April 19, 1995
Over the past few months, the downturn in the economy has exposed quite a few scams and scandals.
This week, Credit Union Times, is taking a look back to 1995 at a scandal involving $2.5 million that went missing from a credit union that supposedly had assets of $168,000.
The trouble started for Berkshire Credit Union in Pittsfield, Mass., when the Jewish Federation of the Berkshires reviewed its own finances. An accountant from the federation wanted verification of its various bank accounts and received none from the credit union. The accountant then found that the credit union listed assets of only $168,000 when the federation alone reported it had $140,000 in its account.
When the credit union was turned over to the NCUA, its liquidation team found actual deposits between $100,000 and $150,000 and received claims for deposits in excess of $2.5 million.
At the time, it appeared that loans were taken out in individuals' names without their knowledge.
Businessman Leon L. Siegel, who controlled Berkshire's finances, was at the center of the scandal.
Siegel's business, J-L Distributors Inc. filed for bankruptcy shortly after the credit union's financial troubles were exposed. At the time the story broke, Siegel had suffered a heart attack and was being treated at a hospital. His company owed $10 million to 20 unsecured investors, including several of his close friends.
The scandal ended a 10-month streak of no losses for the NCUSIF.