Florida Business Lending CUSO Shuts Down?
The website and phone number for CU Business Capital LLC, which was owned by Eastern Financial Florida Credit Union, are both inoperable in light of a loan participation lawsuit.
The Miramar, Fla.-based CUSO has been named in a lawsuit filed by New Hyde Park, N.Y.-based Sperry Associates Federal Credit Union allegedly claiming that it purchased roughly $4.5 million in participation loans with Eastern Financial. The Miami-based CU merged with Space Coast Credit Union in Melbourne, Fla. in June 2009 after being placed in conservatorship. Space Coast and Small Business America, CUBC's successor, have also been named in Sperry's lawsuit.
Sperry contends that a $22.4 million land deal agreement occurred between Eastern Financial and South Florida Properties on October 2006. An undivided participation worth nearly $3 million was sold to Sperry. According to the complaint, Sperry was paid $1.5 million participation for another $15 million loan involving King Credit Facility with CUBC underwriting the loans.
Sperry said since SCCU assumed all of Eastern Financial's obligations after the merger, it is required to turn over the portion of the participation loan allocations. In its complaint, Sperry also alleged the NCUA made a payment to SCCU on the participation loans, which were in default at the time of the merger.
A comment from the NCUA was not immediately available on the suit. An NCUA Office of Inspector General material loss review previously found that Eastern Financial's extensive investments in collateralized debt obligations, rampant member business loan growth and state and federal examiner neglect contributed to the CU's collapse.
A request to SCCU from Credit Union Times for information on CUBC's status was not answered.