The primary cause of the failure of Center Valley FCU was the embezzlement of millions of dollars by the former CEO to fund her family's restaurant and the purchase of luxury vehicles. However, NCUA examiners failed to adequately evaluate the risks to the credit union's operations and failed to notice that there were reportable conditions and material weaknesses.

Those are the main conclusions of the NCUA Inspector General's report on the failure of the Wheeling, W.Va., credit union in February 2009. The loss to the NCUSIF was approximately $16.4 million. Center Valley FCU, which was designated a low-income credit union, had $8 million in assets, six employees and approximately 3,000 members.

Before the embezzlement was discovered, NCUA examiners knew of some of the problems with the credit union's internal controls, which the report concluded were