Ignacio “Nacho” Morales, the former manager of the failed $7 million Borinquen Federal Credit Union who failed to appear Tuesday in federal court in connection with charges he embezzled more than $2 million, had a good excuse: he was already in jail.

According to local Philadelphia news outlets, Morales was holed up in the Curran-Fromhold Correctional Facility after being found in contempt of court during a municipal hearing earlier that day.

District Attorney spokeswoman Tasha Jamerson told the Philadelphia Daily News that Morales had voluntarily surrendered Tuesday morning on a bench warrant from a 2008 DUI charge.

The 40-year-old Morales also is charged with fraud, embezzlement, money laundering, filing false income tax returns and possession of cocaine with intent to distribute. According to court documents, from 2006 through mid-2011, Morales participated in an IRS refund check scheme in which he cashed the fraudulent checks at Borinquen and retained 20% of the value in payment.

Morales also stands accused of several other crimes in which he abused his role as credit union CEO. Court documents allege he withdrew more than half a million dollars from the credit union to buy 15 kilograms of cocaine. Morales received a share of the proceeds from the sales of the drugs, the documents said.

He also allegedly took $600,000 from the credit union to purchase $1.2 million in real estate for personal use, and additionally stole $700,000 from an organizational member who deposited $1.7 million at the credit union. He generated fake statements and misapplied credit union funds to pay dividends on the stolen funds to hide the crime, according to U.S. District Court charges, filed in Philadelphia.

The NCUA issued a cease-and-desist order on June 6, 2011 and ordered it to obtain a CPA audit, as well as verify member accounts and reconcile financial statements. It was placed into conservatorship June 24.

On July 8, the NCUA liquidated the institution and the $1.4 billion TruMark Financial Credit Union of Trevose, Pa. assumed what was left.

Borinquen was chartered in 1974 by a Catholic social service organization and served 8,600 members as of June 2011, according to an NCUA release. The low-income credit union served mostly Spanish-speaking members.

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CU CEO Who Failed to Show for Embezzlement Hearing Found in Jail

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