A bank employee who pleaded guilty in July 2009 in a case involving $4 million in stolen certificates of deposit from four credit unions and other financial institutions is scheduled to be sentenced this month.
Guardian Angel Credit Union, Coreplus Federal Credit Union, Hamilton Federal Credit Union and East Idaho Credit Union are among the financial institutions that filed a lawsuit against MetaBank and Meta Financial Group to recover $4 million in CD funds. In July 2009, Charlene M. Pickhinke, a former MetaBank employee for 28 years, pleaded guilty in U.S. District Court in Sioux City, Iowa, to money laundering, wire fraud, aggravated identity theft and making false statements on a bank's records, according to the United States Attorney's Office for the Northern District of Iowa.
In her plea agreement, Pickhinke admitted that from 1995 to 2008 she sold more than 40 fake CDs while employed at MetaBank. She also admitted to opening two bank accounts using the names and Social Security numbers of deceased bank customers and laundering funds through the accounts. Pickhinke is scheduled to be sentenced this month.
On May 5, a court granted the $40 million Guardian Angel CU in Berlin, N.H. a motion to certify a class action suit, according to May 14 SEC documents filed by MetaBank. Christopher Meier, an attorney with Cooper Cargill Chant P.A., who previously spoke with Credit Union Times (CU Times, July 22, 2009) and is representing the New Hampshire-based CU, did not respond to repeated calls for comment. On May 6, Meier e-mailed Credit Union Times an advisory that the court had issued an order certifying the class. Interested parties were told that they would receive a class notice soon, giving them the opportunity to participate. Meier was scheduled to meet with a judge May 17 to discuss the remainder of the action and indicated that more updates would follow.
Meanwhile, a similar case seeking CD recovery was voluntarily dismissed between MetaBank and the $193 million Coreplus Federal Credit in Norwich, Conn., which filed a civil action on Nov. 18, 2008, according to SEC documents filed by the bank. The last update involving the $27 million Hamilton Federal Credit Union in Novato, Calif., involved seeking a class action status on the case. The $233 million East Idaho Credit Union had also filed suit. Calls to the credit unions requesting comment were not returned.
Outside of the credit union industry, MetaBank has been dealing with suits from others as well. Methodist Hospitals of Dallas settled for a payment and was dismissed with prejudice, according to the bank's SEC filings. Of the nine cases filed to date, two have been dismissed, and three have been settled for payments that MetaBank "deemed reasonable under the circumstances, ?including the costs of litigation." Of the four remaining cases, two are class action suits.
"Notwithstanding the nature of [Pickhinke's] crimes, which were secreted from the bank and its management, plaintiffs in the four remaining cases seek to impose liability on the bank under a number of legal theories with respect to the remaining $3.8 million of bogus CDs that were issued by the former employee," MetaBank said in its May 14 SEC filing. "The bank and its insurer, which has assumed defense of the action and which is advancing defense costs subject to a reservation of rights, continue to vigorously contest liability in the remaining actions."