29 and PNJ.com March 30) ... * HARRISBURG, Pa. (3/31/10)--Harold F. Brown, former CEO of what is now Tri State Rail FCU, Erie, Pa., died Saturday. He was 87. Brown was employed by Standard Stoker Co., and was treasurer of the company's credit union before moving to New York Central FCU, which became Penn Central FCU, then Conrail, then Tri State Rail FCU. Brown was CEO of the credit union for more than 65 years. He was active in the credit union movement, holding positions of treasurer, president and national director of the Pennsylvania Credit Union League before it became Pennsylvania Credit Union Association (PCUA). According to PCUA, he served on the association's board for 23 years and was board chairman from 1972 to 1974 (Life is a Highway March 30). He was pioneer of five credit unions and active in the Erie chapter. In 1981, he was named the league's Credit Union Professional of the Year. He also was president and chairman of PACUL Services from 1975 to 1980. Funeral services are at 10 a.m. today at Christ United Methodist Church, Erie (Erie Times-News March 28) ...

Minn. public funds measure still in legislative process

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ST. PAUL, Minn. (3/31/10)--A Minnesota bill that would have given credit unions and community banks a preference to receive state deposits has been withdrawn by its sponsor, Rep. Tim Mahoney (DFL-St. Paul). However, the overall issue is still alive in several forms, according to the Minnesota Credit Union Network (MnCUN). Mahoney's bill, which was supported by MnCUN, would have given local credit unions and community banks a price advantage in bidding to win deposits from state agencies and called for a study to determine the benefits of directing public deposits to them (News Now March 23). “As for public deposits--the preference legislation did not meet the legislative deadlines this year, and that part of the bill has died," said Mara Humphrey, MnCUN vice president-governmental affairs. "However the study portion of the bill is still moving forward through the legislative process. "This portion of the bill would investigate how to split up the state’s large accounts into smaller ones that community financial institutions could hold, and it studies the economic benefits to local units of government for using community financial institutions more," Humphrey said. Also still moving is a bill that would establish a pilot program for Minnesota state colleges and universities to transfer deposits from the state treasury to a “community financial institution” located within 25 miles of the campus. The pilot program would include eight institutions, she said. MnCUN "supports efforts to give credit unions additional opportunities to hold public funds. We believe that the legislature acknowledges the importance and potential benefits of keeping funds in local financial institutions,” Humphrey noted.

Second TJX hacker sentenced to seven years

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BOSTON (3/31/10)--A second Miami, Fla., man has been sentenced for his role in the TJX Cos., BJ's Wholesale Club and Dave & Buster's restaurant data breaches. Christopher Scott, 27, was sentenced Monday to seven years in prison plus three years of supervised release after he pleaded guilty to conspiracy, unauthorized access to computer systems, access device fraud and identity theft (Associated Press via The New York Times March 30). Scott was described as a "lieutenant" of Albert Gonzalez, the key figure in a number of huge data breaches that affected thousands of credit union members and credit unions, as well as other companies and financial institutions. Scott helped Gonzalez hack into wireless data networks of several national retailers (The Boston Globe March 30). TJX Cos., the Framingham, Mass., owner of retail stores such as T.J. Maxx and Marshalls, said it lost $171.5 million in the breaches, including the cost of settling litigation after the breach. BJ's lost between $11 million and $13 million. Gonzalez was sentenced Thursday and Friday to more than 20 years in prison for heading up the breaches. It is one of the longest sentences ever ruled for a hacking or ID theft case, said The Globe. Several other conspirators who played minor roles in the data breaches also were recently sentenced. They are:
* Jeremy Jethro, 29, sentenced earlier this month to three years probation and six months of home confinement for supplying a code that helped Gonzalez break into TJX and other companies. * Humza Zaman, 33, sentenced earlier this month to 46 months in prison for helping Gonzalez launder about $700,000. * Stephen Watt, 26, a former programmer with Morgan Stanley, sentenced in December, to two years in prison for tweaking hacking software for Gonzalez.

WOCCU backs introducing stevia crop in Kenya

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KISUMU, Kenya (3/31/10)--Soft drinks' popularity is creating an economic crisis for the world's tea leaf growers, with many seeing a significant drop in demand for their crop. Thanks to help from World Council of Credit Unions (WOCCU), Kenyan farmers in Kisumu, northwest of Nairobi, are now growing stevia, a natural sweetener that could one day overtake its artificial counterparts.
Click to view larger image Brian Branch, left, executive vice president and chief operating officer of the World Council of Credit Unions, examines the stevia crop of Kenyan farmer Samwel Kirui and his wife while the plants dry in the sun before being sold to processors.
Stevia, a member of the sunflower family, originated in South America and grows as far north as Arizona, New Mexico and Texas. Sometimes known as "sweetleaf" or "sugarleaf," stevia's leaves have a natural sweetness 30 to 45 times that of regular sugar. It is widely used as a sweetener in Japan and as a food additive or dietary supplement in other countries, said WOCCU. Medical testing has shown that stevia can be an effective sugar substitute with a positive impact on obesity and high blood pressure, said WOCCU. It also has a negligible effect on blood glucose levels, making it attractive as a sweetener for people on low-carbohydrate diets. The U.S. Food and Drug Administration approved stevia extract as a sugar substitute in December 2008. With the help of funding from the U.S. Department of Agriculture, WOCCU has introduced stevia varieties grown on small plots by poor rural farmers who are members of Kenya's Ndege Chai Savings and Credit Co-operative (SACCO), or credit union. After two years of testing, Kisumu's stevia growers are bringing their crop to market through a business alliance with Finlays, a Scottish company with extensive tea growing operations in East Africa and Sri Lanka. "The majority of Kenya's poor still live in rural areas, and many of them are small landowners and subsistence farmers looking for crops that will provide additional household income. Stevia is a crop that has the potential for strong demand," said Brian Branch, WOCCU executive vice president and chief operating officer, who has worked with Kenya's stevia farmers. "Poor farmers with the least amount of training can produce stevia sustainably and profitably on their small landholdings. The challenge will be achieving the scale of production necessary to match stevia's market potential," Branch said.
Click to view larger image The stevia plant is widely used as a sweetener and food additive or dietary supplement. (Photos provided by the World Council of Credit Unions)
Most Kenyan farmers start their stevia crop on a half-acre. The stevia, which grows to be three feet tall, requires two-and-one-half months of cultivation. The leaves are stripped from the plant, dried, and then sold to be ground into a fine white powder that is the basis of the sweetener. The very soft drink companies that are competing with tea leaf production are the world's largest users of sugar and sweeteners, offering tremendous potential for stevia growers. But to tap that market requires significantly more stevia than the farmers can currently grow. Ndege Chai currently finances operations for 1,500 members growing stevia and anticipates that number could grow to 2,000 by the end of 2010. Crop demand projections suggest that 25,000 area farmers could be growing stevia in five years, a capacity far beyond the financial capabilities of Ndege Chai and other small SACCOs. Business alliances with companies like Finlays could provide the capability necessary to raise Kisumu's stevia production to the levels needed to attract the attention of major soft drink conglomerates, according to Branch. "As a substitute for the tea crop, which is declining in popularity, stevia helps poor Kenyan farmers bridge their income gaps," Branch added. "The potential of stevia to help these same farmers raise their earning potential appears to be unmatched by any other crop."

Virginia CUs hit 1 million for kids hospitals

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LYNCHBURG, Va. (3/31/10)--Virginia credit unions have donated their first $1 million to Children’s Miracle Network, a non-profit organization that raises funds for 170 children’s hospitals, including seven in Virginia.
Click to view larger image Virginia credit unions raised more than $1 million to benefit Children’s Miracle Network hospitals. Pictured from left are: Erin Hildreth, Children’s Miracle Network; Virginia Credit Union League staffers Jeanne Sullivan, director of lending and insurance products; Lewis Wood, director of public relations and communications; and Mary Amyx, executive assistant; Patty Jasper-Zellner, Children’s National Medical Center, Washington, D.C.; Brenda Kuntz, Children’s Hospital of the King’s Daughters, Norfolk; Amy Wicks-Horn, University of Virginia Children’s Hospital, Charlottesville; and Rachel Bruni, representing network hospitals serving greater Richmond. (Photo provided by the Virginia Credit Union League)
The Virginia Credit Union League named Children’s Miracle Network its “charity of choice” in 2003, encouraging its member credit unions to raise funds and serve as volunteers in support of the charity. The $1 million was raised during the seven-year partnership. “This $1 million milestone represents a tremendous effort on the part of our credit unions,” said league President Rick Pillow. “Each year, the league’s Community Involvement Committee and our member credit unions hold dozens of fundraisers in support of Children’s Miracle Network, including golf tournaments, auctions, and branch and lobby promotions. It’s those efforts and the support of credit unions’ staff and members that made this possible.” Virginia credit unions also sponsor the Credit Union Cherry Blossom Run in Washington, D.C. Credit unions use their sponsorship to raise funds for Children’s Miracle Network, with more than $1 million donated nationally in 2009 alone. Credit unions have raised more than $3.6 million since assuming the title sponsorship of the race in 2001. Virginia credit unions also donated more than $880,000 to local nonprofits last year, said The Richmond Times-Dispatch (March 28).

Trial date set in Corporate America-U.S. Central case

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BIRMINGHAM, Ala. (3/31/10)--A U.S. District Court judge in Alabama Thursday set the trial date--Dec. 6--in Corporate America CU's lawsuit against individual director defendants of U.S. Central FCU. U.S. District Judge Inge Johnson set the jury trial for 9 a.m. ET in Birmingham, Ala. A pretrial conference was scheduled for Nov. 29, according to the order filed by Johnson. In the lawsuit, Corporate America alleges that U.S. Central violated the Securities and Exchange Act of 1934 and state laws by soliciting Paid-in-Capital (PIC II) funds from member credit unions. The corporate claims U.S. Central concealed the extent of its investment losses. Defendants' answer denying the claims was filed with the court on Friday.

Oregon governor signs public funds bill

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BEAVERTON, Ore. (3/31/10)--Oregon Gov. Ted Kulongoski Monday signed a bill that lifts the $250,000 cap on the amount of public fund deposits Oregon credit unions can receive from municipalities. The bill will be effective Jan. 1, 2013. The credit union movement of Oregon applauds Kulongoski for “acknowledging the value of extending an additional choice for public entities to seek a fair and competitive rate of return on the people’s money,” said the Credit Union Association of Oregon (CUAO). “This issue has been worked on since 1981, and is a testament to the movement’s resolve to advance the credit union charter, and to continue seeking new avenues to serve their local communities,” said Pamela Leavitt, CUAO senior vice president of governmental affairs and public relations. About 4,000 public agencies in Oregon receive public funds and use financial institutions to house the funds.

MCUL OFIR meet on loan modification issues

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PLYMOUTH, Mich. (3/31/10)--Michigan Credit Union League (MCUL) representatives and regulatory affairs staff met with state Office of Financial and Insurance Regulation (OFIR) Commissioner Roger Little and Assistant Director John Kolhoff on March 23 to discuss trends in Michigan’s credit union industry.
Michigan Credit Union League staff met with state Office of Financial and Insurance Regulation (OFIR) Commissioner Roger Little (left) and Assistant Director John Kohloff at the league’s headquarters in Lansing, Mich. (Photo provided by the Michigan Credit Union League)
The first bi-annual meeting of the year, held in Lansing, Mich., covered topics including loan modifications, foreclosures and member business lending. OFIR said its watch list has seen an uptick because net worth across Michigan credit unions continues to decline as delinquencies and charge-offs increase, according to the league (Michigan Monitor March 30). OFIR said it is concerned about interest-rate risk, and that loan modifications and troubled debt restructurings are not being reported according to generally accepted accounting principle requirements. To help credit unions understand these issues, Kolhoff will participate in a “Troubled Debt Restructuring: Panel Discussion” session at the league’s annual convention May 21. Little encouraged credit union CEOs to contact OFIR supervisory examiners and his office to discuss unresolved differences concerning exam issues and examiner conduct. MCUL meets with OFIR and National Credit Union Administration (NCUA) staff twice per year. A follow-up summary of the meeting will be sent to all CEOs and posted to the league’s website after an April 20 meeting with NCUA Supervisory examiners Andrew Healey and Dennis DeMilner.

Wheres my Census form CUs can help

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WASHINGTON (3/31/10)--The 2010 Census questionnaires are out and while many members may have already mailed their questionnaires back, the Census Bureau is asking credit unions' assistance in encouraging stragglers to send in their forms and helping others get a questionnaire. One credit union is going the extra distance to help make sure people are counted.
Battle Creek, Mich.-based United Educational CU's bilingual census assistant, Elizabeth Tutewiler, will assist individuals in answering the Census Bureau's questionnaire to help ensure everyone is counted. (Photo provided by the Michigan Credit Union League)
United Educational CU, a $97 million asset credit union based in Battle Creek, Mich., is providing a bilingual Spanish and English staff member, Elizabeth Tutewiler, to serve as a census representative. She will provide assistance to individuals who may have trouble reading or understanding the questionnaire, according to the Michigan Credit Union League (Michigan Monitor March 29). United Educational CU, which has a diverse membership and many Latino/Hispanic members, has spent several months stressing the importance of the census. "Each year, the federal government allocates more than $400 billion to communities for road and community improvements, education, public health services and more," said President/CEO Fran Godfrey. "These funds support our communities and bring jobs as well, which are vitally important. Michigan will likely realized a population decline, due to the tough economy, so we are putting our best efforts toward getting everyone counted," she told the league. If members haven't received a questionnaire form--or if they've misplaced it--credit unions can let them know they can still be counted by going to a Be Counted site or a Questionnaire Assistance Center to pick up another form in their preferred language. Until April 19, members can go online (use the link) to find the nearest Questionnaire Assistance Center. Once on the site, they should click the second arrow to locate the "Find a Questionnaire Assistance Center." Then they can type in their ZIP code to locate the nearest center. After April 12, credit unions can inform members they can order a replacement questionnaire through the Telephone Questionnaire Assistance line at 866-872-6868. The Telephone Questionnaire Assistance Line will be operational until July 20. In May, census workers will start door-to-door canvassing to contact people who haven't sent in their questionnaires by then. Credit unions can help by warning their members that door-to-door canvassers may be in their neighborhood to help them answer questions. Credit unions also can educate members on what to expect from a census taker. The census workers will begin May 1 and continue through late summer to follow up on addresses with non-responses. The Credit Union National Association is a Census 2010 partner.