Four executives from failed mortgage CUSO Central States Mortgage were indicted on fraud and other charges. David Jungen, his wife Elaine, Jerome Poelhnelt and David Chapman were named in a federal indictment, unsealed Oct. 4 in Eastern Wisconsin's U.S. District Court.
The 2009 collapse and bankruptcy of Central States led to failures and mergers among its owners and contributed to the conservatorship of Members United Corporate Credit Union.
The indictment alleges that the executives defrauded the organization and its owners by allegedly forming a pool of mortgages in the name of the CUSO, which then served as an investment vehicle that allegedly sent interest payments to the executives.
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The group also allegedly closed down the fraudulent investment vehicle in June 2008 and distributed its subprime holdings among other, legitimate, CUSO investment vehicles. Total fraud losses exceed $9.2 million.
In addition, Chapman was alleged to have obstructed justice in the investigation of the matter by allegedly lying to federal investigators.
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