The National Credit Union Administration liquidated American Samoa's only credit union July 5 after a $5 million bailout effort failed.
Agency officials said they were investigating evidence of possible embezzlement and self-dealing by the management of the $9 million-asset American Samoa Government Employees Federal Credit Union.
"We tried to do our best to save it, but there was too big of a hole," said Bob Loftus, NCUA director of public and congressional affairs.
The $5 million spent by the agency represented various loans to the institution and staff expenses, Mr. Loftus said.
The agency seized the credit union in October 1993 because a large number of delinquencies caused the credit union's financial condition to crumble. At the time of the seizure, the credit union had a net capital deficit of $2.3 million.
NCUA staff attorney Steven Widerman traveled to American Samoa to impose and enforce the conservatorship. The board refused to surrender to NCUA the credit union's property or its records. The territory's high court upheld the agency's action and forbade the board from interfering.
