In a consent order, the NCUA last week barred Richard Koenig, the former chairman of Central States Mortgage Corp., a bankrupt Milwaukee CUSO and ex-CEO of the $144 million Prime Financial CU of Cudahy, Wis., from further industry activities.
Terms of the directive were not disclosed, but the disbarment stems from the March 2009 state conservatorship of Prime Financial, which numbered among nearly two dozen small Wisconsin and Illinois CUs that suffered mortgage loan losses in the 2009 collapse of CSMC, one of the early CU victims of the economic recession.
CSMC had been chartered with leadership help of the Wisconsin Credit Union League, also one of the investors. The CSMC failure came as the real estate market turned sour in 2008-2009 with more than half a dozen small Milwaukee area CUs experiencing large losses and writing down their CSMC investments. Eventually a number were absorbed in mergers with healthier CUs.
The NCUA order said Koenig was being disbarred "without admitting or denying fault." The NCUA said its action falls under a "signed order of prohibition to avoid the time and cost of administrative litigation."
Following a turnaround by Prime Financial, the Wisconsin Office of Credit Unions in May lifted the conservatorship on the Cudahy CU after it posted a $270,000 profit in the first quarter and demonstrated financial capacity to grow, said regulators.
--jrubenstein@cutimes.com
