Credit unions in New Jersey and Illinois were liquidated last year because of employee fraud, resulting in a $16.4 million loss to the NCUA's Share Insurance Fund, according to an Inspector General's Report to Congress.
On April 30, 2025, the $49 million Unilever Federal Credit Union in Englewood Cliffs, N.J., and on July 1, 2025, the $3.5 million Aldersgate Federal Credit Union in Marion, Ill., were involuntarily liquidated by the federal agency.
After conducting a "limited-scope review" of the failed credit unions, the Inspector General's report found Unilever lost $8,440,000 because two employees allegedly "hid borrowings and used them to conceal their fraudulent activity and mask the credit union's true liquidity position."
At Aldersgate, $7,975,902 was lost because of management's alleged fraudulent activities involving multiple loans and share accounts, according to the IG report. The credit union had been operating from a residential home.
The inspector general referred two persons to the U.S. Department of Justice for criminal prosecution.
Four other failed credit unions resulted in nearly $2 million in additional losses to the share insurance fund.
The $5.3 million Eastern Kentucky Federal Credit Union in Prestonsburg failed because of its management's lack of follow-up and detailed knowledge of its loan portfolio. The estimated loss was $1,471,759 to the Share Insurance Fund. After the credit union was liquidated on June 5, 2025, it merged with the $2.7 billion Commonwealth Federal Credit Union in Frankfort with cash assistance, according to the report.
The $28.1 million Members First of Maryland Federal Credit Union in Baltimore was liquidated on Aug. 29, 2025, because of pervasive record weaknesses, deficient earnings, elevated operating expenses and declining net worth. The estimated loss was $230,320 to the Share Insurance Fund. The credit union was merged with a purchase and assumption by the $2.6 billion Aberdeen Proving Ground Federal Credit Union in Edgewood, Md.
The $9.6 million Butler Heritage Federal Credit Union in Middletown, Ohio, caused a $192,525 loss to the Share Insurance Fund. The credit union was liquidated on June 30, 2025, because of mismanagement that resulted in continued financial losses and failures to comply with recordkeeping, bank secrecy requirements and information technology standards, the IG report stated. Butler Heritage was consolidated with a purchase and assumption by the $185 million Cincinnati Ohio Police Federal Credit Union.
A group of members successfully blocked Butler Heritage's initial consolidation in 2023 with the $355 million MyUSA Credit Union, also based in Middletown. However, members complained that the NCUA's decision to conserve Butler Heritage in January 2025, came more than two and a half years too late. Before taking legal action to stop the MyUSA merger, members repeatedly voiced their concerns with the NCUA and questioned why the federal agency did not act earlier to conserve the credit union to appoint a turnaround CEO and install a new board, which may have returned the financial cooperative to viability.
Just six months after it was chartered by the NCUA, the $308,500 Soul Community Federal Credit Union in Austell, Ga., was involuntarily liquidated because of insolvency, violations of the Federal Credit Union Act, and NCUA rules and regulations. The federal agency also said Soul Community operated in an unsafe and unsound manner, according to the report.
READ MORE: Semiannual Report to Congress.
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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