While the OIG did 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 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 is serving.

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 13, the OIG did not answer the assertions made in the credit union's lawsuit and the federal agency did not respond to 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.

OnPath claims the OIG initiated an audit in 2014 after receiving allegations that the credit union "had not engaged in eligible activities that saved its target markets and other targeted populations as required under the CDFI program."

However, the OIG's 42-page audit report, which was publicly released in July 2019, did not refer to those allegations.

To receive CDFI certification, organizations must direct at least 60% of their financial product activities to a target market that includes at least one investment area or targeted population. The investment area includes a CDFI-approved area that is economically distressed. A target market is an area where low-income people live or other targeted populations such as African Americans, Hispanics or Native Americans. Low-income people are defined as members whose family income is not more than 80% of the metropolitan area's median family income or greater than 80% of the non-metropolitan area's median family income.

OnPath received more than $7.2 million in CDFI financial assistance from 2006 to 2009, and in 2011 and 2012. In addition, the credit union received $5 million from the CDFI Healthy Food Financial Initiative (HFFI) in 2011 and 2012. The credit union also received nearly $300,000 in technical assistance funding, but the CDFI is not contesting that money. OnPath did not receive any CDFI funds in 2010.

In a letter to the OIG, OnPath's lawyer, Phillip Buffington Jr. in Ridgeland, Miss., wrote that the OIG report contains several mischaracterizations and inaccuracies.

"ASI (the former name of OnPath FCU) continues to believe it submitted correct information in its applications for CDFI certification and CDFI program assistance. Management would also state that instead of working with ASI to validate the actual methodology it used in the CDFI applications process, OIG developed its own methodology to support its own conclusions," Buffington wrote. "Because OIG applied a different methodology to the same dataset, the results were substantively different. The OIG report reflects these differences as inaccuracies, which ASI again believes is a mischaracterization of the information. OIG's methodology is not based on regulation or CDFI written policy in place at the time for the 2005 CDFI application."

What's more, CDFI guidelines at that time allowed credit unions to create and apply their own methodologies for application purposes, according to Buffington. Additionally, the credit union's lawsuit noted that the CDFI fund did not have established methodologies or statistically valid standards for evaluating certification and assistance applications.

Buffington also wrote in his letter that the credit union sought guidance from the U.S. Department of Treasury during the application process and that the credit union received support and ratification from the federal agency for the information OnPath used in its applications.

During the application process, Buffington contended the credit union regularly requested information from treasury officials to ensure the accuracy of all documents and reports submitted.

At no time was the credit union turned away for inaccurate or incomplete reports or applications, according to Buffington.

OnPath did acknowledge that it has not deployed all of the HFFI and FA awards as required by the CDFI assistance agreements.

"However, ASI notified CDFI of (its) difficulty in lending out the HFFI funds and formerly requested an extension from CDFI," Buffington wrote. "CDFI granted the extension to ASI through an amendment of the assistance agreement. Current management is still in contact with CDFI regarding the lack of demand of HFFI loans. ASI holds all of the non-deployed HIFF-FA funds in a restricted liability account as it continues to await instruction from CDFI on how to move forward."

However, with respect to HFFI-FA awards, the OIG said it confirmed with the Treasury Department that it did not execute any amendment to grant an extension in OnPath's assistance agreement, according to the OIG report.

Moreover, contrary to what OnPath has claimed, OIG argued that it did not develop and apply a methodology to the dataset separate from that in the credit union's CDFI certification application.

"However, we identified significant discrepancies in (ASI's) methodology," the OIG report stated. "It was the responsibility of ASI management to support its methodology and the underlying data used in its application for CDFI certification and financial assistance. In all we have worked with ASI management during the course of the audit and concluded that it (the credit union) was unable to provide documentation sufficient to support the decisions and actions taken with respect to ASI's CDFI certification and financial assistance awards."