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The federal government wants OnPath Federal Credit Union to pay back more than $12 million it received from the Community Development Financial Institutions fund program that supported the credit union's mission to serve low-income members, many of whom lost their homes, businesses, cars and livelihoods following Hurricane Katrina.
An article that will be published in the July 22 print edition of CU Times reports that an audit by the Office of Inspector General for the U.S. Department of Treasury claimed OnPath's former executives allegedly submitted invalid information when they applied for federal funds. In addition to recommending OnPath repay millions of dollars, the OIG also recommended the suspension or revocation of the credit union's CDFI certification.
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The credit union, based in Harahan, La., a suburb of New Orleans, said the OIG's conclusion that OnPath executives submitted invalid information is not supported by the evidence. What's more, the credit union noted that the OIG report did not find any instance of misuse, misappropriation or non-compliance of CDFI funds.
While the OIG does not make these allegations, its audit report cited several specific examples that the credit union's information on its CDFI application did not square with the OIG's review and assessments. Moreover, the OIG asserted OnPath violated the government's assistance agreements because it failed to deploy CDFI funds.
In what may be a rare legal move, the $362 million OnPath filed a federal lawsuit in May to stop the $12,298,806 repayment demand made by the U.S. Department of Treasury and the CDFI fund in November 2019.
The credit union is looking to bring its arguments before a jury, claiming that repaying the government would adversely affect the low-income members it serves.
Although the OIG report did not identify the credit union's executives, Mignhon Tourné was serving as OnPath's president/CEO when the credit union received the federal funds from 2006 to 2012. She stepped down from her position in 2016. OnPath did not respond to CU Times' request for additional comments. As of July 15, the CDFI did not answer the assertions made in the credit union's lawsuit and it did not respond to a CU Times request for comment.
On Nov. 13, 2019, the CDFI fund delivered a "notification of recall [for] improper payments" document that said the federal agency determined OnPath submitted invalid information in its CDFI certification program for fiscal years 2006 to 2009, 2011 and 2012. As a result, the CDFI funds distributed to OnPath "constitute improper payments under the Improper Payments Elimination and Recovery Improvement Act of 2012," according to the lawsuit.
The CDFI fund's decision to issue a notification of recall [for] improper payments," was based on the OIG audit report, which OnPath contended has several mischaracterizations and inaccuracies.
Details about this dispute will be highlighted in July 22 print edition of CU Times.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
