Central States Mortgage Co., the Wauwatosa, Wis. CUSO now inbankruptcy court, dropped its long-standing racketeering lawsuitlast week against its former CEO and founder. The court moved aheadwith naming a receiver for the firm, which until its closure lastmonth had serviced 250 Midwest CUs.
Though dismissing the 2008 suit against Richard Jungen, apart-owner of CSMC, the court-appointed receiver, Milwaukeebankruptcy attorney Michael Polsky, could re-file the petition,although defense attorneys are hoping he will decide the suit lacksmerit.
The actions by a Milwaukee County Circuit Court judge are expectedto clear the way for dissolution of the firm owned by 25 Wisconsinand Illinois CUs and the Wisconsin Credit Union League. The CUSOran into large mortgage losses over the last year.
One apparent result was the conservatorship last month of PrimeFinancial CU, Cudahy, Wis., an CSMC investor.
One of the shareholder groups in CSMC is the Wisconsin Credit UnionLeague, whose chairman, Focus CU President/CEO Dean Wilson, tookhelm of the CUSO last December.
The Milwaukee court, according to press reports, gave Polsky, apartner in the Milwaukee firm of Beck, Chaet, Bamberger &Polsky, the right to re-file the CSMC lawsuit, which alleged Jungenand others tried to defraud CSMC of $15 million through a fundingscheme.
Attorney Stephen Kravit, who is representing Jungen, has vigorouslydenied the fraud claims, accusing CSMC of being a “lawless company”that took illegal actions by a bitterly splintered board.
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