A man convicted of defrauding the $2.8 billion, 202,000-member Lake Michigan Credit Union has sued the Grand Rapids, Mich., credit union, he says on behalf of the members, because the credit did not have policies in place to detect his fraud.
Michael Bruce Vorce pleaded guilty in October 2009 to two counts of a 15-count indictment alleging he and other conspirators had defrauded Lake Michigan Credit Union, the Michigan State University Federal Credit Union and 13 banks for a total of roughly $24 million.
Lake Michigan CU’s part of the $24 million was $4.7 million and Vorce was sentenced to 12 years in federal prison for his part in the scheme.
In his lawsuit filed in U.S. District Court, Vorce said he filed the suit on behalf of the credit union's members who, he argued, were victims of the credit union's failure to prevent the fraud.
“The members have been victimized by the LMCU defendant’s' stunning failure to properly and lawfully operate a federally insured financial institution,” Vorce wrote in his complaint, adding the members are “forced to bear the economic consequences of their misconduct which persists to this day.”
According to the indictment, Vorce used fraudulent tax returns and other documents to obtain loans and lines of credit from the credit union and other financial entities and then used new fraudulently obtained loans to pay off the ones coming due.
His cover was to be running a business buying and selling boats. He alleged in his lawsuit that credit union staff did not check on whether he had ever filed the fraudulently filled out returns with the IRS, which he had not, even though he said he gave them permission to do so.
He also alleged that he used fake serial numbers to let him claim to have purchased boats that he had not purchased nor ever existed and these, too, he said, were never checked.
The credit union has not yet commented on the suit.
