The $353 million First Financial Credit Union, headquartered inAlbuquerque, N. M., hopes to find a buyer that can take amultimillion dollar mistake off its balance sheet.

That mistake takes shape as a five-story, almost66,000-square-foot commercial and office development located at 500Copper Avenue in Albuquerque. An historic building, the structurebegan life in 1931 as the copper-hued El Fidel Hotel before beingconverted into an office building and, finally, into a commercialcondominium. The structure boasts a five-story interior atrium, alocation close to Albuquerque's downtown business district andaccess to one of the largest parking areas in the center of town.It has also claimed about $7 million of the credit union's money(so far) and has helped lead to controversy among the creditunion's executive team over how the credit union has been run.

The credit union and the U.S. Attorney for Albuquerque allegeFirst Financial was simply defrauded. The three principaldevelopers who took out the loan, Vincent J. Garcia, David Garciaand Derek Barnhill, have been indicted for bank fraud and moneylaundering. And one of the three, Barnhill, has already pleadedguilty and is expected to testify against the other two when theirlegal proceedings get under way again next month.

But critics lay the responsibility for making the Copper Avenueloan at the feet of CEO Ben Heyward, alleging that the loan merelyrepresented the largest example of a “cowboy style” of leadershipthat, they charged, depended more on Heyward's desire to show offand make a big splash than on due diligence and responsibility thatshould characterize a safely run credit union.

None of the critics, which included both current and formercredit union employees, would speak for the record, citing eitherhaving moved on from the organization or Heyward's inclination tofire executives who have disagreed with him. But all charged thatHeyward's determination to make unilateral decisions and a lack ofattention to detail led to the Copper Avenue loan and a significantnumber of poor loans.

For his part, Heyward did not answer detailed questions aboutthe Copper Avenue loan, but reported that the credit union reliedon the borrowers' representations.

“The Copper Square loan was developed by business services atFirst Financial,” Heyward wrote in an e-mailed statement. “The loanwas approved based upon their representations and therecommendation of the underwriter with whom they dealt and uponwhich I relied. It was not until a few months after the loanapproval that I learned from business services that they had beeninformed of the past business practices of the borrower during thedevelopment of the loan and prior to funding. We are contemplatinglitigation at this time,” he concluded.

Critics countered that the credit union had questioned theborrowers about elements of their history, including at least onesignificant prior development project that, according to courtdocuments, had dissolved into a morass of lawsuits over allegedracketeering, misrepresentations and breach of trust. Heyward wasthe only one at First Financial with the authority to sign off onthe Copper Avenue loan, the critics said, and he knew what the CUstaff knew and went on to approve it anyway.

The U.S. Attorney alleged in court documents that the Garciasused money from the First Financial loan and other bank loans fortrips to Mexico and Las Vegas, improvements on homes and thepurchase of at least part of the controlling interest in a casinolocated in Spokane, Wash.

In court documents, the CU charged that loan payments were latefrom almost the very beginning and that the developers owed over$75,000 that was over two months late by September.

Six of the credit union's executive team in place in February2008, when First Financial made the loan, have since left. Heywardhas maintained that none were fired, but sources familiar with thecredit union said all six were fired or forced out after theyraised questions about the credit union's direction.

The critics argued their concern flowed from their observationsthat the Copper Avenue loan was only the largest in a systemiclending pattern without regard to due diligence, including thepurchase business loan participations. At their height in 2008,NCUA records show First Financial, then a $344 million CU, carriedroughly $100 million in participation loans on its books.

Critics reported that Heyward bought these loan participationswith little or no due diligence from a credit union where he hadworked previously and that he defended them by pointing out FirstFinancial had a low-income designation from the NCUA that permittedit to exceed the otherwise statutory 12.25% business loan cap. Thecritics charged that First Financial did not have this exemptionbecause the CU had never applied for one from the state's creditunion regulator as the NCUA requires.

The New Mexico Regulation and Licensing Department had notcommented on whether First Financial applied for a business loanexemption as of press time.

In further support of their allegations, the critics pointed outthat the credit union's net worth ratio has dropped steadily sinceHeyward took the helm at the CU in early 2005. NCUA records showthe CU's net worth ratio at the end of 2005 stood at 12.32%, took abrief uptick to 12.37% in 2006 before falling steadily to 9.36% atthe end of 2010. Similar numbers can be seen in the CU's return onaverage assets, which dropped from 1.32% in 2005 down to -0.71% in2008. It rose to 0.07% in 2009 but plunged again to -1.39% in2010.

Critics acknowledge that CUs with all sorts of management havelost money in the poor economy since 2008, but maintained thatHeyward's management has led First Financial into a significantlydeeper hole than it would have been in if Heyward was not CEO.