Another fidelity bond legal dispute between the NCUA and an insurance company revealed that a former manager and assistant manager were running a check-kiting scheme that led to a loss of nearly $700,000 and contributed to the involuntary liquidation of an Indiana credit union.
According to court documents filed last week by the NCUA and Southwest Marine and General Insurance Co. of Scottsdale, Ariz., Sandra Santay, manager of the $7.5 million Lakeside Federal Credit Union in Hammond, Ind., and the credit union's assistant manager, Paula Awe, allegedly operated a check-kiting scheme through their Lakeside checking accounts from January 2012 to April 2015.
The fraud was uncovered during an NCUA examination in April 2015. When examiners confronted Santay, she verbally admitted that she and Awe were kiting checks that amounted to $690,120. Soon after the NCUA determined Lakeside was insolvent and closed its operations in July, the $3 billion, South Bend, Ind.-based Teachers Credit Union purchased Lakeside's loan portfolio and assumed its 2,280 members.
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