Troubles continued to mount Friday for the now-closed Central States Mortgage Corp., hit by a state judge's order effectively freezing $2.3 million in assets and the reported dismissal of key management earlier in the week.
The $2.3 million hold, was approved Thursday by Milwaukee County Circuit Judge David Hansher in an emergency hearing.
The judge's temporary restraining order against the beleaguered CSMC, whose lending business has suffered large losses, came on a suit brought by Associated Bank, a subsidiary of the $25 billion Associated Banc-Corp of Green Bay. Earlier suits have been filed by other Midwest banks with Members United Corporate FCU seeking repayment of a $33 million defaulted note apparently forcing CSMC "suspension of business" March 9.
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Officials of CSMC were not immediately available for comment on the Associated suit but the state's top regulator, Suzanne Cowan, director of the Office of Credit Unions, said "progress" is being made in assessing the loan conditions and status of the 23 Wisconsin CUs which invested in CSMC. She said she met with a group of CU representatives in Milwaukee "to get caught up on where we stand."
All of the Wisconsin CU shareholders in CSMC have written off their $3 million investment in CSMC. Two Illinois CUs are also investors and it was understood they also were asked to write off their investments. A processing subsidiary of Wisconsin Credit Union League, W.C.U.L Services Corp said its 3,000 shares valued at $25,000 were also written down at year-end.
Separately, sources said Craig Lester, the interim president/CEO of CSMC, along with other key staffers were fired as part of the Monday closing.
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