GUADALAJARA, Mexico - Lured by interest rates of 45% a year, thousands of credit union members with deposits in The Puerto Vallarta People's Credit Union may have been swindled by the CU's founder for as much as $160 million.
According to a front page story in today's Los Angeles Times, $160 million worth of deposits from some 58,000 members of the CU may be lost. The credit union's founder, Jose Ocampo Verdugo, has been jailed since February and the CU's 49 branches have been shut down.
Verdugo is charged with using the credit union to launder money for two well-known methamphetamine ("speed") dealers. Meanwhile Verdugo has apparently been using member deposits for his own personal spending spree, amassing some 70 properties and other assets, including six planes and a hotel, according to the story.
Unfortunately, The Puerto Vallarta People's Credit Union may not be the only Mexican credit union pilfered by Verdugo. The story also stated that federal prosecutors believe Verdugo controls hundreds of other Mexican credit unions.
For years the Mexican government has been criticized for not intervening in one of the most fraudplagued financial systems in the world.
"This is the oldest fraud in the world-to pay high interest from fresh deposits," said Felipe de Jesus Preciado, a congressman from Mexico's National Action Party.
The story cited one retired barber from New Jersey who moved to Mexico and deposited $10,000 into the credit union because he was enticed by a 47% interest rate.
