AEA FCU Executive Indicted For $1 Million MBL Kickback Scheme
YUMA, Ariz.-In the latest scandal surrounding member business lending, the ex-head of business services at troubled AEA FCU was indicted yesterday on charges of conspiracy, fraud and money laundering in a scheme by which he and his wife allegedly earned a house and new cars as kickbacks on loans approved for a local businessman.
Bill Liddle, the former vice president of business services at the one-time $410 million credit union, his wife Rhonda Liddle, and their alleged accomplice, local businessman Frank Ruiz, were all indicted on 68 counts.
A federal grand jury charged that Liddle, hired at the credit union in 2004, approved 50 member business loans totaling more than $22 million to Ruiz between March 2005 and when he was fired in November 2009.
In return, Ruiz, the owner of Desert Best Distributing, Desert Best Technologies, Desert Best Enterprises and the Yuma Fun Factory, among others, funneled more than $1 million back to the Liddles, including $565,000 to buy a home, a membership at the Yuma Country Club, $40,000 to buy a Toyota Sequoia, $9,600 to buy a Corvette and $246,200 in cash, the grand jury alleges.
The loans, most of which have gone bad, have so saddled the credit union, formerly known as Arizona Education Association FCU, that the credit union lost $4.4 million for 2009 and $4.7 million for the first nine months, with net worth just 2%, making it one of NCUA's special cases.
All of Ruiz's business ventures funded by the AEA loans, including the Yuma Fun Factory, ended in bankruptcy. More than $25 million in AEA loans Liddle authorized during this conspiracy remain in default. All three defendants recently declared personal bankruptcy as well.
"Financial institutions are not personal fun factories for its officers and their anointed business pals," said U.S. Attorney Dennis Burke, in announcing the indictments. "The defendants' selfish scheme has come full circle and they are already paying a price for their greed."
Denise Sweet-McGregor, interim CEO of the credit union pointed to the alleged MBL scheme as the main reason for the credit union's problems. "The details of the investigation over the past 11 months have been difficult to suppress," she said in a statement. "While rumors have been rampant about what members of the community and the media have imagined, we were not at liberty to confirm or deny any of those rumors. However, now that the information about the alleged illegal actions of Mr. Liddle and others have been released by the FBI, the community can now understand why AEA has had to bear such severe financial losses this past year. The harm caused by these alleged actions to AEA's members and dedicated employees is unconscionable."
The case is among a growing number involving MBLs that have caused the failures of large credit unions, including Eastern Financial Florida CU, California's High Desert FCU, Utah's Southwest Community FCU, West Virginia's Center Valley FCU, Colorado's Norlarco CU and Michigan's Huron River Area FCU.