ROCKY RIVER, Ohio – It’s not just Corporate America that is being rocked with accounting scandals, CUs have their own share too. Martin Hughes, CEO of United Telephone Credit Union, is being accused of using funds from a former employer to pay the credit union’s expenses. United Telephone, Hughes, his wife and some board members are being sued by Union Eye Care Center, where Hughes was formerly the president, for stealing more than $363,000 to pay credit union expenses, according to a report in Plain Dealer. The trial is set for November. Hughes told Credit Union Times that the suit is bogus and the credit union has filed a counter-suit. The Ohio statute is quite damning if the CEO is convicted of the charge, stating, “Whenever, in the opinion of the superintendent of credit unions, any director, officer, committee member, employee, agent, or other person participating in the conduct of the affairs of a credit union has committed any violation of law or rule, or of a cease-and-desist order, or has engaged or participated in any unsafe or unsound practice in connection with the credit union, or has committed or engaged in any act, omission, or practice which constitutes a breach of his fiduciary duty as director, officer, committee member or other person, and the superintendent determines that the credit union has suffered or will probably suffer substantial financial loss or other damage or that the interests of its members could be seriously prejudiced by reason of such violation or practice or breach of fiduciary duty, the superintendent may serve up such director, officer, committee member, or other person a written notice of his intention to remove him from office.” The Ohio Department of Commerce Division of Financial Institutions Spokesperson Dennis Ginty would only comment, “We are monitoring the credit union.” He did explain that the “other business institution” concern is secondary to specific credit union violations. Hughes assured that the $16 million credit union is in excellent financial condition, with which American Share Insurance (ASI) President and CEO Dennis Adams concurred. The credit union, state chartered and insured by ASI, has a more than 50% capital ratio. The insurer is not conducting supervision beyond its normal procedures, Adams said. Hughes, the credit union CEO for the past 40-years and a founder, defended the credit union and himself saying that, as president of the Union Eye Care Center, he had allowed the credit union to rent office space from the company for $1,000 a month. When he retired, the new president did some calculations and decided the credit union was not paying enough and ordered back rent, Hughes explained. United Telephone is charging the eye care center for use of the credit union furniture, office machines and other items for a total of more than $500,000, he said. Additionally, two female credit union employees, together with the Ohio Civil Rights Commission and fellow employee Sam Rizzo, are suing 83-year-old Hughes for sexual harassment, according the Plain Dealer article. Hughes said the harassment charges are based on “mental harassment” and nothing physical. According to the CEO, the three employees just want him out of the credit union. He called Rizzo, someone he had known for 20 years, looking for someone to help run the credit union, but within two days, Hughes said, Rizzo was asking when he was retiring. Hughes said he has no plans to retire while he is still able to work. Subsequently, at Rizzo’s urging according to Hughes, the trio sabotaged the credit union’s computer and walked out, causing the main office of the credit union to shut down for two-and-a-half days. The credit union has seven total branches, so service continued at other offices, he said. These are not Hughes’ first brushes with the law. In 1987, he was convicted of falsifying Communication Workers of America logs to allow the group to make more than $400,000 in political contributions. Ohio state law is clear on this aspect, as well. “Whenever, in the opinion of the superintendent, any director, officer, or committee member of a credit union, by conduct or practice with respect to another credit union or other business institution, which resulted in substantial financial loss or other damage, has evidenced his personal dishonesty or unfitness to continue as a director, officer, or committee member, and whenever, in the opinion of the superintendent, any credit union or other business institutions which resulted in substantial financial loss or other damage, has evidenced his personal dishonesty or unfitness to participate in the conduct of the affairs of such credit union, the superintendent may serve upon such director, officer, committee member, or other person a written notice of his intention to remove him from office or to prohibit his further participation in any manner in the conduct of the affairs of such credit union.” Hughes was among those pardoned in last minute actions by outgoing President Bill Clinton (D) in 2000. Additionally, it must be noted that the law was not effective until 1987, the same year as the conviction, and the Ohio regulatory body was unsure on whether the law or the conviction came first, but Hughes was already serving as CEO at the time and the law is not retroactive. Hughes said that he became close friends with then-Presidential candidate Jimmy Carter (D) and had raised a great deal of money for him and had visited with the former President on a friendly basis, as well. He admitted to no wrong doing in the relationship and pointed to his presidential pardon as proof. Hughes also serves as treasurer of the credit union, while his wife also serves on the board and his distant cousin is the chairman. [email protected]

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