Business Loan Fraud Cases Advance
Two major credit union cases involving business loan fraud made news over the past week.
A jury is currently hearing testimony in the case involving William Liddle, former lending officer at AEA Federal Credit Union, who was allegedly involved in a loan kickback scheme.
Additionally, the latest NCUA Call Report data show that AEA received a $20 million subordinated debt note. The liability, shares and equity page of the report dated Jan. 27 showed the note was deposited in December 2011. Subtracting the note from AEA’s balance sheet appears to push its net worth to negative 6.6%.
The fraud trial takes place in Phoenix this week.
In December 2010, AEA confirmed that an 11-month federal investigation revealed that Liddle, a former vice president of business services at the Yuma, Ariz. credit union, was alleged to be part of a $1 million loan kickback scheme.
During his time at the credit union, Liddle approved more than $25 million in business loans, according to an indictment from a Phoenix federal grand jury. Liddle, along with his wife, Rhonda, and Frank Ruiz, an Arizona businessman, were arrested in December 2010 for their roles in approving questionable AEA business loans in exchange for nearly $1 million, according to the Arizona Office of the United States Attorney.
Ruiz used the loans to fund his businesses, many of which are now bankrupt, the district attorney said.
The Liddles were charged with 68 counts of money laundering and various other types of fraud. Ruiz pleaded guilty last June to several similar counts. According to media reports, Ruiz was scheduled to testify against Liddle last week.
Liddle worked at AEA from November 2004 to December 2009.
The NCUA placed the credit union in conservatorship in December 2010. As of August 2011, AEA had posted a year-to-date net income of $2.2 million, according to the NCUA. The regulator touted several improvements, including progress in business loan delinquency.
Meanwhile, the recent indictment of a real estate developer that allegedly obtained loans under false circumstances has brought Denali Alaskan Federal Credit Union some relief.
Lee Baker Jr. has been charged with 14 counts including fraud and money laundering for making false statements to secure loans from the $444 million credit union in Anchorage. He is facing a maximum penalty of 30 years in prison and a $1 million fine.
Denali Alaskan already settled a separate civil action with Baker and his company, Discovery Construction, according to Bob Teachworth, the credit union's president/CEO.
“Denali Alaskan supports the action taken by the U.S. Attorney’s office. The office, after their research, has determined they also have a case against Mr. Baker, and we will certainly follow this case as it now goes through the court system,” Teachworth wrote in a statement to Credit Union Times.
Baker allegedly made several transactions through Denali Alaskan in Anchorage dating back to 2005 to fund several condominium units. To obtain the loans, the U.S. Attorney’s Office said Baker transferred property from Discovery Construction to himself, and then back to his company. Baker then asked for $1.4 million for another deal. However, the funds went to reducing his shareholder debt to his construction company.
In another condo deal, Baker also allegedly lied to the credit union after drawing down proceeds of a $9.2 million loan for an Anchorage apartment project. He ended up defaulting on the loan, the indictment noted.