A class action lawsuit against a conserved credit union that lost $3.4 million last year alleged a former vice president and perhaps other employees were responsible for extensive financial improprieties.

Police officer George Campos and his wife Heather Campos filed a class action lawsuit earlier this month against the Kentucky-based $25 million Louisville Metro Police Officers Credit Union.

Twenty-eight loans that the couple never authorized were taken out in their names, according to the lawsuit. At the end of last November, George Campos went to the LMPOCU's branch to dispute unauthorized credit card charges and a loan he did not recognize on his statement.

“George and Heather have repeatedly asked the credit union for an accounting of their funds which, under Kentucky state law, the credit union is required to keep certain records and no one from the credit union or the NCUA has actually come forward to assist the Camposes. That's really the reason the lawsuit was filed,” said J. Allan Cobb, a Louisville lawyer, who is representing the couple.

“The NCUA, as the conservator, basically said, 'well, if you think something's wrong, you tell us what it is,'” Cobb added. “The problem is that they (the Camposes) don't know what's wrong because of the extent of the actual (alleged) fraud that we believe (took) place.”

The NCUA placed the credit union into conservatorship in December “to resolve issues affecting the credit union's safety and soundness.” Nevertheless, under its conserved status, LMPOCU remains open and continues to serve its 3,564 members.

The federal agency declined to comment on the class action lawsuit.

According to Cobb's who interviewed Mark Cantor, the NCUA's director of special actions, the federal agency uncovered records that don't add up, and employee actions that concealed “jaw dropping stuff,” which affected a “multitude of members.” The lawsuit also alleged the improprieties were carried out by employee(s) who “should never have been there,” and resulted in “multiple people (being) terminated.”

“Mark Cantor told us that the NCUA was in the process of a forensic audit that was not complete, said Cobb, who interviewed Cantor last month.

“They're just having a hard time getting their hands on exactly what happened,” Cobb said. “That leads me to believe it's not a month or two issue. It's something that goes back years, maybe even a decade. I don't know. That's what we're trying to figure out.”

The credit union employed 10 staff members with a total compensation and benefits payroll of more than $550,000 last year, according to NCUA financial performance reports. Its former President/CEO Sharon Burden received a salary of nearly $120,000 in 2016, according to LMPOCU's 990 document filed with the IRS.

The lawsuit names Josephine Crowe, the credit union's vice president, who allegedly was responsible for the improper allocation and appropriation of funds.

“Specifically, defendant Crowe set up fictitious loans in members' names; diverted members' electronic transfers to accounts she controlled; failed to pay-off loans; and engaged in other improprieties, improper allocations and misappropriations to the detriment of credit union members,” the lawsuit alleged. In addition, inaccurate, false and incomplete information was reported to the credit agencies.

Cobb believes LMPOCU learned of Crowe's alleged improprieties in June 2017. At that time, the credit union posted an announcement on its website notifying members that it was conducting a statement verification for the second quarter. According to the lawsuit, the announcement instructed members to notify the credit union of errors on their bank statements. If members did not report any errors within 10 days, LMPOCU would assume the statements were accurate.

In Cobbs' view, this announcement shifted responsibility to members to confirm the accuracy of their quarterly statements, and that the credit union attempted to wash its hands of its obligation to ensure the accuracy of members' bank statements.

For the next five months, the lawsuit also claimed that the credit union “sat on this information,” which kept members in the dark as to the improprieties and potential remedies. The credit union's supervisory committee last June hired a CPA firm to conduct an audit, but its findings were not disclosed to members.

The lawsuit claimed the credit union failed to act in the best interest of their members by hiring and retaining Crowe without taking steps to determine whether she should be trusted with the life savings, finances and credit worthiness of public servants and failing to adequately supervise her.

Although the credit union said Crowe was suspended, Cobb does not know whether she was terminated.

Crowe's lawyer did not return a CU Times email and phone call requesting comment. Additionally, Crowe did not return a CU Times phone call by Monday's deadline.

Cobb said he has been communicating with other members.

“We are seeking class status for those members who are similarly situated with the same type of injury,” Cobb said. “They don't necessarily have to come forward, but what we're doing is seeking to find all the individuals who have been affected similarly so that we can make them whole as well.”

Instant Insights /

Members Slap Class Action Lawsuit Against Kentucky Credit Union

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