SEC Sues Fake Caribbean CU
Does a 7.75% rate on a CD grab your fancy?
Indeed, and exactly this was an offer at Her Majesty’s Credit Union in the Virgin Islands.
One small problem. It wasn’t actually a chartered credit union.
So the U.S. Security Exchange Commission has now filed against the operator Stanley McDuffie, who has a number of alias’ (among them are Stanley Roberson, Stanley Battle and Stanley Robertson-Baffle).
The SEC charges that McDuffie collected funds from would be CD buyers in offices he operated first in Denver and later in Watkins, Colo.
E. Dale Parrish, an attorney in Golden, Colo., who represents McDuffie, has said the credit union has closed. He added to the Denver Post: “All I can say is there is much more to this than even the SEC knows.”
The SEC has claimed at least four people bought CDs from Her Majesty’s Credit Union. One ponied up $365,000.
McDuffie has a prior involvement with a failed credit union, Jilapuhn Federal Credit Union in Georgia. That entity was shut by regulators in 2005, eight months after McDuffie launched it. McDuffie, under the name Stanley Roberson, was hit with an NCUA ban in 2011.
Chartering a credit union in the Virgin Islands, the Denver Post reported, is as simple as applying for a business license. It quoted a source characterizing the process as “rather lackadaisical.”
As early as 2008, McDuffie applied for membership for Her Majesty’s Credit Union in the Credit Union Association of Colorado (now the Mountain West Credit Union Association).
His application was rebuffed. “To our knowledge, it’s highly unusual for an unchartered credit union to operate in Colorado,” Joy Audet, spokeswoman for the MWCUA, told the Denver newspaper.
The Virgin Islands Daily News, meantime, has reported: “Her Majesty’s Credit Union, a newcomer among financial operations in the territory, identified itself on its website as a reputable business headquartered in Denver. Neither claim was true. HMCU’s home office is beside a rural Colorado airstrip in the middle of nowhere. It is operated by a man with a criminal record, multiple aliases and a history of failed business ventures.”
A local TV station has posted a report on Her Majesty’s Credit Union on YouTube.
According to the SEC filing, when investors attempted to redeem matured CDs they were told the funds were “tied up.” That eventually led to the SEC filing.