If former California State Assemblyman Carl Washington defrauded the $492 million First City Credit Union, President/CEO Terry O'Steen isn'taware of it.

O'Steen told Credit Union Times that First City suffered a$5,000 net loss in 2007 when it charged off a credit card balancethat Washington didn't pay. However, to O'Steen's knowledge,Washington did not defraud First City as alleged in U.S. DistrictCourt and reported in local and industry media.

“Yes, he owed us money and didn't pay, but that's not fraud,”O'Steen said.

The Los Angeles-based CEO said he hadn't been contacted byauthorities regarding the case or provided any documentation, norhad he seen the grand jury's indictment that prompted Washington'sSept. 17 arrest.

O'Steen said he assumes Washington revealed he had done businesswith First City when he was interviewed by prosecutors.

The indictment alleges that Washington defrauded multiplefinancial institutions by running up credit card balances and laterclaiming he hadn't made the charges, but had instead been a victimof identity theft. Washington then allegedly filed false policereports and submitted them to Experian, asking the credit reportingagency to remove the affected credit histories from his creditreport. Then, using a clean credit report, Washington repeated thescam by applying for new credit at other institutions.

Counts one and four against Washington allege that on Oct. 19,2007, he submitted an application for a Visa credit card to FirstCity Credit Union and purposely omitted creditor obligations.

O'Steen said he would review the court documents and furtherresearch Washington's account history to determine if any fraud hadbeen committed. The CEO said Washington was eligible to join FirstCity because he is a Los Angeles County employee, employed by thecounty's Probation Department; county employees are the creditunion's legacy select employee group.

The indictment also alleges in counts three and six thatWashington defrauded the $360 million LA Financial Federal Credit Union, located in Pasadena, Calif.,by making false statements on a credit card application on August4, 2009.

The court documents further state that Washington falselyclaimed to Experian that credit reports from the $23 millionMid-Cities Financial Credit Union, located in Compton, Calif., werethe result of identity theft. However, the indictment does notinclude any criminal charges connected with Mid-Cities.