NEW ORLEANS — In a case distinctly similar to one that took place in the wake of the September 11 attacks, the U.S. Attorney for Eastern Louisiana has indicted nine members of the $308 million ASI FCU for stealing almost $90,000 in the wake of Hurricane Katrina.
The nine members of the community development credit union are alleged to have used debit cards to make point of sale transactions or ATM withdrawals that were far in excess of their balances in the days after Hurricane Katrina. The transactions generally began in late August and ran into the fall, according to the nine indictments, which a federal grand jury handed down on August 11. The transactions were also made all over the country, representing the different locales where Katrina evacuees ended up.
The largest amount alleged stolen was just over $18,000 and the smallest was $6,775, according to the U.S. attorney's office. A similar case happened in 2002 when Municipal Credit Union was forced to turn roughly 100 members' cases over to prosecutors after the members overdrew their accounts by some $15 million in the days and weeks after the September 11 attacks. The CU said that, over time, it has recovered almost all the money.
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Audrey Cerise, CEO of ASI, said the CU had not wanted to turn the cases over to the prosecutor's office, but that it felt it had to do so after these nine individuals remained resistant to making the overdraft right with the credit union.
"We needed to send the signal that we were not going to take this sort of thing lying down," Cerise explained. "After all, we have the interests of all the CU members which support the credit union and were willing to stay within the rules to consider."
Like Municipal, ASI deliberately chose to keep its debit and ATM systems available to members even though the CU knew that some forms of fraud were likely to take place in order to serve its members who needed access to their money during the catastrophe, Cerise explained.
That instinct has seemed to have paid off. While the CU turned the case of nine of its members over to the prosecutor's office, Cerise pointed out that at one point in the wake of the storm the CU had over 10,000 of its more than 90,000 members significantly overdrawn.
Most of these instances Cerise attributed to the confusion after the storm as members expected their employers to post direct deposits to their accounts when, in fact, they had not and when people expecting checks from the Federal Emergency Management Agency were unable to make sure the checks actually hit their accounts.
In these cases, Cerise explained, members would make a withdrawal from their account and determine that the check or deposit must have arrived since the withdrawal went through. But in reality the withdrawal merely overdrew their accounts. In these cases, Cerise explained, the members came in and made the money good as soon as they got back into the area or in touch with the CU, a significantly long process in the case of some of the evacuees, she admitted.
But in the case of the nine indicted members, Cerise said the CU had tried to make contact and work out an arrangement to return the money but to no avail. In these cases, she said, the CU expected to take a loss.
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