In what authorities claim is the biggest theft related to relief efforts for last year's terrorist attacks on the World Trade Center, as many as 4,000 members of Municipal CU were charged with taking advantage of the credit union's post disaster generosity to steal as much as $15 million from the credit union's ATMs.
The thefts were made possible because the $1-billion credit union, whose computer systems were damaged in the collapse of the nearby Trade Center, allowed members to continue making cash withdrawals over the regional NYCE system in the weeks after the disaster even though they were unable to reconcile the transactions with their own ledgers.
"This is a prime example of no good deed goes unpunished. People took advantage," stated Manhattan District Attorney Robert Morgenthau, whose office was rounding up 101 of the worst offenders, those who had allegedly stolen more than $7,500 each, last week and charging them with grand larceny. "It's discouraging to think that people would take advantage of the good will of the Municipal Credit Union."
Thomas Siciliano, general counsel for the credit union, which serves municipal employees who include police and firefighters, said MCU has been working with thousands of the guilty members on restitution and has succeeded in recovering about half of the stolen funds, some of it through special loans offered for recompense. "There's been a significant recovery. That's ongoing," he said.
The losses were not covered under the credit union's CUNA Mutual surety bond, according to Siciliano, because they were directly caused by an intentional action by the credit union to aid distressed members in the days following the infamous terrorist attacks.
"Ninety-nine percent of our members acted properly and never took advantage of the situation in any way," Siciliano sought to emphasize. He said many members are not being charged because they exceeded their accounts by as little as $50 and they were unaware of the balances.
But investigators are alleging that hundreds of others used the tragedy to feather their own pockets, tapping the machines for the maximum $500 cash withdrawals dozens of times in the weeks after the tragedy, according to prosecutors. Even though the credit union's systems were down for six weeks after the attacks, Municipal CU was able to keep track and identify who was withdrawing cash during that period.
Among them: Cassandra Scoth, an unemployed member who never had a balance more than $90 in the eight months prior to the attacks, allegedly made 72 cash withdrawals totaling $10,100 between Sept. 15 and Oct. 31; Dyron Jackson, who never had a balance of more than $22 in the eight months preceding the attack, yet made 72 withdrawals for $10,105 between Sept. 19 and Oct. 31; Illya Lancaster, who never had a positive month-end balance for the eight months before Sept. 1, yet made 65 withdrawals for a total of $10,456 between Oct. 3 and Nov. 1.
Another unnamed member who never had a month-end balance greater than $320 in the eight months before the attack made 92 ATM withdrawals between Sept. 15 and Oct. 31 leaving him with a negative balance of $12,595; another member made 83 cash withdrawals and used his credit union cash debit card to make 62 purchases of clothes, electronics and other consumer goods; a nurse who never had a positive balance in her account in the prior eight months, made 54 cash withdrawals for more than $18,000 total in the six weeks after the attack.
Several members used the funds to buy cars. One member bought a Lexus. Another a Ford Expedition and a new Jeep. Another man claimed to have gambled the funds away.
More Than One Hundred Took $7,500
The District Attorney's office said 101 credit union members withdrew more than $7,500 each, more than 540 people withdrew more than $5,000, and at least 4,000 people overdrew their accounts by $1,000 or more.
Siciliano said the credit union will explore expelling the guilty members from the credit union. "Right now, we're concentrating on collecting the money," he said.
The theft occurred after Municipal CU agreed to allow members to continue making cash transactions from ATMs in the weeks after Sept. 11, despite the fact the damage to the World Trade Center, a stone's throw from the credit union's Cortland Street headquarters, damaged a building housing the credit union's computer system and local phone connections.
The credit union continued to allow withdrawals because of the many needy members in the aftermath of the disaster, according to Siciliano. "It was a tough decision we had to make at the time," he said. "Looking back we would make the same decision."