Broome County Teachers FCU officials failed to conduct properdue diligence when the failed Binghamton, N.Y. institution extendedcredit to a mother-and-son team that defrauded the credit union for $14 million, according to a CEOclose to the case.

Scott Lonzinski and his mother, Laura Conarton, pleaded guiltyTuesday to fraud after the two created phony documents, forgedsignatures and created a fictitious persona in order to obtainapproval for share secured loans from BCTFCU for a total of $14million.

According to court documents, Conarton was a loan administrationmanager at a People's National Bank for approximately 10 years, andused her knowledge of the bank's policies to create fakecertificate statements, signature cards and security agreementsfrom PNB pledging the non-existent certificates as collateral forthe loans.