Fake Credit Union Founder Fined $1M
A U.S. District Judge in Denver ordered the founder of a fake credit union to pay more than $1 million in civil penalties and as restitution for bilking members out of $532,000 in bogus certificates.
According to court documents, Judge John L. Kane issued his final judgment Oct. 8 against Stanley B. McDuffie of Denver, who founded Her Majesty’s Credit Union in the Virgin Islands and sold $532,591 in CDs to four members. Judge Kane ordered McDuffie to pay that total amount and an additional $532,591 in a civil penalty to the U.S. Securities and Exchange Commission.
Although McDuffie obtained a basic license to open HMCU in the Virgin Islands in 2007, the credit union was not chartered by the NCUA or by any U.S. state, and was not subject to regulations, the SEC charged in its civil lawsuit filed against McDuffie in November 2012.
Through its website, HMCU “falsely and fraudulently” stated that the cooperative was regulated and was affiliated with CUNA, according to court documents. HMCU also claimed its high-interest CDs, sold from December 2008 to September 2012, were insured by Lloyd’s of London, but that also was false, the SEC charged.
The SEC said McDuffie used the CD funds to pay for flight lessons, rent for apartments and office space, credit union software, travel and lawyers.
When members attempted to redeem matured CDs in December 2011, they were told the funds were “tied up.” That eventually led to the SEC lawsuit.
McDuffie had 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, who also went under the aliases of Stanley Roberson, Stanley Battle and Stanley Robertson-Baffle, was banned by the NCUA in 2011. Roberson had been convicted of contempt of court and sentenced to six months in jail for not complying with a subpoena by Colorado officials investigating HMCU’s sales of securities. HMCU operated an office in Denver.
Last August, McDuffie was about to receive approval for a business application to run an airport shuttle business in New Mexico when state authorities caught wind of his prior conviction and other dealings.
McDuffie applied for a business license to run Sun Shuttle, an airport transport service around Santa Fe, N.M., according to the New Mexico Public Regulation Commission.
Michael Cadigan, an attorney who represented a cab company challenging McDuffie’s application, discovered his affiliation with HMCU after doing a Google search and alerted New Mexico authorities during a July 31 hearing. Cadigan eventually pulled McDuffie’s business application for the airport shuttle.