Former Borinquen FCU CEO Gets At Least Seven Years in Prison
Ignacio Morales, former CEO of the $7 million Borinquen Federal Credit Union, will spend more than seven years in federal prison for embezzling $2.3 million and causing the Philadelphia institution’s 2011 collapse.
Morales was sentenced Thursday by U.S. District Court Judge R. Barclay Surrick in Philadelphia. He also ordered Morales to pay $2.3 million in restitution to the NCUA and to pay restitution to the IRS of $7.3 million.
Morales pleaded guilty in September to fraud, embezzlement, money laundering, failing false income tax returns and possession of cocaine with intent to distribute.
Federal prosecutors said Morales used his position as the credit union’s CEO to embezzle more than $2.3 million of BFCU funds through a variety of schemes from 2006 to 2011.
He also cashed hundreds of fraudulent U.S. tax refund checks through BFCU, keeping 20% of each check.
Prosecuting Attorney Arlene Fisk told the court that at one time, Morales was earning $50,000 a month in kickbacks from just one person who cashed nearly a dozen fake checks per week.
Morales also took $600,000 from the credit union to purchase $1.2 million in real estate for personal use and stole $700,000 from a member who deposited $1.7 million at the credit union.
He generated fake statements and misapplied credit union funds to pay dividends on the stolen funds to hide the crime, according to court records.
Additionally, he admitted to several other serious crimes in which he abused his role as credit union CEO. Court documents revealed he withdrew more than half a million dollars from the credit union in an attempt to purchase 15 kilograms cocaine. Morales admitted in court that he intended to use his share of profits from the drugs to cover up his crimes and throw regulators off his trail.
The NCUA issued a cease-and-desist order against the institution on June 6, 2011, and ordered it to obtain a CPA audit as well as verify member accounts and reconcile financial statements. It was placed into conservatorship June 24. On July 8, the NCUA liquidated the institution and the $1.4 billion TruMark Financial Credit Union of Trevose, Pa. assumed what was left.
Borinquen was chartered in 1974 by a Catholic social service organization and served 8,600 members as of June 2011, according to an NCUA release. The low-income credit union served mostly Spanish-speaking members.