A credit union walking distance from the NCUA that was once a shining star among small credit unions crumbled this year amid allegations of fraud, embezzlement and the suicide of its manager.
The $2.4 million Shiloh of Alexandria FCU was founded in 1993 by the late John DuPree Sr., to serve members and employees of Shiloh Baptist Church, their immediate family members, and an underserved area within the city of Alexandria, Va.
When the NCUA liquidated Shiloh in April, the agency stated that the volunteer-run credit union was insolvent and had no prospect for restoring viable operations. However, that explanation didn’t tell the whole story, according to the 624-member credit union’s financial reports available on the NCUA’s website.
Soon after the credit union was closed, news emerged that Shiloh’s volunteer manager, John C. DuPree Jr., the founder’s son, had died at the age of 48 on April 4 – just one day before the co-op was closed.
Many industry insiders expressed disbelief when Shiloh was liquidated and DuPree’s death was discovered.
Dan Morrissey, CEO of the $2 million Queen of Peace FCU of Arlington, Va., who attended DuPree’s funeral, said the shock of DuPree’s death was surpassed by the shock he experienced when he read in Credit Union Times that Shiloh had been liquidated.
“It’s tough on small credit unions when these things happen,” he said.
Then-NAFCU President/CEO Fred Becker, who had used the credit union as a best-practices example in February, told Credit Union Times in an April 13 article that he was “saddened with the recent events” because “Shiloh has been a special credit union with a special place in credit union history.”
DuPree, who worked for the Environmental Protection Agency, was the sole person responsible for posting transactions to the credit union’s general ledger and maintaining its financial records, the NCUA said.
The details of DuPree’s death remained a mystery until the NCUA filed a civil complaint Nov. 19 in the U.S. District Court for the Eastern District of Virginia against DuPree’s estate and his former fiancée, Sharon Gonder, to recover losses to the share insurance fund caused by the failed credit union.
The couple allegedly concocted an elaborate certificate of deposit scheme, funneled much of the stolen money into their jointly owned company, JD Payne Properties, and used it to support a lavish lifestyle, including buying numerous cars and real estate, according to the lawsuit, which lists DuPree’s mother, Mary H. DuPree, as administrator of the estate. Since Shiloh of Alexandria had a low-income designation, the credit union’s low-income status allowed it to accept investment deposits, such as CDs, from non-member institutions, which DuPree and Gonder used to conduct an elaborate scheme, according to court documents.
The NCUA became aware March 27 of a discrepancy between the stated amount of non-member share deposits in Shiloh’s year-end financial statement and the amount of actual non-member share deposits held, the lawsuit said.
Upon learning of DuPree’s death, the complaint said, the NCUA launched a full investigation of Shiloh’s books and records, and discovered a suicide note on DuPree’s credit union computer, which stated that he had been “stealing money from Shiloh Credit Union for several years now” and “betrayed the trust that everyone placed in me.” In the latest twist in this case, the NCUA, which is seeking $9.7 million in compensatory damages and punitive damages, was awarded a preliminary injunction from a federal court on Dec. 5 to prevent the dissipation of estate assets during litigation, according to court documents, which stated that both plaintiffs agreed to a court order prohibiting them from transferring the assets to anyone other than the NCUA until the lawsuit is resolved.